Insurance Basics: Everything You Need to Know

3 Factors That Affect How Much You Pay In Auto Insurance

Everyone should be carrying auto insurance on their car. In fact, in some areas of the country, it is a requirement that you have auto insurance. Many people wonder what goes into determining how much you pay for auto insurance. Their neighbor might pay a fraction that they do and they wonder if they can get that same deal. In some cases, you are overpaying, and in other cases, it is just that the factors going into your insurance are different. Here are some things that you should know:

1. What Kind Of Cars You Drive

One of the first things that you will have to consider if the type of car you drive. Insurance will help to pay for the cost of repair and replacement if something were to happen to the car. Thus, if the car is only worth $5,000 you are going to pay a lot less for insurance than someone who is driving a car that is appraised at $40,000.

In addition to the cost of the car are the make and model. If you are driving the most expensive model and it is hard to get parts for the model, or the parts are more expensive because they are rare you will pay more. This applies to foreign made cars that are more in the luxury category. Also, the older the car the cheaper it is to insure because it has decreased in value.

2. How Good Your Driving Record Is

Another thing to consider is how good your driving record is.  If you have no citations on your record and no incidents to report you are going to pay less. This is why driving safely is so important. Not just because it is better for your safety, but it is also important to your budget. The more citations you get the more you will pay and it will be a substantial amount.

3. How Often You Drive

Lastly, if you are commuting a long distance every day to work you will pay more than the person who bikes to work, takes public transportation, or lives close to their work. This is because the more time you spend in the car the more likely you are in to get in a car crash. Thus, if you can carpool, take the bus, or walk to work you could actually save money on gas and car insurance.

By understanding what goes into determining car insurance you can save money.