It’s inevitable, your auto insurance premium will increase over time. Like it or not, there is nothing we can do to stop it.
I could stop writing here and tell you your premium increase is due to a rate increase.
Although that may be partially true, there is more that behind the scenes that drives your auto insurance premium.
Let’s pull back the curtain and look at 10 ingredients that impact auto insurance premiums.
Chocolate Chip Cookies and Your Auto Insurance
What if I told you the ingredients in a chocolate chip cookie and your auto insurance have a few things in common?
Everyone has a different chocolate chip cookie recipe. Your Mom probably has a secret ingredient. However, there are some common ingredients to a chocolate chip cookie. Of course, chocolate chips being the main component.
Auto insurance companies are similar. They share some of the same ingredients to come up with your premium. For instance, every insurance company is going to look at your driving history…do you have any accidents and/or tickets?
Yet each insurance company has their own unique ingredients they use to determine your premium.
Let’s look at some of the common ingredients auto insurance companies use to determine your premium.
Age
The first ingredient we have is age. Like it or not, age does impact your auto insurance premiums in Missouri.
If you have a child who is getting ready to turn 16, brace yourself. It will be expensive (especially if you have a boy).
Most insurance companies view 25 years of age and younger as a youthful driver. Statistically, youthful drivers have less driving experience leading to more accidents.
On the other end of the spectrum, individuals 75 years and older will start to see their auto insurance premium increase due to age. Unfortunately, as you and I age our health starts to deteriorate. Our eye sight isn’t as good as it used to be. Our reflexes aren’t as quick.
Statistically, as we age, accidents increase. So do premiums.
Driving History
The second most common ingredient found in your auto insurance is driving history. Do you have any accidents and/or tickets.
Most companies will look at the prior 3 – 5 years driving history.
There is a common myth that if you hit a deer or experience hail damage (i.e. a Comprehensive claim) that it won’t negatively impact your auto insurance premium. The reality is, if you encounter several Comprehensive claims in a short amount of time, it will affect your auto premiums.
Where Do You Live?
Do you live in rural Worth County, Missouri or in the heart of Kansas City, Missouri?
Generally the greater the population, the more dense the traffic, therefore higher insurance premiums.
With that being said, if you live in a rural community and choose to have Comprehensive Coverage (i.e. coverage for hail, theft, fire, vandalism, hit an animal) it may be more expensive in these areas due to the number of animal claims. We see this specifically in Missouri.
What Do You Drive?
Do you drive a newer Maserati or a hand-me-down Ford?
Newer autos have all kinds of bells and whistles today…back up cameras, blind spot detection, GPS, autonomous vehicles.
Technology is great, but it has increased the cost to repair/replace our vehicles.
The other question I hear is, “my vehicle is getting older, why does my auto insurance premium keep increasing?“
Your vehicle may be getting older, but it’s not getting any cheaper to repair at the body shop.
Gender
I’m not being sexiest when I tell you, male’s are more expensive to insure than females when it comes to your auto insurance.
Guys tend to impersonate Mario Andretti more than females. Especially youthful males.
Marital Status
Your marital status is an ingredient in your auto insurance. I wouldn’t recommend getting married just to have a better auto insurance premium.
Do You Currently Have Auto Insurance?
If you call me tomorrow and ask to buy auto insurance, yet you haven’t carried auto insurance the last 8 months, your auto premiums will be higher than the person who has consistently carried auto insurance over the last 10 years.
Liability Limits
I’m referring to your Bodily Injury/Property Damage Liability Limits.
If you cause an accident that injures someone or causes property damage, this is the coverage that will pay the damages.
If you carry low liability limits you will have less favorable premiums versus the person who carries higher liability limits.
Loyalty
How long have you been with your current company? One year or 15?
Some insurance companies will provide better rates to the person who has been with them longer than the newbie.
How Do You Use Your Auto?
Do you use your auto to go to work, pick up your kids, a trip to the grocery store? Or do you run a lawn care business? Offer Uber rides? Do you make money with your vehicle?
How you use your automobile will impact your premiums. More importantly, it affects your coverage.
Depending on how you use your vehicle, you may or may not have the coverage you think you have.
Final Thoughts
There are more drivers on the road today and more miles being driven than ever before. Accidents will happen.
Furthermore, the number of distracted drivers on the road is more than ever. I’m not sure why anyone would buy a billboard. Who looks at billboards…? Everyone is texting while they’re driving.
This is 10 ingredients that impact auto insurance. Keep in mind these are some of the more common ingredients that drive premiums. Like I said at the beginning, the ingredients may vary with each insurance company, but this will give you a starting point of understanding your premiums.
Music Credit: Brock Berrigan, Split Decision
