A number of factors can affect the premiums for auto insurance. This article will list five of the major ones which should help anyone in the market for insurance shop around for the best possible deal.
- The Make and Model of the Car: It is perhaps obvious that a more expensive car will have to be covered by higher premiums, but there are other things involved in the price of insurance as well. A car that is likely to be stolen will have higher rates, as will a car with certain modifications. The Insurance Services Office calculates these safety risks through their own special system. Any insurance shopper can use an Internet search engine for more information on which cars will be more or less expensive to insure.
- The Period Over Which the Premium is Paid: Most companies will charge less for those who pay an annual sum than for those who pay month by month. This is called paying "fractional premium fees" because the payment has been cut into segments. Generally, an insurance company will not inform the policy holder of this up front, largely because they prefer customers to pay the higher price. These fees will be listed on the monthly statement, so checking to see if they are there, then choosing an annual plan might be a good start on saving some money.
- Credit Rating: Car insurance companies are just like many other businesses in that they prefer customers to have a good credit rating. Policy holders with a good credit rating will often pay a lower rate, because they are considered to be less of a risk. The insurer feels that a customer with a good credit rating is more likely to pay on time.
- Teenaged Drivers on the Policy: It is a common belief that teenaged drivers should be added to the insurance policy as soon as they achieve legal driving age. In truth, a teenager should only be added to the main policy when they actually have a license of their own.
- Canceling an Old Policy: When switching insurers, be certain to cancel the old one in writing. Discarding the renewal letter from the previous insurance company is just not enough. The old company will consider this non-payment, which is a black mark for the customer's credit rating - which leads, of course, to higher premiums do to a poor credit rating, as noted earlier. However, the new policy should be in place before the old one is canceled, since the old company may need to verify there is new coverage before the existing policy is dropped. Remember that the car dealer may also need to be notified of a change in insurance providers if there is any outstanding payment left on the vehicle.