What Factors Determine Your Car Insurance Price?
Have you ever wondered why some people seem to have lower car insurance rates than you do? Or maybe you’ve wondered why your rates are lower than others? There is a reason for that. Or, there could be a number of reasons. When insurance companies determine car insurance rates, they don’t just pick a random number and say, “this is what we can offer you”, nor do they base rates on how much they like you. Instead, they base the rates on these factors:
Your Driving Record
The top factor in determining insurance rates is something you can control: your driving record. The insurance company into consideration how many traffic tickets you’ve received, the severity of those tickets (a more serious DUI versus a simple ticket for a broken headlight, for example), and the number of accidents you’ve caused. If you have a spot-free driving record, you’ll be in for a treat once you see the insurance rates you’re offered.
Your Personal Information
Insurance companies are going to stereotype you a bit based on your age, gender, and marital status. The reason they do that is because statistics show married individuals are less likely to get into an accident than single drivers. That might sound a bit silly, but the reasoning behind it is married folks are considered to be less aggressive on the road since they usually have at least one passenger. Women are also considered less likely to get into an accident than men, statistically, so a female’s rates are usually lower than a male’s.
Your Place of Residence
The city you live in factors into the equation. Why? Because the risk isn’t the same for drivers in one town as it is in another. Drivers that live in sparsely populated cities typically get better rates than those in highly populated towns. The higher the population, the more cars on the road, which leads to more accidents.
Your Credit Score
Your credit score doesn’t impact the rates much, but having a good credit score does help. If your credit score is low, work on getting it fixed so that when it comes time for renewal, the insurance company will give you a slightly better rate on car insurance. If you’re wondering what the heck a credit score has to do with driving, insurance companies attribute a good credit score with responsibility.
The car you drive won’t have a significant impact on your insurance rates, but there is some advantage to having the “right” car. If your car scores well on crash tests, you’ll get better rates than a car that isn’t equipped with certain safety features such as air bags. The value of the car does matter. Cheaper cars get cheaper rates because claims payments will be lower than an expensive car.