What drives the cost of car insurance? Unfortunately, it is a lot more than your accident history or the type of car you own. In fact, insurance rates are like a puzzle made up of several pieces of different sizes. The bigger pieces represent the most influential factors in your rates, whereas the smaller pieces correlate to factors of lesser significance. The way these pieces fit together is unique to you and your personal risk profile, and the final result will vary from insurer to insurer.
Generally speaking, the more negatively an insurer views your risk profile, the higher your rates will be. However, not all factors are viewed with the same emphasis among insurers. By finding an insurance company that is more lenient on your negative factors, it is possible to find more competitive car insurance rates without sacrificing the quality of your coverage.
Factors that Influence Your Rates
There are many different factors that can influence the price you will pay for car insurance. According to the Insurance Information Institute, insurance companies use this information to determine how likely it is that you will be involved in a car accident or need to file a claim. Below, we list some of the most commonly used risk factors.
You might assume that your credit is only used to determine your eligibility for a loan, but the truth is insurance companies use credit history to help determine claims risk. That is because studies have linked low credit scores to a higher probability of filing an insurance claim. While negative factors can stay on your credit report for many years, you can improve your credit by making on-time payments and avoiding high debt balances.
Your past driving behaviors are a good indication of your future ones. If you have a history of accidents, speeding tickets, or even DUIs, insurance companies might be more hesitant to insure you. If you are extended coverage, you can expect to pay higher rates – especially for multiple offenses.
The more time you spend on the road, the higher the risk of an accident. Drivers who have long commutes or put a lot of miles on their vehicles each year may be viewed less favorably than those who are retired, work from home, or put 10,000 miles or less on their vehicles each year.
The vehicle you drive can have a big influence on your rates. Insurers need to know how much it will cost to replace or repair your vehicle if you need to file a claim. They also want to know if your vehicle is at high-risk of being stolen or if it contains certain safety features, such as airbags and anti-theft devices, that could actually prevent claims in the future.
There may be little you can do about it, but your age can impact the price you pay for coverage. Young drivers under age 20 are nearly three times more likely to be involved in a collision than older drivers are. However, students who maintain good grades – usually a B average or greater – may qualify for discounts on coverage.
Shopping for Affordable Rates
If you have one or more negative risk factors, you are not necessarily doomed to higher car insurance rates. By shopping for coverage with an independent insurance agent here at the Andreotti Agency, you can find the high-quality coverage you need at a competitive rate from an insurance company that is more favorable to your individual risk profile and circumstances.
For more information about the cost of car insurance or to request your free quotes, contact our office today.