Cars Your Insurance Company Will Love
If you own a car, you probably have car insurance (it’s the law). However, some car insurance policies pay out big for your insurance company. In this blog, we’re going to explore how car insurance companies make their money and what cars they love the most.
There are three ways car insurance companies make money:
Good Drivers. Ever wonder why your insurance company gives you discounts when you don’t get into accidents? Well, car insurance companies give discounts to good drivers because they know your car will be extremely profitable to them. When you drive your car and you never make a claim, your insurance company gets to keep all the money from policy premiums. So, even if the insurance company gives you a discount, they still make a profit on your responsible driving.
Accident-prone Drivers. When you get into a car accident, your insurance company will more than likely cover the repairs. As a result, your insurance premiums will go up in price to offset the cost of your claim. This price increase on your premiums allows your insurance company to still make a profit on your premiums while also recouping their money from the loss.
Your Car. The car you choose plays a role in how much you’ll pay in insurance premiums. Insurance companies look at the size of your car, the type of motor you have, and possible theft.
- Size Matters. Smaller cars are easier to maneuver, so your insurance company may believe you will drive more recklessly. This leads to larger premiums. And if you drive a larger car, you can inflict more damage during an accident, so your insurance company may charge you a higher premium.
- Motor Type. Vehicles with larger engines require higher premiums because the engine has more power. The more powerful a vehicle is, the faster it can go, which increases your chances of getting into an accident.
- Theft. The Insurance Information Institute states that almost a third of premium costs are set aside for potential theft of the vehicle. If your vehicle is at risk of being stolen due to rarity or location, you will also see higher premium rates.
Saving money on insurance. Insurance companies base their business model on risk and probability. If you and your car seem like a bigger risk for the insurance company, you’ll pay more in insurance premiums. However, you can save money on your policy by:
- Shopping around for the lowest premiums
- Raising your deductible
- Bundling your car insurance with your other insurance needs (home, renters, etc.)
- Taking advantage of low mileage discounts
It’s always a good idea to check in with your insurance company once a year to see if you can lower your premiums. Some insurance companies will offer you a discount just for being a loyal customer!
When you buy your next car, keep this information in mind. And don’t forget to search our inventory! We’re sure you’ll find a car that you’ll love!
