Four Factors That Affect Car Insurance Premiums
Your car insurance policy premiums are determined by a large list of different variables and factors. Some things, like age, cannot be controlled, but others are able to be altered. Understanding some of the most common variables that are included in the calculation of your monthly insurance payments can help you make changes to save yourself money each month without having to give up your coverage.
Security
One of the most important factors that insurance companies will look at when determining how much you should pay each month is how your car is stored. Vehicles that are parked in open spaces or on the road are at greater risk of theft and damage, which means that claims are more likely and your premiums will be higher. Look into parking in a garage or another covered space, especially if it comes with a lock, to lower your premiums.
Vehicle Age
The age of your vehicle also plays a role in determining how much your premiums are each month, though it is not the same clear spectrum that security is. Instead, older cars can come with lower premiums because they are less expensive to fix (unless you're driving an antique vehicle or one that does not have many available parts). Conversely, brand new vehicles tend to have greater safety and security features that make an accident less likely, like reverse cameras, but will be more expensive to repair or replace if totaled due to their higher value.
Deductible
While not a physical factor relating directly to your vehicle, the size of your deductible does play a significant role in determining your monthly premium payments. A larger deductible will mean that you will have to cover a larger proportion of the costs relating to vehicle accidents, which means that small accidents assessed at low values will have to be covered completely by you. However, it does lessen the monthly burden associated with maintaining your policy, so you may want to consider raising your deductible if you've never experienced an accident and need to save money over a period of a few months; you can always bring it back down later.
Credit Rating
Finally, having a poor credit rating can also have an effect on the monthly payments that you are assessed for through your insurance policy. While improving your credit can take some time, you can work to build it by paying your bills on time, reducing the amount of debt that you hold, and speaking to a financial advisor about other steps that you can take. Not only will this improve your credit and access to funds as a result, but you will also be able to save money each month on insurance premiums.
