On average, car insurance costs $1,457 a year in the U.S, which is about $121 a month. New drivers may think that car insurance is simply expensive no matter what, but this isn’t the case. There are many factors that go into calculating the cost of your car insurance. In general, insurance companies analyze the risk you pose. Insurance companies don’t want you to file a lot of claims, since it costs them money. That’s why they charge more for drivers who they believe are more likely to file claims.
So, who is more likely to file a car insurance claim?
On average, a male between the age of 16 and 25 is the most likely to file a car insurance claim. This is because teenagers are more likely to speed, and men are more likely to engage in aggressive driving. In 2016, drivers between 15 and 20 years old had the highest rate of speed-related crashes that resulted in fatalities. In 2016, it was discovered that males between 19 and 39 years old were more likely to drive aggressively.
Age and gender aren’t the only influences on your car insurance rates, however. Car insurance premiums also depend on your:
If you live in areas with a high cost of living, you’ll likely pay more for insurance. Michigan has the most expensive average at $2,611 a year.
Some vehicles cost more to insure based on certain qualities. Expensive vehicles, sports cars and vehicles modified for speed will all cost more to insure. Vehicles with high safety ratings, on the other hand, typically cost less to insure. If you want to save money on car insurance, you may want to purchase an older vehicle with a high safety rating. There are also certain vehicles that are statistically more likely to be stolen, and thus cost more to insure.
Credit scores are a way for the insurance company to see how reliable you will be in paying your bills in full and on time. Most teenage drivers don’t have any credit, which is one of the reasons teens are usually on their parents’ policy. Their parents’ car insurance premiums will go up significantly by adding a teenage driver to their policy. This makes it even more important for the insured to have good credit.
Your driving record is one of the most important considerations to your insurance premiums. One wreck raises insurance by 41% on average. This is less than the cost of a DUI, which is considerably more. Insurance can rise over 80% after an incident involving a DUI. Drivers with a bas or spotty driving record may have trouble finding insurance, let alone insurance that is affordable. Nevertheless, it’s possible to find insurance agencies that specialize in nonstandard drivers.
The more coverage you have, the more expensive your insurance will be. There are some coverages you must have as required by state law. In Texas, for example, you must carry:
Depending on where you live, other coverages may be optional. If you have an older, worn car that would cost more to insure than to replace, you may not need full coverage. On the other hand, newer cars should be insured properly so you won’t be stuck paying expensive repair and liability expenses after an accident.
When you’re looking for commercial insurance for your business, you’ll come across insurance agencies offering several different packages. These packages are designed to bundle commercial insurance for a cheaper rate than purchasing individual policies. One of these packages is a business owners policy, or a BOP. A BOP combines property coverage and general liability.
This isn’t a one size fits all policy, however. There are certain requirements your business must meet to qualify for a business owners policy. There are three main factors that are considered regarding a BOP: business size, income and industry risk. These size categories are used and developed by the North American Industry Classification System (NAICS). The Small Business Association (SBA) uses these guidelines to determine whether a business is a “small business” or not.
A business owners policy is designed for small businesses. The category of “small business” varies depending on the insurance company and the industry your business is in. Some businesses are only considered small if they have 250 employees or less. Others are considered small even if they have 1,500 employees.
The income your business makes can help determine if your business is small or not. Revenue limits vary once again depending on the industry. Some companies may only be considered small businesses if their annual revenue is less than $1 million. Others can earn over $10,000 in annual revenue and still be considered a small business.
Your business’ industry is the main player when it comes to qualifying for certain insurance packages. A small business in retail has very different limits and requirements than a small business in a government agency, for example. In general, BOPs cater toward small businesses in low-risk industries. This means industries that have a low likelihood of claims and lawsuits are more likely to qualify for a BOP.
Low risk industries include:
Examples of high-risk industries include:
Keep in mind that these are not comprehensive lists. Other industries may fall into either category.
To summarize, BOPs are best suited for small businesses in low-risk industries that earn less than a set amount in annual revenue depending on their industry.
This doesn’t mean that there is no option for larger businesses, however. As opposed to a BOP, larger businesses can insure their assets with a commercial package policy (CPP). A CPP is a more flexible version of a BOP geared for larger businesses and high-risk industries. This package also combines property insurance and general liability insurance, but can also expand to include:
Neither BOPs or CPPs cover health insurance, life insurance or workers compensation.
If you’re in doubt about whether your business qualifies for a business owners policy or a commercial package policy, speak with an insurance agent about the industry and parameters of your business.