One of the most common questions every insurer in the United States is most certainly: Why is my auto insurance so expensive? We get it, it’s illegal to drive without car insurance but some policies can be crippling to someone on a tight budget. That’s why we decided to write this article detailing some of the most common factors that cause auto-insurance premiums to skyrocket. By understanding how these policies are priced, individuals can do a better job at taking matters into their own hands and getting a car insurance policy that provides the coverage they need, at a price they can afford.
Type of Car
If you are in the market for a new vehicle, consider how the type of vehicle you purchase will affect your auto-insurance costs. Smaller, sportier vehicles tend to cost more to insure not because of the vehicle itself, but because of the way most people drive them. Sportier cars tend to be driven much more aggressively, which makes accidents more likely. As a result, small sporty cars tend to be much more expensive to insure than something like an SUV.
Value of Car
A more expensive vehicle is more expensive to repair, which means they are more expensive to insure. The MSRP value of a car is a major factor considered by insurers when deciding what to charge for a car-insurance premium. If you’re worried about your monthly insurance costs, don’t buy something like a BMW, look more towards affordable cars like a Honda or something with a lower MSRP value.
A major factor that most people have no idea contributes to their auto-insurance costs is actually the size of their engine. That’s right, more horsepower actually translates to more money paid towards insurance each month.
The logic here isn’t that difficult to follow. An engine with more horsepower makes for a faster vehicle. People who own those vehicles tend to drive faster than those with smaller engines. As a result, those same people find themselves at a higher risk of getting into an accident. Insurers take on more risk by offering coverage to those drivers, so the insurance premium is higher to reflect that increased risk.
According to the Insurance Information Institute, about a third of comprehensive auto insurance premiums go to paying out auto-theft claims. That’s why so many insurers actually charge more for a car if it’s a model that is popular among thieves. Be sure to check the most recent list of vehicle models that are stolen the most often. While many of these cars may have a cheap MSRP, you’ll be paying the difference in your premiums.
Where you live and where you drive your vehicle the most often also play a big part in your monthly car insurance costs. If you live in a city where accidents are more prevalent, you are going to have a higher premium than someone who lives in a more rural environment.
It’s a big game of give and take when it comes to balancing your car insurance coverage with your monthly costs. Knowing what factors contribute to your auto-insurance costs will help you make more informed decisions when it comes to purchasing a policy and purchasing a car.
Of course, if you plan on driving in the U.S. you need a car insurance policy. There is just no way around it. If you need a new policy, or want to learn more about how you can lower your monthly costs, reach out to TGS Insurance at www.tgsinsurance.com.