Car insurance rates are fixed based on very complex statistical and mathematical concepts, it might as well be rocket science to average policyholders. With the increasing sophistication of modern computer systems, more and more individual factors are being used by insurers to compute auto insurance quotes.
Causes of the rise and fall of car insurance rates
Insurance rates are based on factors surrounding each individual application; therefore no two are exactly alike. The basis of computation falls under the rarefied field of actuarial science, buried in the calculus are a set of simple factors that determine whether you would get higher or cheaper auto insurance premiums.
- Driver-dependent factors
These factors are based on the individual characteristics of the driver; mainly their driving habits, so to speak. This includes their driving history, which for the insurer is a gauge of the probability that a driver could be in an accident (and thus make a claim). In short, drivers with a good road safety record (no traffic violations, citations, accidents, or those with advanced driver’s education) will be more economical to insure.
There are also other factors investigated by insurers which are not directly connected to the driving history of the insured. But they are still checked by the company to determine the risk of signing up such driver. These include the age of the applicant, marital status, credit score, educational background, employment status, and where he/she lives.
- Car-dependent factors
Included in this category is the safety performance of the car, its age, market value (included aftermarket gadgets and customizations done on the car), mileage, and even whether or not the car is using alternative fuel (which is subsidized by some states or is eligible for discounts). Generally speaking, the higher the safety rating of the car and the less time it is used on the road, the cheaper are the insurance premiums.
- Location-dependent factors
The price of auto insurance premiums can also be affected by factors inherent in the area where the car is used. Examples are places with a high risk of extreme weather events, or neighborhoods with a high crime rate. Both of these could mean paying a higher premium. Also, cars that are parked out in the street will be charged higher than those kept in a garage.
Which of these factors is decisive in getting cheaper auto insurance?
The first factor above is within the driver’s control, although marital status, age, credit score, and other demographic indicators cannot be changed very easily and quickly. Meanwhile, the car-dependent factor can also be at some degree controlled (such as buying a new or more ‘insurance-friendly’ car). Factors arising from the area are more difficult to change.
Of all these, the most important factor that you can control is your driving record. This is actually the main factor that determines whether or not you get cheaper insurance quotes.
If you manage to have a clean slate (no DUIs, citations, speeding tickets, traffic accidents, or any other violations), then you could be looking at cheaper car insurance premiums.
So, does getting parking tickets affect my insurance premiums?
The quick answer is NO. Tickets are issued for parking violations, which of course only happen when you park your car. Parked vehicles are not liable for any accidents (only moving vehicles are), so the fault falls at the moving car even if your car is parked illegally.
To make sure you get cheaper car insurance premiums, the main rule is still to drive safely. As the cliché goes, it is better to be safe than sorry.