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Life Events and Car Insurance

How Life Events Affect Your Car Insurance

When life throws a significant change at you, your car insurance rates and needs may also change. Understanding how major life events affect your car insurance rate will help you ensure you have the right auto insurance coverage for your current situation.

What Is a Life Event?

A life event is a major life change that creates a new financial situation or financial considerations.

A life event may prompt the need for additional insurance products or a change in insurance.

Life events include, but are not limited to:

  • Getting married/divorced.
  • Having a child.
  • Buying a car.
  • Buying a home.

Continue reading to learn how specific life events can impact your car insurance.

Common Life Events That Affect Car Insurance

Marital Status Change

Some of the biggest life changes are:

  • Getting married.
  • Separating from a spouse.
  • Losing a spouse in death.

When the number of drivers in the household goes up, such as when you get married, your insurance rates will go up as well. However, many people find that their insurance rates as a couple are lower than their combined insurance rates as two single individuals.

When the number of drivers goes down, your insurance premiums will drop. Don't expect the rate to be cut in half, though, as you will no longer have the married discount.

Having a Baby

Having a baby may actually help reduce your car insurance rates.

Car insurance companies have found that parents with young children tend to drive more attentively because of their precious cargo.

Also, many parents with babies on board choose to upgrade to a larger, safer vehicle. Upgrading to a safer vehicle often lowers your premium.

Moving to a New Home

Moving to a new home may or may not affect your car insurance rate. If you move to an area with a lower population, the risk that you have an accident will decrease, leaving you with a lower car insurance rate.

Conversely, if you move to an urban, population-heavy location, expect your rate to go up as a result.

If you are buying your home, you may be eligible for a multi-policy discount by combining your homeowner's insurance with your car insurance policy.

Adding a Teen Driver

Teen drivers are statistically more likely to exercise unsafe behaviors and get into accidents than older drivers.

Because of this, teen drivers present higher risk to car insurance companies and they, in turn, charge teen drivers higher premiums.

Buying or Selling a Car

The cars on your policy directly affect the cost of your insurance. The more cars you have insured by the same company, the less you pay per car, as you'll likely get a multivehicle discount. However, with more cars, you'll pay more altogether.

If you buy a new car, its features will impact how much it costs to insure. For example, high-performance vehicles, luxury cars, and SUVs tend to have higher premiums than other car types. Do note, however, that if your car is equipped with certain safety equipment such as passive restraint or passenger-side airbags, you might get a discounted rate.

If you get rid of a car, your premium will likely drop, even if your per-car rate increases slightly.

Getting a New Job

One of the factors that affects your car insurance rate is your commute. The farther you commute, the more you pay.

If your new job is closer to home, you will pay less. If your mileage has gone down, make sure to update your insurance agent to make sure this is reflected in your rates.

Comparison-Shopping After a Life Event

If you are facing a significant life event, shopping around for car insurance can help you get the cheapest auto insurance possible.

Each insurance provider offers a slightly different formula for how they determine your rates. Find one with reasonable, competitive rates to help you make the most of the upcoming changes in your life.

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