What Factors Affect My Insurance
Costs?
The factors of most importance in
determining the size of you insurance premium are
probably the combination of your driving history,
your age and where you live. Where you live is a determining
factor in the size of the premium you pay on your
automobile insurance as you will see in this article.
States that have enacted no-fault
auto insurance laws generally have lower rates than
states that are otherwise similar. Each state is divided
into rating territories based on population density,
traffic congestion and other factors that influence
the accident rate.
Many times, areas will be sub-divided
into cities and communities. In this age of computers,
it is easy to feed in an address and get a statistical
analysis of the relative accident history of the surrounding
area.
The premium paid by an individual
car owner reflects the number and cost of accidents
caused by all drivers in his rating territory. The
cost of each accident claim in your territory also
contributes to the cost of your insurance. Car repair
charges, hospital and medical bills and jury awards
vary widely from area to area, and you will pay more
for your insurance in a community where the average
accident bill is high.
When an area’s overall insurance
bill has been determined, based on the number of accidents
and the size of the claims, the cost is shared by
all the insured car owners in the community. But it
is not shared equally. Your own particular insurance
premium within your territory is influenced by how
likely you and other drivers in your family are to
have an accident. Thus individual or family premiums
may be affected by the following factors:
Business or pleasure. Cars that are
driven to and from work, or that are used for business
purposes throughout the day, are usually more exposed
to accidents than cars used only for family convenience
and pleasure, and usually require higher insurance
rates. There are farmer/rancher discounts for cars
used primarily in farming and ranching, since their
accident rates tend to be relatively low.
What kind of car you drive. Sports
cars, extra high-horsepower vehicles and souped-up
automobiles of normally lower horsepower are involved
in proportionately more accidents than standard models,
and many insurance companies impose higher premiums
on them.
Your driving record. Statistics show
that drivers who have had accidents or been convicted
of traffic violations in the past are more likely
than those with clear safety records to have accidents
in the future. Thus, under the “safe driver”
plans in effect in most states you may save up to
20% on your auto insurance if you and others in your
family have not been responsible for any traffic accidents
or been convicted of any serious traffic violations
for three years.
Male or female. Men have more accidents
than women. In most states a woman between thirty
and sixty-four years of age may be eligible for a
10% savings on the premium if she is the only person
in the household who drives the car.
How old you are. Accident rates are
highest among young drivers. Thus a male driver under
twenty-five or a female under twenty-one may be charged
considerably more than drivers above those ages, and
a male driver under twenty-one more than a female
driver of the same age.
Married or single. Among young drivers, those who
are married have fewer accidents than those who are
not. Thus young married men are likely to enjoy lower
premium rates than single men of the same age.
Driver education. Because they learn
good driving habits, young drivers below the age of
twenty-five or twenty-one (depending on the state)
who have completed recognized courses in driver education
may be entitled to special discounts on their auto
insurance premiums. To be recognized the driver education
course must meet the standards set by the National
Conference on Driver Education.
Good-student. Premium credits ranging
up to 25% are available in many states to youthful
drivers who maintain good grades n schoolwork. To
qualify for the discount, a youth must be at least
sixteen years old and be a full-time student in a
high school or college.
Two or more cars. If you own two
or more private passenger cars, you may qualify for
a discount on your insurance premium, provided the
cars are all insured with the same company.
As you can see, sometimes we can affect these categories
and sometimes we can’t. So if you want to have
low car insurance premiums and stay healthy, you might
consider riding your bike!
Michael R. Barnes
practices law in Key West, Florida. His comments are
provided as a pro bono community service and are not
offered as legal advice for a particular set of circumstances.
This article was materially assisted in its preparation
by his paralegal, Christine Gorman. If you are concerned
that you may need a lawyer, you are encouraged to
contact one and follow his or her advice for your
individual situation.
