It can be risky getting on the road. There are on average 6 million car accidents every year in the US. In 2017, over 40,000 fatalities occurred on the road in the US. This gives you a picture as to why auto insurance is needed. While the need is clear, how insurers calculate your premium can be more of a mystery. While car payments stay fixed and gas prices change some, auto insurance rates can seem to swing wildly. Below are 10 things that can affect your car insurance rates.
10 Things That Affect Your Car Insurance Rates
Rest assured your rates aren’t created by the roll of the dice, but rather by some consistent factors. Knowing what insurers are looking at can help you estimate your costs and possibly lower them.
How old you are is a major factor in what kind of driving risk you are (and therefore affect your car insurance rates). Car crashes are the biggest cause of death for drivers between 16 and 19 years old. Teens who are in the first few months of having their license are at a very high risk of having an accident.
Due to these stats, teens pay more for auto insurance than any other age group. On the bright side, many insurers offer ways to offset the cost for teens, such as discounts for good grades and taking part in certified driver training.
Women statistically have many fewer car accidents than men. In 2016, 12,422 male drivers died in car accidents while 5,107 women drivers were fatalities. Even with the decline of teen auto fatalities over time, fewer female teen drivers die in crashes every year than male teen drivers.
Due to this gap in driving risk, women pay less for car insurance than men. As both genders age, however, the gap reduces.
3) Vehicle Type and Expenses
The cost of your car will certainly affect your car insurance rates. The more expensive your car, the higher your premium will be. Repair costs can affect your rates as well. If you have a car that’s difficult to repair or has hard-to-find parts, it will reflect in your insurance cost.
4) Vehicle Record
Insurers take the safety track record of the make of your car seriously. Collision insurance is offered to take care of you in case you’re in a car accident, so your insurance company is going to take a vested interested in what kind of car your drive.
Insurers consider the safety of other drivers equally important. Some cars are dangerous due to size, structural flaws, or control issues. These cars can make the road risks for others. Liability coverage is much higher for such cars.
5) Chance of Theft
It may come as a surprise that the chance of your car getting stolen is an insurance risk. Since insurers offer comprehensive coverage for instances like car theft, it makes sense that they look at what you drive before you get a policy. If your car has a high chance of theft, expect your comprehensive auto coverage to cost more than average.
6) Driving Record
A poor driving record is a surefire way to affect your car insurance rates….in a bad way of course. It’s a good idea to ask your insurance company how they weigh incidents and how long they stay on your record. An accident can affect your record for an average of three years. Driving carefully and not speeding is both healthy and keeps money in your pocket.
7) Where You Live
Some areas have more traffic or crime than others. As such, where you live can factor into your auto premium. This is one of those parts of car insurance that is figured by looking at groups of people rather than just one. If your area has many people driving without liability or has many poor drivers, it’s going to reflect in your rates.
8) Driving Habits
How often you drive can play a part in your policy premium just like how you drive. If you don’t drive often because you work from home or carpool but need liability insurance, a low-mileage policy could save you money. Talk to your agent to see what’s available to you.
9) Credit History
Depending on where you live, your credit score can affect your insurance rates. There is a school of thought in the insurance industry that people with low credit scores have more accidents. California, Massachusetts, and Hawaii have banned the use of credit scores as a factor in car insurance rates. Check with your agent to see if your credit is used in underwriting.
10. Insurance Provider
No two insurance companies are going to calculate all the above factors the same way. One may weigh age more than driving record, or vice versa. Running costs can change daily as well, so you could get two different quotes from the same company months apart. This is another good reason to look around to make sure you’re getting your best rate.