The 3 Roadblocks that Cause Your Auto Insurance to Skyrocket

You may not be a teen driver and you do know to abstain from drinking and driving, but cheap car insurance is still not available. What are you doing wrong? Three problems may stand between low cost auto insurance and you. Do you know what they are?

The DMV Point System

Each driver's license is tied to a driving record. In California, a traffic ticket, being the at-fault party in an accident, or reckless driving add one to two points to your record. In Colorado, failure to yield the right-of-way results in a four-point penalty, while speeding just five miles over the limit qualifies for a one-point notation. The DMV site highlights the various point scoring systems for the states; make sure you know yours!

It is sometimes possible to mitigate points by agreeing to attend traffic school; however, this option may only be available once every 18 to 24 months (depending on your jurisdiction). When you apply for auto insurance or renew your current policy, the insurer checks your driving record with the department of motor vehicles. Points added translate into increased costs.

The Insurance Institute for Highway Safety

Known as the IIHS, the agency rates vehicles' safety and extrapolates how much insurance companies have to pay if these cars ever get into accidents. Based on these evaluations, insurers assign higher baseline policy costs, while offering cheaper car insurance premiums on other models.

Drive a car that fails in the evaluation, and watch your auto insurance premium go up. Conversely, opt to buy one of the group's top safety picks, and you are rewarded with a low base cost on your policy. For example, the 2011 top picks include the Audi A4, Kia Soul, Toyota Avalon and Ford Fusion. Yet even cars that have a good year may have had some flops in the past. Case in point is the Hyundai Elantra, which scored well in 2011, but did dismally in 2001 to 2003.

The ZIP Code

Real estate agents are not kidding around when they chant the mantra of "location, location, location!" Indeed, changing ZIP codes can have a profound influence on your car insurance premiums. For example, if you buy comprehensive auto coverage, your vehicle is covered for theft. If you move into a ZIP code where car theft is reported more frequently than in other areas of the country, your baseline insurance premium goes up.

Another factor is population density. More people increase the potential for a collision, fender bender, or pedestrian-involved incident. Not surprisingly, insurance companies hedge their bets by charging higher insurance premiums for drivers in urban centers than for those who live in more rural environments.

Sources

DMV: "The DMV Point System"

IIHS: "Top Safety Picks 2011"