When setting your insurance rate, there are plenty of factors that car insurance companies take into account, from your location to your credit score, to whether you're single or married. Learning about the different factors insurance companies consider when setting a rate for you will hopefully help you make an informed decision when shopping for car insurance, and also potentially help you find ways in which you can lower your premium.
1. Age & Gender
Young male drivers generally pay more compared to young female drivers. The primary reason for this is based on statistics that show that male teens are more likely to kill or hurt someone in a car accident than teenage girls.
A mature driver (someone 26 and over) will generally pay less than younger drivers need to. If you're a young driver, chances are you'll see a decrease in your insurance premiums once you're in your mid-20's.
Alternately, mature male drivers get better rates than their female counterparts. While the difference in rates isn't usually that significant, it's generally thought that this is because studies have shown older female drivers are involved in more minor accidents compared to males.
2. Credit Score
While not all insurance companies do this, many will look at your credit score when they're trying to determine your insurance rate. Although there isn't a particular point where your credit score will begin to affect your rate, you can usually count on higher premiums if your credit score is low.
The reasoning behind this is that you're viewed as being a less reliable customer to the insurance company. Maybe you've missed payments on a few bills in the past, which caused your credit score to drop; this leads the insurance company to think that you may end up missing payments with them at some point. Since not all companies look into credit scores or disclose that it's something they look at when setting premium rates, it might be a good idea for you to ask your agent if it's something they do.
3. How Much You Drive
The more time you spend driving out on the road, the higher your chances of being in an accident. If you're someone who commutes to work by car because you live far away, not only will it cost you more in terms of time and gas, your premiums are also probably going to be higher than someone who lives closer to work, driving a shorter distance. On the flipside, if find you're suddenly needing to drive fewer miles, you may be able to lower your rates a little bit.
4. Marital Status
If you're single, you're going to have a higher rate than a married couple would. This may sound strange (and maybe a little unfair), but getting married can actually lower your rate significantly, particularly if you're male. Why? Married couples are less likely to get into accidents or incur driving violations compared to those of you who happen to be single. This leads insurance companies to put anyone lucky enough to be married into the low-risk category, resulting in a lower rate. The amount your rate decreases will all depend on your previous driving history.
5. What Kind of Car You're Driving
Your vehicle is going to be rated by its make and model by the insurance companies. Things they'll take into consideration: the likelihood of your car being stolen or getting into an accident, age, size, and safety rating.
Compared to smaller cars, a larger vehicle is generally going to be safer in the event of an accident. As a result, they'll have better safety ratings, which can lead to lower premiums.
If you have a car that is especially attractive to thieves, you're more likely to get higher rates from your insurance company than a car considered a less likely target. Likewise, if you're purchasing a brand new car, one that is large and sturdy like a minivan or SUV, larger new cars tend to be cheaper to insure compared to something small, such as a Honda Civic.
Contact an insurance broker for more information.