Even though it's pretty easy to get car insurance online these days—you can compare quotes with the click of a button and pay by credit card for instant coverage—the high cost of insurance is still a problem. Even though having car insurance is both required by law and a good idea, it's still annoying to have to pay what seems like an outrageous amount, and most of us would jump at the chance to lower the bill.
To do this, we need to know what factors insurance companies use to decide how much our premiums will be.
Your driving record may be the most important factor in how much your premium costs. If you've been in accidents before, the insurance company will see you as a higher risk and charge you more. Worse, if you've been convicted of a driving offence like speeding or driving under the influence, your insurance will cost even more, especially if your licence was taken away.
On the plus side, if you don't have any bad things in your history, like accidents, your insurance will go down over time as you build up a "no claims" discount.
The type of car you want to insure is the second most important thing. Of course, it will cost more to replace a more expensive car, so the insurance will also be more expensive. This isn't the whole story though. Other factors like the size of the engine, how easy it is to find cheap parts, and how hard it is to fix will also play a role. Lastly, some car models are known to be easier to break into or steal than others. Insurance companies know this and will adjust their quotes to reflect it.
The price you pay for insurance will also depend on how you use your car. If you don't drive much and don't put a lot of miles on your car each year, your premiums can be lower because you spend less time on the road and are less likely to need to make a claim. People who live in cities may also have to pay more than people who live in quieter areas.
Where you park your car is also important. If you park in a safe place, preferably one that keeps your car out of sight and under cover, your risk is lower and your premiums will be lower, too. Cars that are always parked on the side of the road are more likely to be stolen or hit, so their insurance will be more expensive.
One last thing to talk about is how appealing your car is to thieves, and I don't just mean how desirable it is. A cheap car with little or no security is more likely to be stolen than an expensive one with a good security system like an alarm and etched windows, etc. This is because criminals will have to work harder to get what they want from the expensive car. Also, potential thieves will be more interested in a car with a lot of gadgets, like an expensive stereo system or satellite navigation.
So, even though car insurance is expensive, it's not always as simple as it seems. If you look at what insurers want in a "perfect" customer, you may be able to lower your premiums.
