Understanding Why Car Insurance Premiums Are Very Costly

Understanding Why Car Insurance Premiums Are Very Costly

Car insurance and its importance: –

It is the end of the month and you are running low on your cash. Bad luck strikes at such a time as your unruly neighbor bumps into your nicely parked car causing you unanticipated expense. Just then you realize the car insurance premiums that you have been paying are worth it.

Car insurance premiums might seem to be very costly. It is so for a variety of reasons. Let us understand why car insurance premiums are very costly.

Reasons for soaring car insurance premiums: –

There are many factors that contribute to rising car insurance premium costs. Here are a few of them.

  • Demographic factors: –

Demographic factors have a great impact on car insurance premiums. Your age determines the rate that you will be charged. Young people who are riskier to insure are charged a higher rate as compared to a middle-aged group of drivers who are generally more stable and less risky. Especially young males are risky and are charged a higher insurance rate.

The geographic region where you reside also impacts the car insurance premium. Neighborhoods that are characterized by a great amount of traffic congestion or vehicle theft and vandalism are likely to be charged a higher premium. This is the reason why you will find a high insurance rate in urban areas where there is great traffic compared to smaller towns and neighborhoods.

  • Driving record and insurance claims history: –

People who have a good driving history are considered to be safe customers by insurance companies. Companies lookout for customers who obey traffic laws and do not earn tickets for violating the rules. If a person consequently drives carefully he is likely to get into less trouble and file fewer claims. Companies prefer customers who have a history of filing lesser claims. Such customers are charged lower premiums.

  • Credit score: –

A customer who has a good credit rating is likely to be charged a lower premium compared to one who has a poor credit rating. A credit score has a great impact on the premium rate.

  • Car related factors: –

The kind of car you drive also determines the rate you will be charged. If you have a brand new sports car who has a high maintenance cost it is likely you will be charged a high premium. On the other hand, if you drive a second-hand robust SUV your premium rate is likely to be lower.

  • Choice of coverage: –

Car insurance premiums are very costly in Texas and are mandatory like in most of the states in the US. There is a minimum level of coverage you must have before you drive around in Texas. For bodily injury liability, you must have $30,000 per person and $60,000 per accident as a minimum amount of coverage. Usually, this level of coverage is not sufficient to ensure that you reap benefits out of your insurance policy.

Hence you need greater and more coverage options such as comprehensive and collision coverage. However, going for these options means you have to pay higher premiums.

How to manage the cost of car insurance premiums: –

Even though car insurance premiums are very costly, you cannot just escape this expense. However, you need to know how to manage this expense smartly. By driving carefully you can maintain a good driving record and be favorable for the insurance company.

Moreover, keeping a low maintenance second-hand vehicle will also help you negotiate a better rate with the car insurance leads company. Paying your bills and liabilities on time shall help you get a better credit rating and reduce the risk associated with insuring your vehicle from

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