Tyron Jones

Car Insurance Expert
Updated: 1/2019

Tyron Jones is a car insurance expert who has operated within the auto insurance business for more than 10 years. 

Car insurance rates differ from state to state and from insurance company to insurance company. Estimating your auto insurance costs in your area requires knowledge of a number of factors that contribute to your rate. The good thing is that car insurance calculators can do the work for you and that’s just the job of providing you with a fair estimate. If you want to lower your insurance rates, you must take a look at the factors determining your insurance. Then consider options you have, and use the calculator and see how you can save money.

Your Insurance Options

First, let’s look at the types of auto insurance you can buy. There are many kinds of auto insurance out there, but only three kinds of auto insurance form the basis of the coverage. They are comprehensive, collision and liability.

Comprehensive Insurance

Comprehensive insurance covers everything in the event that you are in an accident. The coverage includes damage to both cars, property, all injured parties and it also covers you if a tree falls on your car.

Collision

Collision insurance is as close to normal insurance as you can get in that it covers everything affected by the accident, including injuries and property of both parties involved. If you hit a car, the collision will cover damage to everyone injured in the accident and the property damage to both vehicles.

Liability Insurance

Liability covers all the damage that you become liable for after a chargeable accident. That does not include your automobile, but it does cover injuries to anyone riding with you and to the other party, and to the other party’s property.

These types of insurance are the main categories of insurance, and they are priced according to their coverage, so comprehensive is the most expensive and liability is the least expensive. You can buy other insurance to complete your coverage, but you might want to do a little research and ascertain if you really need it.

If you just bought a new car and you took out a loan, the lending institution will probably insist that you buy comprehensive and pay for that length of coverage for the length of the loan. At the end of the loan period, you have the option to downgrade your insurance. Often, it’s overpriced compared to the value of your car at the end of the car loan period. If your car is worth only $6000, it’s hard to justify a car insurance policy that costs thousands of dollars a year.

On the other hand, if you downgrade your insurance to liability, your vehicle will be a complete loss if you get in a chargeable accident. The bottom line then is do you have the funds to replace the vehicle you are driving? If not, then you might want to at least pay for collision insurance so your vehicle is covered.

How to Estimate Auto Insurance Costs for Your Area

Risk Factors

To understand why so many factors go into estimating your car insurance you must appreciate that the insurance company’s premium is determined by generalizations they make about drivers. They make generalizations about the age of drivers, their neighborhood, their occupation, their income and their driving record. Even a person’s credit history affects how insurance companies calculate your insurance. Studies also indicate that occupation, and income level trump the driving records in many instances, and a perfect driving record means little to insurers.

Good and Bad Drivers

The risk the insurance companies assume is based on pools of people. Whenever somebody in your pool files a claim, it’s as though everybody filed a claim because everybody in the pool has to pay. This pay is reflected in the calculation of your insurance rate. If you never file a claim and you have never received payments from the insurance company then you have spent a lifetime paying for other peoples’ mistakes. That’s how insurance companies cover their risk. Good drivers pay for bad ones.

State Regulation

Every state regulates its insurance industry, and that factor also affects your insurance rates. On the whole, you pay more in California than you do in Minnesota because different states have different regulations. And each state varies on how much a factor can affect insurance rates too.

Beyond what the state allows as acceptable practices, the insurance companies charge different amounts for different factors. One insurance company differs from the other in how they charge drivers more or less.

What Factors?

All this adds up to your risk factors. Why do you pay more for car insurance? It’s your risk factors. This is where you can take the bull by the horns and lower your insurance rates. The way to understand your numbers is to compare them to your neighbor’s numbers. The place to start is to discover the average insurance premium a person in your state pays and what factors determine the price. You can shop around and buy insurance you want by knowing your risk factors.

When you start calculating your insurance cost, you must start with a mean. If you know the risk factors going into your insurance rate, you can shop more effectively for insurance. There are factors you can manipulate to lower your premium. Increases or decreases to your insurance occur because of these factors:

Age

Age is important because young people are a high-risk category. At the other end of the scale, elderly people are also a risk group, but they don’t suffer as significant a rate hike. The insurance rates reflect statistics that indicate young drivers and elderly drivers get into more accidents. Between the ages of 16 and twenty- years, the driver is at significant risk to get into an accident. Young drivers won’t see a rate decrease until age 25. You pay a much higher rate until that age than you do at the other end of the scale, but the rates for the elderly start to rise after age 55. Because both ends of the age chronology increase, the inexperience of the younger leads to higher costs. At the elderly end, some ignorant insurance buyers may not even notice the rate hike, or they may write it off to inflation.

Where You Live Matters

It stands to reason that the more cars and the greater congestion in your neighborhood might affect insurance rates, and where you live is a major factor in auto insurance calculations. Densely populated areas create risky environs to drive in, and if you live there, your rates will increase. The more congestion and traffic, the more likely you’ll be involved in an auto accident. Since car theft is a major source of claims filed with insurance companies, a densely populated area where more cars are stolen also factors in the price of the premium.

How to Estimate Auto Insurance Costs for Your Area

The Make and Model of Car

When you witness the crash test dummy in a safely rated vehicle, you can see how collisions work. If you own a model with an award from of the National Transportation Safety people, you should get a break from your insurance company. Much of your insurance coverage goes to paying for injuries in a car collision. If your car is invincible, chances are good you’ll pay less. If you like driving a luxury automobile, you may pay more insurance because the cost of repair is higher. You may even pay more for an ordinary foreign car because foreign parts can be more expensive. If your car is a desirable make or model in the mind of car thieves, and you don’t do anything special to protect it, you are risky. Since young people like cars with a lot of power, racing stripes, and attractive makes and models, their insurance goes up, and they’re already being penalized for their youth.

Are You Married, Divorced or Widowed?

Married people enjoy a cheaper rate because single people are higher risk drivers. It‘s not clear whether this is because traditionally, younger people also tend to be single, but it is how it is. What’s even more bizarre is that divorced and widowed people also suffer rate hikes. Is this because they’re grouped together with single young people, or do dotty old widows really get into car wrecks more?

You may have heard of people getting a break on their car insurance because they combined the coverage of their home with their auto insurance. So, it goes with married couples who combine the cost of insuring more than one automobile in a family policy. The end result is a lower rate. Married people have it much better than single people.

Your Driving Record

Perhaps the only true measure of the driving riskiness of an arbitrarily chosen person is their driving record. Insurance companies look at that closely and assign levels of riskiness dependent on how many accidents can be found and how many moving violations have been issued. A DUI is taken very seriously by an insurance company, and you’re immediately put in a high-risk group if convicted. It’s a good idea to check your driving record from time to time to make sure there is nothing untrue there. You should get an untrue statement fixed before you contact an insurance company about coverage.

Your Annual Mileage and Daily Drive Time

Have you ever wondered why an insurance agent inquires about the number of miles you drive annually, and what your daily driving routine is? The more miles you drive every year, the greater a risk you are to get in an accident. In addition, the daily driving habits tell an insurance agent whether you will be in congested traffic every day.

Your Credit History

A poor credit history really has no logical connection to your driving record, but the insurance industry may increase your insurance premium by as much as 70 percent for a low credit score. That’s a hefty increase and it may be why some states have made the practice illegal.

As you can see, the nothing about auto insurance is What-you-see-is-what-you-get, and nobody would blame you if you didn’t understand the hidden costs of auto insurance. The best thing to do is use an insurance buying service that can get you the best rate. You can estimate what a policy will cost and buy auto insurance that you feel comfortable with.