Many of us agonize over those monthly car insurance payments, and often think about what we could do with that money if we weren’t burdened with the debt. What we often forget about, and I know many people who fail to budget for it, is the cost to insure to our cars. I was one of those people who was constantly trying to figure out how to lower my car insurance premium, but there are so many statistics and pieces of data that go into calculating your insurance, it can often be difficult.
Age is one of the largest factors in determining your insurance premium. It’s probably no secret that one of the biggest rate drops comes at age 25. Statistically speaking, drivers younger than 25 are at a much higher risk of getting into a car accident. This is why virtually no car company will insure to those under 25, which made it quite difficult when I used to travel for work when I was younger. Another factor that plays into car insurance is your home address! Statistically, some cities have higher traffic congestion, and downtown areas often come at a higher expense than suburban areas. I live in the metro Detroit area, and I know that car insurance premiums tend to be significantly higher in Flint and Detroit where car theft is more common. The type and cost of the vehicle you drive can also play into your insurance premium. Driving a brand new BMW will cost considerably more than, say, a three year old Ford Focus. Not that either car is necessarily better than the other, but one costs quite a bit more to repair should you have an accident. Last, but certainly not least, is your driving record. Having more accidents, moving violations, and especially alcohol related incidents will have a severe impact on the rate your receive. As a personal finance blogger I would be remiss if I didn’t mention that your credit score can also be factored into your car insurance premium. The state of Michigan used to allow this as a calculating factor, but have since ruled against it. Though I know there are many other states out there that have continued allowing insurance companies to use this in determining your personal rate.
I don’t think telling you to “shop around” is worthy of an entire article posting. I wanted to let you know about a very specific program that I think is actually quite beneficial, the Snapshot progam by Progressive. This is in now way a sponsored post, nor am I receiving any kickback for writing this article. I just happen to use Progressive, and have been a loyal customer for about 5 years now. The Snapshot program is actually quite easy if you are already a Progressive customer, you simply email them for your Snapshot device, and then plug the device into your car. Ultimately the device serves to monitor your driving habits, such as your usage. How often and how many miles you drive is a big part of how much you pay, and insurance companies can’t just take your word for it. I only drive 10 miles each way to work, but I still need a car to get there, and by monitoring how few miles I drive each day earns me a cheaper rate than the average person. I know there are people out there concerned with an adverse effect like raising your rate, but this program is actually an incentive that will ONLY lower your premium. They will monitor your driving for the first 30 days and automatically provide you with a lower adjusted rate if you qualify, and then after a full six months they may further lower premiums. It’s important for consumers to understand that this is supposed to be a promotional program, they are not data mining, nor are they trying to punish drivers that travel execessively, as your rate will not ever go up based on the device. They claim that your insurance premium can be lowered by as much as 30%, though the company has disclosed that the average driver experiences a decrease of between 10 % to 15%. I’d sincerely love one of my readers to get it a try and leave an unbiased review on my site.