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What Factors go Into Your Car Insurance Rates?
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Michael
Student Contributor
Posted July 24, 2018
What if I told you that your car insurance premium wasn’t just based on your diving record? Many drivers don’t realize that their insurance premiums are based on multiple factors in a variety of categories. Here’s a breakdown of some of the factors that impact how much you’ll pay.
Where you live
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Living in an urban area compared to rural areas can affect your cost for insurance. Do you live in an area that has high crime, theft, or even a lot of traffic? Having more cars on the road can put you at a higher risk for accidents, which can cause your premium to go up. Living in a city with high crime will also bring financial risk causing your rates to increase.
What you drive and your driving record
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Driving your dream car can be the best feeling in the world, but you may want to consider what your premium could be before you buy it. Insurance companies consider what kind of vehicle you are driving when determining rates. They are looking to see what safety features and anti-theft technology are included with the vehicle. Your driving record will also help determine how much you will pay. If you have been involved in any kind of traffic incident it may raise your premium. The impact of an accident on your insurance rate will be reduced over time.
Your credit score
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According to Nationwide, 92% of all insurers now consider credit when calculating car insurance premiums. They tend to look at your payment history, length of credit history, and what kind of credit you have open. These categories help insurers see what kind of reputation you have for paying others as agreed. If you are paying others back it helps show the insurance company less risk of not getting paid. A higher credit score generally corresponds with a lower premium.
Age, gender, and marital status
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Some factors that affect your premium are not something you change. If you’re younger than twenty-five you’ll likely have a higher premium. If you’re a young man, you may have a higher premium than young women due to studies showing that young men are more prone to crashes. In contrast, as men get older their premium tends to shift lower than women. Studies have also shown that if you’re married, you may be less likely to get into an accident.
How often you drive and how you use your car
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Do you drive a lot for work? If you are driving your car frequently for work, you pay more for insurance. The more you are driving your car, the more you are at risk of being in an accident. You may be able to get a lower premium if you don’t use your car often.
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