Do you ever hear the same news headline from your favorite radio station during a single leg of your commute? Do you hear the same song multiple times? Or, perhaps you are on the phone with friends and family members, lamenting the fact that your wireless service provider just pushed the “nights and weekends” start time out an hour and knowing that you will be facing a massive cell phone bill at the end of the month. Maybe you use the time to make sales calls or strategize about the work week. Whatever it is, that long commute may be costing you more than you think.
In addition to your time, gas, wear and tear on your vehicle and other long-distance related costs, your auto insurance premiums may also be affected by the distance of your daily commute.
Variables that Affect your Car Insurance Rate
Insurance companies factor in a number of different variables to determine the price at which they are willing to offer you coverage. Variables include your driving record, your gender, the type of car you drive, your credit history and that same information for every other person listed on your policy. Finding a low cost car insurance policy means managing all of these variables. The lowest cost auto insurance policies involve managing these variables as well as increasing deductibles, lowering coverage levels and taking other possibly unwanted actions (such as removing coverage that isn’t mandatory).
Insurance companies collect all of this personal information and then process it through complex financial modeling tools to create a risk profile for you. The positive risk factors (which may include being married, having few driving infractions on your record and possessing a high credit score) are offset by the negative risk factors (which may include being “too young,” driving a sports car and being male). Each company weights each variable differently, though the top car insurance companies all use a very similar pool of variables, weighted approximately the same.
Distance – One of the Variables
In addition to these variables, insurance companies factor in your location and your estimated daily driving habits (including your commute). Most companies ask you to estimate the number of miles you expect to drive in the coming year.
The logic behind this is simple, people who spend less time on the road are less likely to be involved in an accident. Obviously, to compensate themselves for the higher risk, car insurance companies will charge drivers who spend a lot of time on the road a higher premium. Some insurance companies also factor in things like proximity (or expected use) of a high-risk road. In other words, if you live next to the five-mile stretch of Highway XYZ, which has experienced twenty fatal accidents in the past 2 years, insurance companies may factor this into the equation. Not all insurers have the capability of getting this granular, but many do.
Companies that don’t have that level of specificity factored into their financial risk measurement tools, will likely use your zip code as a proxy. People who live in zip code 12345 may be involved in more accidents because they have that dangerous stretch of Highway XYZ running right through the middle of the region. While you may not ever use this stretch of highway, the fact that others in your area do may affect your insurance premiums.
Companies may also ask you more detailed questions about your driving habits than just mileage. For instance, you may be asked if you drive during rush-hour. Drivers who are surrounded by cars (and cars filled with impatient people anxious to get where they are going) are usually considered higher risk. Even if you miss the evening rush hour you may find yourself penalized by your commute. Drivers who are on the road late at night on weekends (such as food-service providers and entertainers) are sharing those roads with a higher percentage of drivers who are operating their vehicle under the influence of drugs or alcohol.
Steps You Can Take to Find Low Cost Car Insurance
For many people, altering their driving habits isn’t a realistic option. If you have to get from home to work each day, your car may be the only realistic solution. However, others may have the option of taking public transportation, carpooling with a neighbor or even moving closer to your job. Understanding that distance has a direct effect on your insurance premiums is the first step, determining what you can do about it is the next…
Do you ever hear the same news headline from your favorite radio station during a single leg of your commute? Do you hear the same song multiple times? Or, perhaps you are on the phone with friends and family members, lamenting the fact that your wireless service provider just pushed the “nights and weekends” start time out an hour and knowing that you will be facing a massive cell phone bill at the end of the month. Maybe you use the time to make sales calls or strategize about the work week. Whatever it is, that long commute may be costing you more than you think.
In addition to your time, gas, wear and tear on your vehicle and other long-distance related costs, your auto insurance premiums may also be affected by the distance of your daily commute.
Variables that Affect your Car Insurance Rate
Insurance companies factor in a number of different variables to determine the price at which they are willing to offer you coverage. Variables include your driving record, your gender, the type of car you drive, your credit history and that same information for every other person listed on your policy. Finding a low cost car insurance policy means managing all of these variables. The lowest cost auto insurance policies involve managing these variables as well as increasing deductibles, lowering coverage levels and taking other possibly unwanted actions (such as removing coverage that isn’t mandatory).
Insurance companies collect all of this personal information and then process it through complex financial modeling tools to create a risk profile for you. The positive risk factors (which may include being married, having few driving infractions on your record and possessing a high credit score) are offset by the negative risk factors (which may include being “too young,” driving a sports car and being male). Each company weights each variable differently, though the top car insurance companies all use a very similar pool of variables, weighted approximately the same.
Distance – One of the Variables
In addition to these variables, insurance companies factor in your location and your estimated daily driving habits (including your commute). Most companies ask you to estimate the number of miles you expect to drive in the coming year.
The logic behind this is simple, people who spend less time on the road are less likely to be involved in an accident. Obviously, to compensate themselves for the higher risk, car insurance companies will charge drivers who spend a lot of time on the road a higher premium. Some insurance companies also factor in things like proximity (or expected use) of a high-risk road. In other words, if you live next to the five-mile stretch of Highway XYZ, which has experienced twenty fatal accidents in the past 2 years, insurance companies may factor this into the equation. Not all insurers have the capability of getting this granular, but many do.
Companies that don’t have that level of specificity factored into their financial risk measurement tools, will likely use your zip code as a proxy. People who live in zip code 12345 may be involved in more accidents because they have that dangerous stretch of Highway XYZ running right through the middle of the region. While you may not ever use this stretch of highway, the fact that others in your area do may affect your insurance premiums.
Companies may also ask you more detailed questions about your driving habits than just mileage. For instance, you may be asked if you drive during rush-hour. Drivers who are surrounded by cars (and cars filled with impatient people anxious to get where they are going) are usually considered higher risk. Even if you miss the evening rush hour you may find yourself penalized by your commute. Drivers who are on the road late at night on weekends (such as food-service providers and entertainers) are sharing those roads with a higher percentage of drivers who are operating their vehicle under the influence of drugs or alcohol.
Steps You Can Take to Find Low Cost Car Insurance
For many people, altering their driving habits isn’t a realistic option. If you have to get from home to work each day, your car may be the only realistic solution. However, others may have the option of taking public transportation, carpooling with a neighbor or even moving closer to your job. Understanding that distance has a direct effect on your insurance premiums is the first step, determining what you can do about it is the next…
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