Whether you think you’re paying too much for car insurance, you want to update your policy, or you need to purchase a new policy, it’s important to know what the factors are that affect car insurance rates. While some of the factors may be beyond your control, gaining a better understanding of what you’re paying for might help you find ways to save on your policy. Insurance companies take several different things into consideration when determining car insurance rates–and highlighted for you here are seven of them.
Age
Age is a big factor in calculating car insurance rates–and unfortunately it’s one that you can’t do anything about. Drivers under the age of 25 are usually considered higher-risk, while drivers between the ages of 50 and 65 are deemed the safest. If you’re a younger driver, hang tight. You’ll most likely qualify for a lower rate once you pass the 25 mark–especially if you maintain a clean driving record.
Location
Your geographical location is another factor that will determine what you pay for car insurance. Where there’s heavier traffic there generally tends to be more accidents–so city drivers can expect to pay more than drivers living in smaller communities or rural areas. Also, if the area in which you live has a high crime rate, the cost of your car insurance will reflect the risk.
Type of Vehicle
If you drive an expensive car such as a sports car or luxury vehicle, you’ll definitely pay more for car insurance. You may qualify for lower rates, however, if you opt for added safety features such as anti-lock brakes or side airbags. Installing an anti-theft device in your car may also make you eligible for a discount–especially if you park your car in the street or in a parking lot as opposed to a locked garage.
Driving Record
Insurance companies look closely at driving records, and if you have a meticulous one you’ll be greatly rewarded. On the other hand, if your driving record is marred with traffic violations such as speeding tickets or DUI’s, you’ll pay more for your car insurance until you can prove to the insurance company that you can be trusted. Moving violations pose a greater risk for accidents, so they’re a big factor when it comes to determining rates.
Claims History
Like traffic violations, excessive accident claims under your belt will automatically classify you as a high-risk driver. Since you can’t make your claims history disappear into thin air, try to improve your driving record so that you can decrease your chances of getting into an accident. The time frame in which claims affect your rates varies from company to company, but after a few accident-free years your rates will gradually go down.
Credit Score
It’s not uncommon for insurance companies to check your credit these days, and bad credit or no credit can mean higher car insurance costs for some drivers. If you have very little credit history, work on establishing good credit and earning yourself a decent credit score. If you have poor credit, take measures to improve it so that you can earn favor with your insurance company.
Vehicle Usage
The distance you travel to work and whether or not you use your car for business purposes are both factors that will influence your car insurance rates. Higher miles and certain occupations may lump you into a high-risk category, with increased rates resulting. Also, if you have other people listed on your policy as drivers, your rates may increase depending on their ages, driving records, and such.
Each insurance company has its own formula when it comes to calculating car insurance rates, but many of the factors that they look at are the same. Even though it isn’t possible to alter some of the factors that determine your rates, you may have the opportunity to make some changes and improvements over time.
Guest post from Sam Landon. Sam writes for CarInsurance.org.