When insurance companies decide on the rates that they are going to charge their customers, there are many factors that they take into account. Many of the things they take into consideration you really have little to no control over, but there are some things that are factored in that just might surprise you.
One of the key factors in determining car insurance rates is your driving record. Rates will be higher if you have been the cause of one or more accidents. The same holds true if you have a number of moving violations against you or you have submitted too many claims to your current insurance company. All of these things are factored into the price you will pay for car your insurance.
Demographics are another area that plays a big part in your insurance rates. While a married woman could pay less for her insurance, an unmarried young man could pay considerably more because they take into consideration the risk factors of each class of driver. The drivers who are known to pay the most for their insurance coverage based on annual statistics are teenage boys. If you live in the city you will pay more for your insurance than your neighbors in the suburbs. Higher crime areas present higher risks and result in higher rates.
You probably already know that the type of car you drive is also factored into your rates. You should always check how much your insurance rates will change when you buy a new car. More and more new cars have factory installed safety features that make insuring a new vehicle sometimes less expensive than you think. Passenger side airbags, keyless entry and pre-installed alarm systems on newer vehicles cut down on the liability and in the end can cut down on the cost to insure them.
One thing that you can control is your credit score. In recent years the insurance industry has been allowed to use your credit score to determine your rates. If your credit score is good, you’re safe. If you are having financial problems, check your credit score and see if there are any errors on it. If there aren’t then set up a plan to pay your bills on time and your score could improve in as little as six months time.
The amount of time that you are on the road will also play a part in how much or how little you will pay for your insurance rate. Someone who is on the road commuting to work two hours a day is going to pay more to insure their car than someone who works from home and uses their vehicle mostly for leisure. Some companies even give lower rates to retirees who don’t drive nearly as much as they used to.
Letting your insurance coverage lapse will not only affect your car insurance rates but it will affect whether you will be able to get insured at all. If you are going to change your insurance make sure that you let your current carrier know so that they don’t cancel you. If you look irresponsible you will appear to be a bigger risk to an insurance company.
Take the time to do what you can about the things you can control – drive safely, keep your credit record clean, and let your insurance agent know if you are switching carriers. Every little bit helps and altogether they make a difference on how much or how little you will pay for your coverage.