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UPDATED: Mar 13, 2020
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Adequate automobile insurance coverage is required in all 50 states. Drivers who are unable to pay for damage to the vehicle sustained in a car accident are wise to carry sufficient insurance. Saving a few dollars on car insurance premiums by cutting coverage limits is not prudent because an expensive accident can cause financial hardship.
The best approach to finding affordable car insurance rates is to select the appropriate coverage levels and compare discounts offered by various reputable insurance companies. Get started now by entering in your ZIP code and receive a FREE car insurance quote comparison!
Categories of Auto Insurance Discounts
Automobile insurers offer discounts to encourage drivers to sign up with the company and embrace risk-reducing driving behaviors. Claims made throughout the year cost the insurance companies money. Avoiding claims adds to the company’s profit margin, which is why attracting good drivers is important to every insurance company.
Insurance shoppers will find quotes from companies that are attempting to build a strong customer base through introductory rates that last for six months. At the end of the introductory period, these rates return to market rates that are competitive with other companies.
The driver profile is the most influential factor on the annual insurance premium charged by the insurance company. Driver attributes are factored heavily in the perceived risk of loss calculations that determine the rates for each driver class. An insurance company cannot target individuals to pay higher rates.
Accident statistics and actual repair costs are tracked closely. Costs associated with repairing and replacing vehicles are factors in calculating annual car insurance premiums. Certain vehicles are less expensive to insure than others are.
Insurance companies encourage policyholders to move other insurance policies to the same company that carries the auto insurance. Discounts offered by each insurance company will be creative and unique to draw customers from the vast marketplace.
The discounts associated with various groups are the most overlooked discounts in the insurance industry. Obscure groups including fraternities, credit card holders, credit union members and those in certain professions receive discounts for choosing the right car insurance provider.
Driver-Related Auto Insurance Discounts
Behaviors in other areas of life are factors in the auto insurance industry’s perception of risk of loss. Drivers are not aware of the ways that trouble in another area of life can influence the annual car insurance premium paid. Wise shoppers know that substantial auto insurance discounts are offered to those with the following positive attributes.
A driving record that is free from moving violations and accidents will be rewarded. One moving violation can be costly when the insurance policy comes up for renewal. Switching auto insurance companies will not erase the impact of the traffic ticket on the annual premium.
Auto insurance is one place where youth is not rewarded. Experienced drivers are rewarded for infrequent claims and long, clean driving records. Each state sets an upper age limit on the mature driver discount, usually 80 or 85 years. Stellar school performance is associated with responsible driving behaviors.
Statistics have proven the correlation between excellent student performance and lower occurrence of car accidents and moving violations. An established credit history of proven responsibility has been tied to responsible driving habits. High credit ratings earn discounts from car insurance companies. Advanced driving courses, including defensive driving and senior driving classes, reduce the risk of accidents.
Insurance companies will offer discounts of 30 percent or more to the driver who completes these courses. Drivers should contact the insurance company for a list of approved courses.
Vehicle-Related Auto Insurance Discounts
Expensive vehicles will cost more to repair or replace. The auto insurance industry tracks the accident statistics and repair costs that are incurred throughout the United States every year. Auto insurance rates are based on the vehicle attributes.
Every vehicle type is evaluated for its performance in various types of crashes. Actual accidents provide valuable information to the automakers and insurance industry. Modifications are made each year to improve the subsequent models.
Vehicles with air bags, anti-lock brakes and other safety features installed by the manufacturer protect drivers from injuries in crashes. The VIN is used to assess the features present on the vehicle that is being underwritten. Automobile alarms, locked ignitions and steering wheel locks are theft deterrents that lower vandalism and theft claims.
Auto insurance companies will offer discounts to drivers willing to install these devices. Vehicles that are driven infrequently are less likely to be involved in crashes. Insurance companies offer discounts for cars that are driven less than a certain number of miles, usually 5,000 miles in a calendar year.
Insurer-Related Auto Insurance Discounts
Insurance companies encourage certain types of policyholder loyalty by offering discounts that are unique to the company. Insurance shoppers must ask for these discounts prior to choosing the insurance company. Each discount might seem minimal, but together the discounts add up to big savings.
Homeowners, life and auto insurance policies administered by the same insurance company will yield premium discounts. Insurance companies grow faster through this discount than any of the others. Drivers willing to sign up with another insurance company before their existing insurance policy expires can earn a discount from the new company.
Payment of the entire annual premium at the beginning of the period benefits the insurance company. Lower administrative costs allow the insurance company to offer a discount to policyholders who pay once each year. Insurance premiums that are paid automatically lower the administrative costs on a policy, which creates a discount for the policyholder.
Factors That Influence Rates
Drivers need to know that certain factors will raise the rates on a car insurance policy. Drivers can influence some of these factors, but others are a fact of life. Densely populated areas experience higher accident and vandalism incidents that rural areas.
Car insurance companies charge city dwellers higher insurance rates. Vandalism, theft and other types of claims related to crime will cost the insurance company money. High crime areas require higher car insurance premiums to cover these costs. Car accidents occur more often in certain intersections and parts of a given city. People who live in these areas will pay higher car insurance rates.
High labor and parts costs raise the insurance rates paid by people who live in certain parts of the country.
Insurance is designed to mitigate loss. Savvy insurance shoppers will look for acceptable coverage and ask for every possible discount from the auto insurance companies. Detailed notes will be essential for tracking the best insurer for the driver’s personal situation. Use our FREE car insurance search tool by putting in your ZIP code!