Factors That Contribute to the Cost of Your Auto Insurance
Drivers often ask why their insurance premiums change upon renewal. If you’ve ever wondered why your rates fluctuate – or why your rates are so much higher or lower than friends’ or family members’ rates – we’re happy to share the most significant factors taken into consideration when calculating car insurance premiums.
- Your credit score. Research shows that drivers with higher credit scores generally pose the lowest risk to the insurer, so their insurance rates will reflect that. Likewise, drivers with lower credit scores are statistically at a higher risk of incurring losses, which drives higher car insurance premiums for drivers with lower credit scores. Improving your credit score by paying bills on time, paying off debt, and resolving any collections accounts can help.
- Your driving history. If you have a history of at-risk driving, like speeding, driving under the influence, or being cited at-fault for an accident, your premiums will be higher than somebody who has no negative marks on their driving record. While you can’t undo past driving mistakes, you can make a conscious effort to drive responsibly going forward to improve your rates over time.
- Your claims history. Underwriters look at how often you filed claims with your previous insurer (or with them if you’re renewing your policy) to determine how likely you are to experience losses in the future. Drivers with a history of frequent claims are a higher risk to the insurer than drivers who have not filed claims (or who have filed infrequent claims) in the past.
- The car you drive. Some cars are inherently higher risk to insure than others: those with high horsepower, makes and models that are statistically at higher risk of being stolen, and vehicles that are either expensive to repair or costly to replace. Likewise, some vehicles are accompanied by inherent low risk. You can maintain some control over your premiums by driving a vehicle that’s inexpensive to insure.
- Your zip code. Certain zip codes are more prone to accidents than others: those with a younger average age; those that are congested or large number of people per square foot; and those with a lively night life, for example. Underwriters review accident history in your zip code to determine the risk you’re at by living where you live. Choosing safe, rural communities can help keep your insurance premiums low.
- Your age. Auto insurance is particularly expensive for young drivers and typically doesn’t get cheaper until you hit your mid-twenties. That means that if you’re a young driver yourself or you have a young driver in your household, you can expect higher insurance rates. It also means you have something to look forward to before Medicare eligibility!
- Your marital status. Married drivers are a little less likely to engage in risky behavior than single drivers, which means insurance premiums generally decrease when you put a ring on it.
For a free insurance quote, stop by Binford Insurance in Indianapolis, Indiana, today. We’d love to take a look at your coverage, share our expert insight, and see if we can find you better coverage for a better price