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California Auto Insurance

Auto insurance is intended to mitigate the costs associated with being involved in an auto accident.  Rather than pay out of pocket for repairs or injuries resulting from an accident, the consumer pays premiums to their carrier who in turn may litigate and pays out on their client’s behalf. It is a business of risk versus reward and often times a drivers premium reflects the carriers expectations that they will be paying out on the policy. The carrier will determine a driver’s rate based one large number of factors including but not limited to; number of tickets, accidents, years of licensed experience, the location of the insured’s residence, the vehicle year make and model, available discounts and even gender.

When purchasing personal auto insurance in the state of California there are multiple factors that are taken into account when determining the price; since cost is often one of the largest concerns for consumers it is important they understand what exactly affects their rates and how they can keep them down. The largest and most widely known factor is your driving record. The frequency in which one receives tickets or gets into accidents is directly related to how much or how little a person will pay for auto insurance, this is because auto insurance is a business of buying risks. A person who has many tickets or accidents shows that they are a greater risk behind the wheel, as such the cost goes up to insure them. On the other side of that coin, a driver who has no tickets or accidents on their record has shown they follow all laws and drive safely. This shows they are a low risk driver and as a low risk driver they are cheaper to insure. In order to ensure carriers are in fact charging less for drivers who have proven they are not high risk the state of California has introduced law into the books defining what a good driver is and mandating that all good drivers receive twenty percent discount on their personal auto insurance. Any driver who has had an active license and received less than 2 points on their driving record over a period of 3 years is eligible for the good driver discount in the state of California, saving them twenty percent on the cost of coverage. Additionally, any at fault accidents with property damage can be counted against the driver when determining points. Because this percentage is so high it is important that drivers try and remain eligible for the good driver discount if they would like to save money, this is typically the largest discount available.

Another major factor in determining price of coverage is the years of driving experience a driver may have. While the driver’s age may play a small factor the reality is the number of years licensed is much more important. In addition to being eligible for the previously mentioned good driver discount, a driver who has any significant number of years on the road as a driver has proven that they are an experienced driver simply through repeating the action so many times. These drivers pose a smaller risk than those who have significantly less experience behind the wheel and are more likely to react appropriately to a dangerous situation. So, what we have is a situation where a 20 year old driver who has been licensed since the age of 16 may actually cost less to insure than a 25 year old driver who has only been licensed for a year.

Every at fault accident that a driver has on their driving record may be counted against them when determining their rates. Drivers who have at fault accidents on their driving record have shown that they are not particularly safe behind the wheel; as such there is a greater risk that they will be involved in another at fault accident. Many carriers will refuse to insure a person with many at fault accidents as it is almost a guaranteed loss. In addition to causing rate increases on their own, accidents can also disqualify an insured from receiving the good driver discount. As such, accidents can really be an expensive factor when determining auto insurance rates.

The year make and model of a vehicle are very important when determining the rate of a vehicle, especially if the driver plans on adding comprehensive and collision coverage. If a vehicle is being insured with Comprehensive and Collision coverage the cost of replacing and repairing the vehicle can be a big deal. This is why it is always a good idea to call your agent or broker and ask them to quote a vehicle before you purchase it; nobody wants to get stuck with an insurance payment they cannot afford. As a general rule, newer and high performance vehicles are going to be more expensive to insure than an older standard performance vehicle for comprehensive and collision coverage. When purchasing just liability coverage the carrier is not agreeing to repair the insured vehicle, therefore the year make and model are not nearly as important when determining the cost; however it may have a slight impact since certain vehicles are simply viewed as unsafe and more accident prone, and as such they may even increase the rate of just liability.

Another factor when determining insurance rates most insured’s are unaware of is their address. While it often times will not create much of a change when moving to a nearby ZIP code, it can affect your rates. It is common to move to a new residence in the same town and see a slight increase or decrease in rates based solely on this. This is because some areas are considered to be higher risk areas, causing the probability of loss to go up. In some cases, when moving to an entirely different town, insured’s may see their rates go up so high they can no longer afford them. Be sure to check with your agent or broker before moving to see how the change will affect your rates.

No matter what your needs are, be sure to call us at Bains & Woodward and we’ll help you find the perfect policy at the right price!

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