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Understanding Insurance

How to Estimate Auto Insurance

Wondering how much the cost of car insurance will be for that beautiful new car you’ve been dreaming about? You’re not alone. And landing on that exact number can be difficult for a number of reasons because insurance rates can vary by car type and the age of the vehicle.

For the same car, costs can shift according to the zip code where you live. But other factors like your personal financial history and your family’s driving records can all influence the cost of your premium as well. To better understand what factors are in play, let’s take a look at what goes into calculating the cost of auto insurance and dig deep into the factors that sway your insurance costs.

Reasons Car Insurance Rates Vary

Vehicle insurance rates can differ one car to the next and even between drivers. Most car insurance companies will have their insurance agents collect information about your car when developing a quote. They’ll also ask you about your preferred coverage limits, which can adjust the cost of your car insurance policy.

Agents will look at state-mandated coverage requirements to be sure you’re getting the protection you need to drive legally. Here’s an in-depth look at some of the individual factors that can influence your rates.

Age. Your age can influence the average cost of car insurance. Rates usually go down for drivers after they turn 25, but young drivers can get lower rates by enrolling in our Teen Safe Driving program, which tracks driving performance.

The KnowYourDrive app is able to produce a trip summary that scores young driver’s performance. Parents love it because it can also help them keep an eye on their children’s whereabouts.

Marital status. If you get married or divorced, it’s best to connect with your American Family Insurance agent as soon as possible to let them know of the change. Usually, this will mean you’ll be changing your policy, whether you’re including your new spouse or removing your ex.

Credit rating. You may be able to save money on car insurance with a good credit rating. Insurance brokers and agents will review your FICO credit score, which can impact your final price.

Driving record. If you’ve not had a major accident in five years, this can benefit your auto premium. Likewise, when no property damage or liability claims have been made against you in the recent past, you stand to get a better rate.

Vehicle make and model. The cost of your car and the year it was produced will be used to help generate your insurance rates. Policies for new and expensive vehicles will generally be more costly when compared to policies for less expensive and older cars.

Where you live. The area and zip code where your car is registered will have an impact on the amount you pay for insurance. Safe neighborhoods with low crime rates are typically related to lower insurance rates.

Eligible discounts. If you’re able to bundle other policies with your auto coverage, you can save on your premium. Most providers will offer a discount when you bundle homeowners insurance with your auto policy.

With American Family Insurance, you may be able to save big. Check with your agent to learn more about bundling.

Annual mileage. You’ll likely be asked about the way you intend to use your car when you apply for auto insurance. You’ll be asked about the distance you’ll be driving to and from work each day and about your projected annual mileage. In most cases, your rates will increase if your annual mileage is higher than the average.

Coverage limits. One way you can control the cost of your auto insurance is to request quotes on various coverage limits. By adjusting these limits and your deductible, you should be able to find the coverage you need. Because many states require you to buy car insurance that protects against uninsured motorists, you’re going to probably need something close to full coverage to fulfill those requirements.

Other added coverages may be a good idea, as well. If your state doesn’t require you to have insurance, adding bodily injury liability coverage, you may be doing yourself a big favor — if you’re ever found liable for an accident that caused injuries to others.

Going paperless. At American Family, we’ll reward you when you enroll in My Account and choose paperless billing. You can also go paperless by downloading the MyAmFam app.

By working with your agent to leverage all your available discounts, you really can save on your auto and home insurance premiums. You’re able to manage billing, handle insurance claims and even review some of your policies when you go paperless.

Insurance Rates Vary by Car Condition and Model

Do you know — is it cheaper to insure a sedan or an SUV? Insurance companies base their insurance rates in part on the average cost to repair a vehicle. Costly vehicles that carry expensive parts will likely cost more to insure. And premiums on vintage cars that are well maintained can cost more than your average car insurance rate because these vehicles have retained their value.

To better protect your finances, you may want to consider added liability insurance protection. Think about it your classic car doesn’t have automatic breaking systems or airbags.

  1. Wondering why your car insurance rate increased?

    Well, it all starts with where your premium goes once you pay your insurance company.

    When you pay your premium, it goes into a bucket of money that holds the premium of everyone who is insured by the insurance company.

    When a customer gets into an accident, your insurance company will use those funds to help cover costs for things like vehicle repairs or rental reimbursements.

    When there are lots of claims, you might see an increase in your premium because the insurance company needs to cover all of the claims being filed.

    But that's not the only reason why your premium may increase.

    Other factors, such as the rising costs of repairs and health care, can impact your premiums.

    And even though you can't always prevent a rate increase, you can save on auto insurance by maintaining a good driving record, bundling your auto and home insurance together, paying your bill in full, and taking advantage of the available discounts.

    At American Family Insurance, we do our best to keep insurance costs low while still providing dependable coverage and excellent service. Connect with an agent to get the protection and support you need.


Learn How to Shop for Auto Insurance

Before you get to the dealership and sign on the dotted line, be sure to check in with your American Family Insurance agent. Compare quotes on the various makes and models you’re considering as you shop for car insurance. You’ll have the information you need to review your budget and verify expenses before you buy. And you’ll also find real peace of mind knowing that you’ve got the protection you need when you’re out cruising in your new ride.

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Related Topics: My Account , Billing , Bundled Insurance , Discounts