Car insurance premium rates vary based on a number of factors. According to Forbes, insurance premiums make up approximately 11 per cent of a car's cost of ownership over a five-year period. Insurance companies consider your driving history, age, coverage amount, location and driving habits when creating an insurance policy. However, regardless of your driving record, where you live or how often you drive, your premium can climb if you drive certain vehicles. And the opposite is true; certain vehicles will lower premiums.
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Horsepower is a major determining factor in insurance costs. Insurance companies consider statistics from sources such as the Highway Loss Data Institute that suggest vehicles with high horsepower are involved in more accidents. Look for a vehicle with a small 4-cylinder engine, two-wheel drive and low horsepower, 70 to 110.
Regardless of your vehicle's horsepower or your driving record, insurance premiums can soar if you drive an expensive vehicle. Expensive vehicle are expensive to replace. When insurance companies calculate the risk associated with insuring you, they consider their costs should your vehicle be totalled in an accident. Higher vehicle price tags result in higher insurance premiums.
While some drivers believe that small economical cars are the cheapest to insure, small cars may actually result in a higher insurance premium. Because small cars often are accompanied by higher rates of collision injury claims, insurance companies view this as riskier compared with the lower injury claims in bigger vehicles such as SUVs and trucks. A midsize car or full-size sedan is a more affordable insurance choice than a compact car.
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