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Auto insurers underwrite policies to evaluate the risk given to each insurance applicant. During this process, an individual is grouped into a category, such as a high-risk driver, a low-risk driver, a teenager, or an elderly person. If this risk associated with the applicant is considered too high, the application may be refused altogether. After the results are calculated, the insurance company gives a price, which is based on the perceived risk posed by the driver.
1. This is also known as assessing the driver
Insurers use this rating as a way of gauging what it costs to insure a particular person if a claim is made and how likely it is that claims will arise again in the future. This is often referred to as financial responsibility assumed by an insurer. The tip is to maintain safe driving and avoid traffic accidents and you will go a long way toward cheaper car insurance.
2. Not all insurance companies rate drivers the same
Many providers use the same general metrics, but their algorithms that ultimately determine rates are quite different. One of the biggest factors all insurers use when calculating premiums is accident frequency. When a person files a claim, the insurance kicks in and accidents can cost many thousands of dollars, especially if a death is involved. The more claims an individual makes, the riskier he or she is in the eyes of the carrier and the more likely he or she will make a claim in the future. Higher rates are therefore imposed on these high-risk motorists. To keep rates low, avoid incidents and claims filing and save a lot of money on car insurance. Don’t worry if you’ve had accidents in the past.
3. Top Contributing Factors Affecting Auto Insurance Rates
*Driving Record: Auto insurers will look closely at how many citations and accidents you have been involved in.
Keep a good driving record and watch your rates drop.
*The location where you live: If you live in the city, you can expect to pay more than if you live in a rural area with much less traffic.
* The car you drive: This is a very big factor that determines the rates. New and expensive luxury or sports cars have some of the highest insurance rates. On the other hand, used cars that are safe and inexpensive to repair have some of the lowest coverage costs. Get a boring used car and save on coverage.
* Marriage Status: Married people pay less for car-ins because they are considered more responsible.
* Your age: Drivers under the age of 25 can expect to pay about double for car-ins. The sweet sport for the lowest rates is between the ages of 32 and 62.
4. Apply for all possible discounts
A fun and smart way to save on car insurance is to apply for different discounts. If you have more than one car, consider getting a bundle discount or multi-vehicle discount. You can also take a safe driver course and save about 5%. Other popular discounts include good students, military, and even teachers.
5. Shop directly on the web for the cheapest rates
The internet has literally taken over the world. It has also saved millions of people money on auto insurance. Buying car insurance online is smart because you can find direct rate prices that most brokers can’t match.
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