Why And How These Four Factors Influence Auto Insurance Rates
Auto insurance premiums are determined by so many factors that you probably don't know some of them. Here are some of the hidden factors that may determine the rates you pay for your car insurance:
Unemployment Rates
It is unfortunate that places with high unemployment rates may also have high car insurance premiums. This is understandable given that those who are unemployed or have extremely low incomes may forgo car insurance as a way of trimming their expenses. Unfortunately, this raises premiums for those who do buy the insurance. This is because your insurance pays for your car's damage if you are involved in an accident with an uninsured motorist. Insurers raise their rates to cover such risks.
State Laws
State insurance laws do not exactly dictate how much your insurers can charge you for premiums, but they do have an effect on the rates you pay. For example, Michigan's insurance laws guarantee injured drivers unlimited medical benefits. As you can imagine, the medical claims can be pretty high, which result in insurers protecting themselves by hiking their rates.
Legal Climate
Even the legal climate in your area may have a hand in determining your car insurance rates. In this context, the legal climate doesn't refer to official laws and regulations, but rather how judges and juries typically determine cases auto accident cases. For example, insurance rates may be higher in an area where judges tend to give big awards compared to other areas where judges give conservative awards.
Weather and Natural Disasters
Climate and weather patterns in your area may also have a big impact on your auto insurance rates. Things like floods, hurricanes and even falling debris cause considerable damage to cars, for which people make insurance claims and cost their insurers money. As a result, auto insurers have to hike their rates to cover those risks. A good example is Louisiana, which is prone to natural disasters and has relatively high auto insurance rates despite its low crime and accident rates.
One factor alone may not raise auto insurance rates significantly. However, a combination of several of these factors will have a noticeable impact on the rates. Most of these issues may be out of your control, but they aren't the only ones that insurers use while calculating premiums. Personal factors such as driving history, type of car you drive, and deductible matter a lot. The trick is to manipulate the factors within your control so you can enjoy inexpensive rates.