The Census Bureau indicates that roughly 8 percent of drivers were involved in an accident during the most recently reported year, resulting in over 5 million police reported car crashes. Often, car accidents are complicated. Did they really have the right of way? Whose fault is it? The auto insurance company is a third party to enter the picture, act on your behalf, and aid in the determination of any monetary payments.
An absolute necessity, car insurance can get expensive. An Insure.com report states that the average annual car insurance premium ranges from $926 for residents of Ohio to $2,551 for Michigan residents, with the average premiums in other states falling in between that range. Location plays a large role in how much you pay for auto insurance. Other factors, such as age, marital status, and driving record all impact how much you have to come out of pocket for car insurance. Also, good credit and a clean driving record will generally lead to a lower premium. You may be surprised, however, by some of the factors that play into the determination of your insurance cost.
1. Payment — Up Front and Paperless Discounts
When you pay your entire premium up front, you save a substantial amount of money. According to a publication by Cars Direct, insurance companies add on fees of up to $10 per month when you make monthly payments on your policy, which can add up to $120 per year. Also, some providers will offer additional discounts when you opt for paperless billing and pay your bill through electronic funds transfer.
2. Members-Only Discounts
If you are active duty or retired military, you are generally eligible to receive a discount. Membership in certain alumni associations, employee programs, and professional associations, honors societies, and other organizations may also render you eligible to receive auto insurance discounts. The discount you receive depends on your organization and your provider. Members of the University of Alaska Fairbanks alumni association, for instance, receive an 8 percent discount on Geico auto insurance.
3. Discounts for Doubling Up
When you purchase two or more types of insurance from the same company, you can often receive a discount. When you obtain homeowner’s insurance and auto insurance from the same provider, the provider may offer you a percentage figure discount. Nationwide, for instance, states that it offers a discount of up to 25 percent for multi-policy. Your provider may also opt to offer a discount in the form of a whole dollar amount.
4. Vehicle-Related Discounts
If you have an anti-theft device, such as an alarm system installed in your vehicle, this can generally save you around 5 percent off of your premium depending on your provider. Safety features — such as anti-lock brakes and airbags — are also a money saver when shopping for auto insurance.
5. Lifestyle Discounts
The amount of time you spend driving has a significant impact on your insurance premium. Total mileage and insurance premium cost are directly correlated. If a life event, such as a career change, causes a reduction in your mileage, it’s wise to report that change to your provider so that it can adjust your premium accordingly. The type of work you do may affect your insurance cost as well.
According to a publication by DMV.org, scientists, pilots, actors, and artists generally have lower auto insurance premiums. On the other hand, real estate brokers, business owners, doctors, and attorneys are among the occupations that generally pay higher rates. For students or parents of students, educational achievement is a contributing factor in determining auto premiums and discounts. A publication by Autos.com reports that a student up to the age of 25 with at least a “B” average can receive up to a 15 percent discount on auto insurance premiums.