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Factors That Increases Auto Insurance Premiums

written by: Eric Stolze•edited by: Jason C. Chavis•updated: 4/27/2011

Have you ever wondered why younger drivers pay higher insurance rates than older drivers? Get some facts to help explain why your auto insurance rates are affected by things over which you have little or no control.

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    Auto Insurance Facts About My Premium

    Pulling Accident Victim From Car 

    Many factors that seem to be unrelated to driving can have an effect on a driver’s auto insurance premium rates. Age and gender are factors that a driver has no control over. Marital status and occupation are rating factors that do not change very often in a driver’s life. Smoking and drinking are habits that a driver can more easily change and may reduce insurance rates.

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    How does age affect insurance premium rates? Drivers under twenty five years of age will have higher premiums because they get into more accidents. When a driver reaches the age of twenty five, the age related surcharge in his premium rate will begin to go down. Drivers over the age of fifty have much lower premiums because they are the safest drivers.

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    Gender is another rate factor. Female drivers tend to pay less than male drivers because they are usually involved in fewer accidents than male drivers. There are always exceptions to this generalization, but insurance companies set rates based on gender averages. They know that a large group of female drivers are often less risky to insure than a large group of male drivers.

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    Marital Status

    Marital status is also used in setting auto insurance rates. Single drivers often see their premiums go down after they get married. Drivers can see a rate increase after getting a divorce.

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    Occupation and Education

    A driver’s occupation can have a positive or negative effect on his auto insurance premiums. Salespeople who drive each day to call on customers will have higher rates than employees who do not use their cars while on the job.

    Drivers with a higher level of education can get lower premiums. Drivers who are attending school can get lower rates as long as they get good grades.

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    Some insurers charge lower premiums to drivers who do not smoke. Drivers who smoke while driving can get more easily distracted by their burning cigarettes, and these distractions can cause accidents.

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    Drivers who do not consume alcohol can get lower rates from some insurers. Insurers know that there is little chance that a non-drinking driver will drive while under the influence of alcohol because a non-drinker is never under the influence of alcohol. Drunk drivers cause many accidents, and insurers can use the incentive of lower premiums to make drunk driving less likely to occur.

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    Image Source

    Pulling Accident Victim From Car. (Supplied by minds-eye at Flickr; Creative Commons 2.0;