Did you know car insurance companies consider many different factors when underwriting your policy? Some of these factors you can’t control and other factors you may have limited control over whether or not you can easily change them. To learn a few of these factors and ways you can lower the costs of your monthly car insurance premiums, keep reading.
1. Your Driving History
Your driving history contains information about the number of tickets you’ve received and how many car accidents you’ve incurred over the last several years. Needless to say drivers with numerous speeding tickets, infractions, and car accidents will pay more in monthly premiums than drivers who have very few tickets and accidents. In order to control this factor, you’ll want to improve your awareness while you drive and obey all traffic laws.
2. How Many Claims You’ve Filed Recently
Car insurance companies typically look at your claims history over the last three years. If you’ve filed a claim every year for the last few years, you’ll likely pay more in premiums than someone who hasn’t filed any claims or only filed one claim in three years. While you do have to file a claim if you damage someone else’s property with your car or get into a collision with another driver or pedestrian, you can choose to pay small amounts of damage from your own pocket, like accidentally backing your car into your own mailbox or garage.
3. Your Credit Score
To insurance companies, your credit score indicates the number of financial resources you may have available to pay for damage to your vehicle. If you have a low credit score, car insurance companies assume you have no savings or financial resources to pay for vehicle damage, which means you’ll be more likely to file a claim for any amount of damage that is over your deductible amount. For this reason, drivers with poor credit scores often pay more for coverage.
4. The Coverage Limits of Your Policy
Your coverage limitations are the maximum amounts the insurance company will pay for each claim. They typically include limitations for property damage and personal injuries, and the higher those amounts, the higher your insurance premiums. However, drivers shouldn’t choose the lowest coverage amounts. Instead, they should strive for the state average or slightly better. Having extremely low policy limitations could result in you being underinsured and responsible for any claim amounts that are more than your policy’s limitations.
5. Your Deductible Amounts
Certain types of car insurance coverage include deductibles. The most common insurance with a deductible is collision insurance because this pays for damage to your vehicle regardless of whether or not the accident was your fault. Insurance deductibles typically range from $0 to $1,000 per claim, and the higher the deductible amount, the lower your insurance premiums. However, you should always strive to have deductible amounts that you can always pay versus having an extremely high deductible amount that you can never afford.
Ways to Save on Your Monthly Premiums
Even with all the factors that affect car insurance rates, you can still take advantage of certain discounts that can lower your monthly premiums. The most common discounts include:
- Cash discounts for paying your entire premiums upfront.
- Low-mileage discounts for drivers who do drive less than the average.
- Good student discounts for high school and college students that maintain a certain GPA.
- Multiline discounts for having more than one policy with the same insurance company.
- Safe driver and accident-free driving discounts.
When looking for an affordable insurance policy, you should think about your driving habits, the number of claims you’ve filed, and your credit score and work toward improving those items so that you can get better rates in the future. It’s also important to take advantage of all the discounts available to you and remember to shop around and get multiple quotes. Every insurance company weighs factors differently, which means you could save hundreds by switching insurance companies.
