Bad Credit, Driving Record Affect Car Insurance Premiums


In a time where more and more Americans are choosing to increase deductibles or even forego renewing their car insurance policies, experts warn that some factors can contribute to higher premiums.

Bad Credit, Driving Record Affect Car Insurance PremiumsThe bleak economic situation is forcing many motorists to cut down on expenses, car insurance included. Many policyholders renewing their policies are also choosing to increase their deductibles in a bid to get lower premiums.

Recognizing the desperation of many drivers across the nation, industry specialists are cautioning motorists against compounding their financial problems by having spotty driving records. Experts say that a driver’s record is one of the primary bases used by providers to calculate insurance premiums.

Car insurance companies prefer low risk motorists, they say. It all boils down to simple logic, experts add. If a driver is considered at high risk for car accidents, companies have to expect a high probability of paying out claims in the future. Because of this, providers charge these motorists higher premiums.

Drivers that are considered as safe and responsible also represent lower possibilities of being involved in vehicular accidents. Consequently, they are usually offered lower premiums, analysts explain.

A spotty driving record would indicate a high probability for accidents and a higher risk for company losses. To make up for the possibility of losing income, providers hike insurance costs for drivers to shoulder.

Experts also emphasize the need for motorists to drive cautiously and defensively. By avoiding car accidents and other moving violations, policyholders can avail of special rates and even discounts.

Specialists also add that a driver’s credit score can adversely affect insurance costs. Some companies look into a motorist’s credit history to assess if their financial status will allow them to settle payments on time. Though prohibited in most states, some providers resort to this.

A poor credit score means that a policyholder can miss payments. To avoid losses, some companies screen potential policyholders using their credit history. Most states disallow this particular method because it is believed to be discriminatory.

Industry experts suggest that drivers should shop around before deciding on a insurance provider. Some companies offer special promos and rates that should be closely studied by motorists. Policyholders should pay close attention to the terms and conditions that accompany any policies. Analysts also add that consumers can compare insurance quotes online and even consult industry experts to come up with the best decision.