When Does Your Car Insurance Go Down?
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Your car insurance rates are determined by a number of factors, such as your age, driving history and the type of car you have, all of which are designed to tell the insurance company how much of a risk you are. The higher the risk, the higher the rates. Your car insurance will usually start to drop when you turn 19 with a more substantial decrease when you hit 25. If you want to lower rates, try driving safely, improving your credit and/or take advantage of discounts and safe-driving programs offered by insurance companies.
Keep reading to see what else will affect your auto rates and what you can do to pay less money for the coverage you need.
How Do Car Insurance Companies Determine Rates?
Car insurance premiums are calculated with one thing in mind; How much of a risk are you? This is where most of the calculating lies. Insurance companies will look at several factors to establish your risk:
- Motor vehicle record (MVR) - Also known as your driving history, this shows essentially everything recorded by your state's DMV or BMV about your time while driving. It will include:
- Your name
- Your date of breath
- Your driver's license number
- Accident reports
- DUI convictions
- License suspensions
- Traffic citations
The more citations and accidents, the more of a risk you present to an insurance company.
- Your age - Teenagers and seniors will have higher insurance rates. Younger drivers between 16 and 19 are over three times as likely to get into a car accident.
- Your credit information - Your credit score and credit history are considered indicators of how likely you are to file a claim. Because of this, insurance companies will look at your score and history. Drivers with outstanding debt, bad payment histories and high credit utilization will have poor credit, therefore falling into a high-risk category and being offered higher rates.
- The type of vehicle you're insuring - Insurance companies will give you lower rates for vehicles less associated with high-risk behavior and cars that are less expensive. Conversely, expensive sports cars will mean higher rates.
- Where you live - Vehicles that are located in areas where theft, violent crimes and filing claims are high will be offered high rates for insurance coverage.
- Available discounts - Insurance companies offer several discounts to their customers. The more discounts you get, the lower your rates.
What Are the Most Common Reasons Car Insurance Rates Go Down?
There are several reasons why your car insurance rates may drop:
- You've gotten older - As stated above, young drivers under 19 years of age have higher car insurance premiums because they are statistically more likely to be in a car accident. At age 25 drivers see a big drop in rates and will continue to see lower rates as they mature and gain more experience behind the wheel.
- You've selected a higher deductible - Your deductible is the amount you pay towards a covered accident if you have full coverage. Choosing a higher deductible means your premium will be lower, and vice versa.
- You have a consistently clean driving record - Having a clean driving record means you're a lower risk. If you have no accidents and no claims, then you will receive lower rates.
- Your credit score has risen - There is a link between your financial stability and your insurance rates, so raising your credit score can help lower your premium payment. Pay off your debt on time and in full when possible and don't use more than 30% of your total available credit line.
- You qualify for more discounts - Insurance companies have many auto discounts for their customers. Those who qualify stand to save a substantial amount on their coverage. This means there could be discounts you could eventually qualify for. Some of these discounts include:
- Good student discount
- Distant student discount
- Loyalty discount
- Organizational discount
- Safe driving discount
- You've changed insurance carriers - Car insurance rates are not fixed. They change daily and drastically from one company to another. Shop around and see if there is another carrier who can get you the coverage you need for the price you can afford.
- Time has passed since your last accident - Accidents will cause your insurance rates to go up, especially if the accident was your fault. After a period of three to five years, the accident will drop off your record and your rates should lower.
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At What Age Does Car Insurance Go Down?
Your insurance will start to go down once you hit 19 years old with a significant drop when you turn 25 unless you have an accident or file too many claims. Depending on finances, driving history and discounts, your rates will continue to drop over time. Some insurance companies break down their rates by age range. For instance:
- 16 - 19: higher rates
- 19 - 34: rates decrease significantly
- 34 - 75: rates stabilize or decrease
- 70+: rates trend up
Do Insurance Rates Increase For Seniors?
Car insurance rates will rise for seniors over the age of 70. Older drivers are more apt to be in an accident and more likely than young drivers to be seriously injured in an accident. However, there are still ways for seniors to save money on their car insurance with discounts by completing state-approved driving safety courses through organizations such as AAA and The National Safety Council (NSC). Seniors can also do the following to help lessen the financial burden of being insured:
- Low-mileage discount - Many insurers will provide a discount for drivers who drive an average of 7,500 miles per year, depending on the insurer. If you want to save on your coverage, drive less.
- Telematics discount - You can elect to allow a device to collect data on your driving habits and mileage. The data is sent to your insurance provider and is used to generate your auto insurance premium. If you're a safe driver, telematics will help save you money.
- Drive safely - Driving safely is one of the best ways to avoid accidents, which in turn helps you to avoid filing claims. The fewer claims you file the lower your rates will be.
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How Can I Help My Car Insurance Rates Go Down?
While you can't control your age, there are other things you can control that will help keep your car insurance rates down.
- Practice defensive driving and follow the rules - You need to be ready for the possibility of an accident when you're on the road. Defensive driving means you are aware of your surroundings and know how to safely and appropriately navigate traffic regardless of the conditions. Follow the speed limit and obey traffic signs and lights. Don't cut your fellow driver off and be sure to use your blinker when required. All of this will cut down on the possibility of you being in an accident and in turn lower your chances of having to file a claim with your provider.
- Improve your credit - Improve your credit score to lower your insurance rates. Don't spend more than what you're able to pay off. If you do use credit cards, try to pay off the balance in full before your payments are due. Keep your credit utilization low, below 30% of your full credit line.
- Use discounts - Discounts are offered by most insurance providers and can save you a substantial amount of money. Speak to your insurance agent and see which ones you qualify for.
- Drive less expensive cars - Expensive cars cost more to insure because of their value. Try looking at vehicles that are more economical.
- Consider switching providers - There are many insurance companies out there that would love to have your business, and each one will offer you a different rate on your vehicle coverage. Shop around and save.
- Take into account where you choose to live - Your auto insurance rates will be based on where you live. Insurers will look at the amount of claims filed in an area as well as the criminal activity. If where you live is a high-crime area, or you're planning to move somewhere that has a lot of claims filed, you will be looking at higher rates. If you can, consider moving where crime and accidents are rare.
Whether you’re a young driver, an experienced driver or a senior driver, you need the right coverage for the right price. Enter your zip code below or call 855.214.2291 to compare multiple companies and receive free auto insurance quotes in minutes.