Although the word
“accident,” by definition, means “unintentional,” many car accidents are the
result of negligence by at least one driver. Consequently, higher insurance
costs exist for everyone. These higher premiums particularly
affect individuals who may be considered at a greater risk of having an
accident. Here’s a quick look at some of the things that may be impacting your
automobile insurance costs:
Age Matters
In order to arrive at equitable pricing,
automobile insurers spread the cost of accidents over the insured population.
According to the Insurance Institute for Highway Safety (IIHS, 2013), the
highest death rates per mile driven occurs among teenagers, followed by elderly
drivers. Therefore, premium rates are generally higher for drivers under 25 and
older drivers.
Points for Safe Driving
Most automobile insurers use a safe driver rating plan, or some variation, to reward drivers
who have clean driving records and penalize those who have a history of
accidents and/or moving traffic violations. Therefore, the driving records of
individuals listed on your policy directly affect your automobile insurance
premiums.
Where You Live
Population density and the number of
vehicles on the road are two other important factors that help determine your
insurance costs. As people and cars compete more and more for limited space on
the road, accidents are more likely to happen. Territories (a town, a large
city, a county, or some defined geographical subdivision) are rated based on
the losses, or “risk” profiles, for such areas. Premiums are weighted by the
record of insurance losses, such as accidents, theft, and vandalism, as well as
the history of police enforcement of traffic laws in each given territory.
Vehicle Category
Certain cars may
cost more than others to insure, depending on a variety of factors. Vehicles
will generally be more costly to insure if they are expensive, carry a high
theft risk, carry lower safety ratings, or cost more to repair. A common
question for many policyholders is, “Why isn’t my policy premium going down as
my car gets older?” Premiums tend not to decrease because liability concerns
remain the same regardless of the age of your car; further, the cost of repairs
to an older car is generally comparable to a newer vehicle’s repairs.
In summary, it is the driver’s record, his or her vehicle, and its use that
set the basis for calculating auto insurance premiums. Some of these factors
may or may not be in your control.
