Factors That Affect Your Auto Insurance Rates

Your auto insurance rates aren’t the same as your neighbor’s rates — even if you drive the same kind of car. Insurers consider a number of rating factors, many of which are unique to us. Your vehicle does play a big role, however. Both the safety features and the cost of repair come into play. Even vehicle theft rates play a role.

Your vehicle

The myth about red cars costing more to insure has been busted. But the type of car you drive affects your rates — even if the color doesn’t matter.

Some cars cost more to repair. Some tend to cause more damage in accidents. Some have safety features that can earn extra discounts. If you’re considering buying a new set of wheels, check with your agent or broker before signing the bottom line. The new car might have lower insurance costs — or the cost of insurance might be higher.

Where you drive (and how much)

Areas with higher congestion can have increased accident rates. Higher risks often lead to higher rates overall. Similarly, how much you drive can affect rates. On average, people drive about 15,000 to 20,000 kilometers per year. However, if you drive significantly less or more than the average, your rates can be affected. This isn’t always bad news. Many insurers offer a discount for documented low-mileage use.

The driver

Your driving history plays a role, even if you’ve never had an accident. Safer drivers, as measured by both accident history and moving violations, tend to pay less for auto insurance. Yes, that speeding ticket can affect your rates. Slowing down a bit can save you money.

Statistics can play a role as well. For example, statistically speaking, women have fewer accidents than men. In many cases, the reduced risk results in lower rates for women. However, gender is just one of many rating factors used by insurers.

Conversely, younger drivers tend to have more accidents than older generations. That’s to be expected. Few of us were born as great drivers. Instead, we learn what to watch out for as we gain more experience. Younger drivers often pay more for insurance.

The coverage you choose

The coverage choices you make drive your rates as well. However, it’s better to choose the coverage you need rather than cut coverage to save a few dollars. Talk to your broker to review your coverage. Many times, you can make adjustments to better customize your coverage without cutting corners. There may even be some discounts available, such as defensive driving courses, low mileage discounts, or others.

Reasons to Consider an Umbrella Policy

Many of us remember getting wet in the (unexpected) rain while waiting for the school bus. A large umbrella would have kept us dry and could even protect more than one person from the weather. An umbrella insurance policy works in a similar way, adding coverage for underlying policies.

Life is risky. This is no surprise to us, but the risk in everyday activities isn’t always apparent, especially potential liability risks. What if someone gets hurt? Quick action can help ensure they get medical care, but it may not stop a lawsuit. Liability refers to our financial responsibility for injuries caused to others. These injuries can be physical, or they can be reputational. Umbrella policies specifically target liability risk while expanding the coverage of the underlying policies to cover new risks.

A standard home insurance policy offers liability coverage. However, this coverage has limits that can leave gaps in coverage. As one example, you might have a coverage limit $1,000,000. What if you have loss of $2,000,000? A liability that exceeds your coverage limit can force the sale of assets, drain your savings, or leave a debt that can take years to pay off. An umbrella policy expands the coverage limits of the underlying policy. So, $1,000,000 in liability coverage paired with a $2 million umbrella policy gives you $3million in coverage. Your umbrella policy expands your auto liability coverage as well.

Also, a standard home insurance policy does not cover reputational harm. With the ubiquity of social media apps and websites, it is easier than you might think to cause reputational harm to someone through libel, a written defamatory statement. Even if unintentional, the risk is always there. An umbrella policy brings new coverage for libel and slander risks in many cases.

Your liability coverage can travel with you everywhere you go. However, your coverage cannot cover business risks and intentional harm may not be covered. If you have business risks, speak with your agent or broker about a business policy.

Reasons to consider an umbrella policy:

  • You own a home

  • You have retirement savings

  • You own other assets

  • You entertain guests at your home

  • You have a young driver

  • You kids’ friends sleep over at your home

  • You host children’s parties

  • You carpool children to sports or other activities

  • Your teenager babysits

  • You volunteer

  • You are on the board of a condominium

  • You or your family use social media

  • You have pets

  • You have a pool

  • And many other reasons

For most households, one or more of these reasons to consider an umbrella policy looks familiar. Fortunately, umbrella coverage is often one of the most affordable ways to protect your household. To learn more, reach out to your agent or broker or contact us to discuss the best ways to safeguard your family.

Have any questions? We can help.

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