Risk Factors and its Effects on Car Insurance Premiums

by Bianca Villares


The premium that drivers pay for auto insurance depends on certain factors, specifically called risk factors. Based on previous driving records, miles driven per year, age, etc, a driver’s risk factor is evaluated and is directly proportional to the insurance premium he or she must pay.

To make sure you pay the lowest premiums possible, think about these factors and what you can do to make them advantageous for your situation:

Driving Violations and Accidents
Insurance companies have one thing in mind: a significant number of accidents or moving violations equals to greater accident risk. Some insurance companies even penalize drivers with a bad record, which usually lasts for a number of years. Bottom line is, the more driving violations you have, the higher the premium. If you want your premiums to decrease, keep your record clean.

Vehicle Type
This is where insurance companies and car owners understand each other’s demands. Car owners of the latest, most expensive models usually get insurance with better coverage, which means higher premiums. Cheap cars cost less to insure because car owners have the option to disregard other types of coverage that are not applicable to their vehicles.

Occupation
No, they don’t check your salary. Not yet, at least. For insurance companies, a significant relationship exists between the business use of your vehicle and the premium you must pay. If your job description includes long hours of driving such as being a door-to-door salesman, expect a higher premium.

Credit Rating
A better credit rating will save most drivers from higher premiums since many insurance companies believe that poor credit history is susceptible to higher risks.

Geography
The place where you reside can also dictate your insurance premiums. Living in congested cities or areas with a lot of traffic prone to vehicular accidents raises the risk factor of drivers. High crime rate, specifically of vehicle thefts, also leads insurance companies to charge higher premiums.

Education
Drivers with higher educational attainment are charged with lower premiums.

Others
Years of driving experience, lower miles driven each year, theft protection devices and multiple cars and drivers also offer opportunity for premium discounts.

Some factors which cannot be adjusted, such as age, gender, and marital status can also affect a driver’s risk factor. Most insurance companies see drivers under the age of 25 with higher potential risk of being in an accident. Women are also considered as safer drivers than men, while a married person has lower premiums compared to a single one with the same driving record.

By calculating your risk factors, you can easily get lower premiums which could save you a lot for the years to come. Just remember though, each insurance company has a different take on insurance premiums, so it’s always best to compare the rates of multiple companies for your particular situation.

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Trading In Your Old Cars

by Bianca Villares

The deal behind trading in used cars may seem simple enough. Head out to the car lot, show your used car to the dealer and ask for the trade-in price— the amount which the dealer will pay you for your vehicle. But if you want to get a fair deal out of your used car, you can’t afford to overlook some basic details.

Start by knowing what to expect from trading in your used car. The trade-in price is lower than the private-party price, which is what you hope to be able to sell your used car for to individual buyers. Understand that dealers must account for certain costs such as inspections and reconditioning, which makes the trade-in price cheaper. But then again, trading in your used car is faster and less stressful than selling it on your own.

Know what your used car is worth. Most people depend on used car values found on the internet or books which are accurate most of time—given that your vehicle is in good condition. The amount that the trade-in will bring actually depends on a number of things, such as vehicle history, mileage, running condition, paintwork, and interior. Any dealer would surely check these things to evaluate your vehicle’s trade-in price. Consider having a few minor repairs on your car if you wish to increase its value; cheap repairs can go a long way every so often. The curb appeal and general condition of your vehicle determines its actual worth, despite the values posted on the internet.

Find a dealer who’s looking for a vehicle model the same as your used car. This requires added research on your part, but it’s all worth the effort. Find out if your vehicle has a place in the product and inventory mix on the dealer’s lot. They won’t give much for your car if they have a number of vehicles the same model as yours parked in their lot. But if you happen to offer a model to a dealer when they’re running low, they might step up the bargain.

If you are in a hurry to replace your current car, then trading it in is one of your best options. But like any investment, you should look out for your interests by getting a good deal. Prepare your vehicle and arm yourself with as much information as possible before trading in your used car.

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Don't Tread Lightly: A closer look at your vehicle's tires

by Mark Lorenzana

What is the least appreciated part of a vehicle? A good answer would be the tires.

Most people don’t give much thought to their tires until it’s too late-- until they fail. And when tires fail, it could mean just two things: either you get a minor inconvenience that might involve getting stuck in traffic, missing work, while putting on your spare, or a scenario that could be much worse – a life-threatening accident.

If you own a vehicle, perhaps it’s a good idea to give more importance to your tires. Be sure to check the condition of the tires you are currently using and look out for any defects or faults. Check the spare, too.

Or better yet, continue reading this article. It will delve more deeply on safety issues concerning vehicle tires.


Looking out for serious defects in your car tires.

This should serve as a warning for the driving public. There might be hidden defects in tires that could cause drivers to lose control of their vehicles on the road.

It is not enough for tires to look good, be properly inflated, and have a good amount of tread. It’s a good idea to check the age of your tires.

Because tires are the most under appreciated part of a vehicle, drivers often neglect how old their tires are as long as they still look good. This might be true especially for spare tires—some could be up to a decade old or more. A very old spare tire, believe it or not, could deteriorate to the point of having its interior rotted. One can just imagine the disastrous effects this could lead to when driving at extremely high speeds.

In tires, the rubber materials that hold the belts together will eventually degrade and lose its elasticity. It will get to the point where the tire can no longer hold together. Research shows that tires six years or older tend to break down. And it’s not just the spare tire in your trunk that can be dangerous. Even tires bought from the shop or the showroom can be just as dangerous – who knows, these might have been sitting in a shelf for more than a decade waiting to be sold.


Avoiding accidents brought about by old, faulty tires.

Many vehicle makers now put warnings in their car manuals against using tires that are more than six years old. Some experts, however, advocate for expiration dates to be stamped on the tires not unlike other consumer products like milk.

The tire industry disagrees, stating that expiration dates will only give consumers a false sense of security. They stress that this might lead consumers to use the tires and wear them down to the nub as long as the products are still within the expiration date.

Tire makers say proper maintenance is the key to safe tires and that there is no reliable data that tires become dangerous after six years.

How to make sense of all these contradictory views by the experts? Here is an important tip for the consumer: on the outer wall of the tire, the side that faces away from the car, are a series of digits and letters. The last series of four numbers actually shows the tire’s date of manufacture. For instance, if it shows 1202, this means that the 12th week of 2002 is the tire’s date of manufacture. By checking the date of manufacture, you can determine on your own the age of the tire. You can then decide if it’s time to buy new ones.

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