Life Events that Impact Car Insurance Rates

Insurance is a numbers game. Underwriters base their rates on the likelihood of an insured making a claim; the more likely you are to claim, the higher your insurance premiums will be. It’s as simple as that. To get the best rates, therefore, you need to present yourself as a low-risk customer. 

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But what can you do to reduce this risk; what major life events are impacting your chances of getting affordable car insurance cover?

Birthdays

Your 18th and 25th birthday have a massive impact on your auto insurance policy. After these dates, your risk plummets, and your rates soon follow. Car insurance companies base their rates on probabilities, as discussed above, and a 16- to 17-year-old is twice as likely to have a car crash than an 18- to 19-year-old. 

At this young age, you pay a higher deductible because your insurance needs are greater, but as soon as you turn 18, you can secure lower rates and bring those car insurance costs down.

A teen driver is between 2 and 5 times more likely to have an accident and suffer bodily injury than a driver aged between 25 and 35, so car insurance costs will reduce even further once you reach 25.

The cheapest rates tend to be reserved for policyholders aged between 50 and 60. At this age, insurance premiums cost around $1,200 on average, compared to the $5,000+ paid by the average 16- to 18-year-old teen driver. However, costs begin to increase again after this age. Even if you have a relatively clean driving record, auto insurers will consider you to be a greater risk and will increase your premiums as you age.

Motorists over the age of 80 can expect to pay roughly the same as those aged between 20 and 29, for example.

Getting Married

Your marital status is considered by underwriters for most insurance policies, including homeowners insurance. Again, it’s all about probability, and statistically speaking, married policyholders carry less risk than their single counterparts. Where car insurance is concerned, this is even more poignant, as you’re more likely to use your spouse’s car. 

Your insurance company may also provide you with a multi-car discount, allowing you to save even more on your car insurance policy. Speak with your provider to discuss potential savings and benefits

As an example, a married couple will pay around $1,600 on average for a joint policy with Geico, and if they have more than two cars between them, they can shave up to 25% off the cost.

By the same token, however, these rates may increase if you get divorced, with the average increase being around $120 to $140.

Buying A Home

In the eyes of an insurance company, you’re more responsible when you buy a home and your rates may decrease as a result. However, the best thing about this life event is that it allows you to take advantage of multi-policy discounts. 

If you take out many different policies with the same provider, you can shave hundreds of dollars off your annual premiums and will be covered for everything from property damage to medical costs, physical injuries, vandalism, and breakdowns, all with the same company.

Buying a home also improves your chances of securing credit and it gives you more options when times are tough. Homeowners can tap into their home equity whenever they need a little cash and because they can use their home as collateral, they can also benefit from low-interest secured loans.

Buying a home is one of the biggest life changes you can make and it’s also a costly one as it leaves you with substantial and long-term debt, but it’s a decision that generally carries more positives than negatives.

Getting a Job

As an employee you can benefit from company discounts and policy offers, potentially saving on a host of insurance policies and shaving dollars off your car insurance policy. This isn’t true for all jobs and all employers, but it’s worth looking into.

Ask your employer if there is any way you can save money on your insurance and if there are any other benefits you can take advantage of.

Paying Off Debt

Repaying debt is a huge accomplishment, especially when you consider that three-quarters of all Americans will die with substantial debts and many of those will have lived with debt throughout their adult life. 

Repaying debt provides you with a little more financial freedom and is a significant weight off your shoulders, but it can also reduce the price of your auto policy by improving your credit score.

Bad credit increases your risk significantly and is factored into a lot of calculations, including job applications and security clearances.

How Much Does Car Insurance Cost?

The exact price of your car insurance policy will depend on a number of factors, from coverage limits to your age, personal circumstances, driving history, and type of car. Whether you have a new car or a used car will impact the price, but whether it has features such as emergency braking, anti-lock brakes, and airbags, will also make a difference.

Discuss your options with insurance agents, compare rates from multiple companies, and don’t forget to consider extras such as rental car expenses and collision coverage. Your goal is not to simply get the cheapest auto insurance premiums and move on. You need to think about what will happen if you ever have an accident and file a claim. If you’re cheap today you could be hit with some costly expenses in the future.

Summary: Comparison Shop and Benefit

Every time a major life event occurs, you should consider changing your insurance policy. Car insurance isn’t like life insurance or health insurance; it doesn’t increase as you age and the cheapest policy isn’t the one you’re offered at the first time of asking. If anything, the opposite is true, because as discussed above, teen drivers and young drivers pay huge premiums every month.

Comparison shop, negotiate, and don’t be afraid to look for a new provider. Car insurance companies do everything they can to compete with one another and switching is a great way for policyholders to take advantage of different circumstances and secure reduced premiums.