If you own and drive a car, chances are you’re also paying a car insurance premium. Considering that different insurance companies will quote you a wide range of premiums, you’re probably wondering what factors affect your auto insurance rate.
While it makes sense that your driving record and car usage play a factor in determining your auto insurance rate, they’re definitely not the only factors insurance companies take into account. Here are the most common factors that companies consider to establish your particular auto insurance rate.
- Driving record. Insuring any driver is a risk for insurance companies, but especially drivers with blemishes on their driving record as they represent a high risk. There’s no formula for predicting the future, but companies can certainly make an assessment by examining your past driving habits. If you have a history of accidents, speeding tickets or a DUI, you can expect to have a higher auto insurance rate.
- Location. Where you live will most certainly impact your auto insurance rate. Generally, living in a big city is more expensive than a rural area. Urban areas are more heavily populated, which means there’s more traffic and bigger chances of auto accidents. City life also means your car is at an increased risk of being stolen – another factor that increases your auto insurance rate.
- Demographics. You may or may not be surprised that your age, gender and marital status may help determine your auto insurance rate. Insurance companies collect statistics to keep track of patterns that help them identify drivers who are most at risk of being involved in a car accident. In general, women pay smaller insurance premiums, while men – especially young males under 25 – tend to pay higher premiums. Once drivers reach 25 years of age or they get married, they’re likely to see a drop in their auto insurance rate.
- Credit history. You probably already know that your credit history comes into play when you’re applying for an apartment or a new credit card, but perhaps you weren’t aware that it may influence your auto insurance rate. It’s true – many companies are now pulling your credit report to assess how responsible you are and how much of a risk you represent. The lower your credit score, the higher your insurance premium will be.
Given that companies use a variety of factors to determine an individual’s auto insurance rate, premiums can vary wildly from one person to another. And while there are some factors, such as your demographic profile, that are out of your control, there are others you can influence to your advantage, like maintaining a good driving record.