Massachusetts first mandated auto insurance in 1926, and by 1970, approximately 48 states in the United States had mandated auto insurance for individuals and business owners. The mandates were enacted to protect the driver as well as those who get injured in an accident or get their property damaged.
Accidents caused by careless driving have long been a source of concern for Americans. In 2019, approximately 12.15 million vehicles were involved in car accidents, with passenger cars accounting for half of this total.
Auto insurance premiums vary greatly based on factors such as an individual’s age and gender. A 20-year-old male had to pay around 142 US dollars per month in 2022, while a woman of the same age had to pay 126 US dollars. Age, driving history, and a variety of other minor but significant factors all play a crucial role in determining auto insurance premiums. Given the high cost of healthcare and maintenance, such insurance premiums appear to be the only viable option for protecting oneself and others from financial harm.
Here are some important factors that influence auto insurance premiums:
- Driving record
According to the Insurance Information Institute, approximately 11,254 drivers were involved in accidents that occurred in 2021 as a result of fast driving, accounting for approximately 18.5% of total crashes. Approximately 4,600 people were driving recklessly. Reckless driving is one of the leading causes of an individual’s insurance premiums skyrocketing. Once the driving record has such a history, it is difficult to reduce the premiums to the average state level.
- Driving under the influence
According to III, more than 11.5% of accidents in 2021 occurred because the driver was under the influence of alcohol or narcotic substances. Whether due to alcohol, drugs, or medication, such reckless driving behavior can be extremely dangerous for both the driver and other passersby. Individuals have been denied auto insurance or had their policies revoked in some cases after being convicted of driving under the influence (DUI). In such cases, policies can be increased by up to 70%. This increase can raise premiums from $1,500 to $2,500, depending on the severity of the case and the insurance provider.
- Criminal cases
Offenses such as running a red light or speeding have little impact on insurance premiums if they are not a recurring occurrence. However, serious cases such as hit-and-run or the DUI cases can have a long-term impact on the record. Cases of felonies and repeating minor offenses can remain in history and raise premiums for a period ranging from 5 years to the entire driving course.
- Age and experience
Without considering the other factors, age and driving experience are two of the most important factors influencing insurance premiums. A young male, for example, will usually be charged differently from a young female. In addition, someone with less than 5 years of driving experience is more likely to make mistakes on the road. As a result, age and driving experience can have a significant impact on insurance premium rates.
When it comes to auto insurance premiums, an individual’s residence will be an important factor as well. Some states, such as Florida, Louisiana, Delaware, and Michigan, have the highest auto insurance premiums. The disparity between the national average and premiums in these states can range anywhere between $300 to $800.
- Credit history
Credit history is another important factor that can influence insurance premiums. If you have a low credit score, insurance companies may view you as a high-risk individual. This may not be the best practice to base auto premiums on, but some states and insurance companies can use this aspect to raise premiums by 47-33% across the country.
When a vehicle is used for commercial purposes, it is more likely to be worn out quickly and frequently. Because of regular maintenance requirements, such vehicle owners see an increase in auto insurance premiums. Commercial vehicles (bigger and heavier) may also cause more damage than passenger vehicles because collisions can be fatal. Another reason why usage is so important for deciding the auto insurance premiums is because vehicles are sometimes used to transport hazardous materials, which necessitates extra caution and can result in heavy damage. As a result, commercial vehicles will face higher premiums than passenger vehicles.
Many other factors, such as claims history, can contribute to an increase in auto insurance premiums. However, there are numerous tips that can help you save money on auto insurance, whether commercial or personal.
- Safe driving
Always practice safe driving habits. Do not rush to get on the road, and always drive responsibly. It is critical to avoid substances while driving in order to avoid suspension of insurance claims.
- The owner is the driver
If your car is not covered by group insurance, try to avoid lending it to others. If a family member is involved in an accident, the policy will not cover the damages.
- Proper insurance
Make sure you have enough insurance to cover all of your needs. Always get a risk assessment done so you are never underinsured.
Auto insurance is one of the most important aspects of risk management for any individual or business owner. If you need to renew your policy or are struggling with high insurance premiums, consider contacting Gonzalez Insurance for a thorough portfolio assessment. With our zero deductibles policy, we can offer customized policies that are perfect for your needs. Get in touch with us to learn more.