Insurance Rates Franklin TN

How Are Auto Insurance Rates Calculated?

Everyone wants lower auto insurance rates, and for a good reason – there’s a lot of money involved in car ownership, and attempting to cut down on your losses is only natural. But when it comes to insurance, it doesn’t pay to be cheap. The protection you give up for the sake of smaller premiums can translate into thousands of dollars of out-of-pocket expenses down the line. It’s best to be strategic about your insurance, and the first step toward lowering your costs is understanding what goes into them. Keep reading to determine how auto insurance rates are calculated and what you can do to reduce them without missing out on essential coverage.

What Goes Into Car Insurance Premiums

An insurance premium is a payment you make to your carrier in order to be issued an insurance policy. Auto insurance premiums are normally paid monthly, semi-annually, or annually. Numerous factors influence these costs. While many, such as inflation or regulatory changes, are beyond your control, others, such as your driving record and the type of car you own, concern you directly and can be easily adjusted.

Top Factors that Influence Car Insurance Premiums

1. Your Age and Gender

It’s no surprise that younger drivers are subjected to higher insurance rates. Their lack of experience behind the wheel makes them statistically more likely to be involved in incidents that require insurance assistance. As a result, carriers try to balance the risk with higher premiums.

In terms of gender, women are statistically less likely to be involved in accidents, so they may enjoy slightly smaller insurance premiums.

2. Your Driving History

I’ve already discussed this in our previous post about auto insurance requirements in Tennessee. Still, it doesn’t hurt to say it again: high-risk drivers have higher insurance costs and, in some instances, may find it difficult to purchase insurance altogether. While parking violations may not cause your premiums to skyrocket, speeding tickets and collisions will, so make sure to practice safe driving and think twice before adding high-risk drivers to your policy.

3. The Type of Car You Drive

The type of car you drive affects auto insurance rates

According to AAA, the best car to buy when it comes to insurance costs is a small SUV. An expensive car comes with higher insurance premiums, so let that sink in before impulse buying a two-door, 350 HP convertible. Factors that influence auto insurance rates include the cost of repairs and the likelihood of theft, as well as the vehicle’s safety equipment. Consider installing an anti-theft system to lower car insurance premiums.

4. Your Insurance Coverage

The amount of coverage you purchase will naturally influence your premiums, but that doesn’t mean you should opt for the bare minimum and pass on collision and comprehensive coverage. According to the National Association of Insurance Commissioners, the average cost of car insurance in Tennessee stands at approx. $960 a year (as of 2017). Skipping collision and comprehensive coverage may halve it, but that will subject you to the risk of having to pay thousands of dollars should you be unlucky enough to be involved in a car crash.

5. Location and Driving Habits

Mileage matters. Driving frequently increases the risk of accidents, particularly if you live in a densely populated area. Using your car for leisure instead of work will help you save money on your premiums, so maybe use public transit for your commute. It’s also worth mentioning that if you’re looking to buy a second car, you can expect lower rates, as your primary vehicle will carry the bulk of the premium load.

6. Your Credit and Insurance History

Poor credit history can impact your auto insurance rates, as can a recent lapse in insurance coverage. Carriers consider these characteristics risky, so they avoid giving their best rates to customers who raise what they deem to be red flags.

Tips for Lowering Your Car Insurance Premiums

Williams Auto Insurance Franklin TN

Now that you know what goes into your rates, you’re better equipped to lower them. In addition to the small tweaks in behavior that I already mentioned throughout the article, such as buying a safe car, keeping your mileage in check, and practicing safe driving, you can also take into account the following:

  • Compare quotes. Research goes a long way, and you can use a variety of online tools to compare car insurance quotes. You can check out The Zebra for their comparison service. Or, better yet, get in touch with an insurance broker – at Williams we go above and beyond to equip our customers with the best auto insurance offers, so drop us a line if you’d like us to help out.
  • Bundle your insurance policies. An excellent way to lower your costs is to opt for a bundled insurance package that includes auto and homeowner coverage. This will allow you to enjoy a hefty discount while benefiting from broader protection.
  • Consider telematics technology. Some companies offer usage-based insurance options that correlate costs with real-time driver behavior. Simply put, telematics technology follows how you drive, brake, and accelerate and assesses risks on an ongoing basis, adjusting your premiums accordingly. The safer you drive, the lower your premiums. Make sure to ask your insurance broker about telematics next time you get in touch.

I hope this overview helped you better understand how auto insurance rates are calculated and how your behavior impacts these rates. Let me know if you still have questions about the subject, and I’ll make sure to get back to you with more information.

Until next time!