Vehicle insurance companies look at how risky the vehicles, drivers and zip codes are, how much coverage required, credit score, claim history and several other key details like marriage and homeownership status when they assess insurability and price an application for coverage. The more of these factors go your way the lower the premium gets. Motorists can improve their risk profile by scoring better on some of the factors affecting car insurance rates and being aware of their impact on premiums is the first step.
Here are some of the most influential rating factors;
- Accidents
At-fault accidents increase your auto insurance rates as much as 42%. Most companies look at 3 – 5 years of history. The more recent an accident is, the higher its impact on premiums.
- Traffic tickets
Moving violation convictions go on your driving record and seen by companies. Their influence depends on the severity of the infraction. For example, speeding tickets increase vehicle insurance premiums 23% on average. Again, the more recent tickets are the more influential they are and most tickets stay on your record for at least 3 years.
- Claims
Although it isn’t as much as claiming for an at-fault accident, each claim may affect automobile insurance premium and the degree of the impact will depend on the size and nature of the claim, your driving records, the company and state.
- Driving experience
How long you had your driver license is taken into account. Novice drivers get charged higher premiums. Furthermore, listed drivers’ experience and driving records are checked and rated too.
- Age
Age is a very significant factor especially in the early years of driving. Teenagers are considered the highest risk drivers and can be charged as much as 3 times more than mature adults. Premiums aren’t affected much by age once you are over the age of 25. Motorists get the best rates between the age of 50 and 65 and they start going up again after 65.
- Gender
Again, the effect of gender is the most significant for young drivers. Usually young males pay over 10% higher rates than young females. This gap closes after the age of 25 and can be insignificant for mature drivers. Some states like California, Massachusetts, Pennsylvania, Michigan and North Carolina don’t allow use of gender as a factor.
- Marital status
Married motorists are considered to be more responsible and avoid risks on the road in comparison to single ones and this is noted by auto insurers, which offer around 5% discounts for married motorists.
- Home ownership
Homeowners get better rates than renters. You can save around 5% with most companies if you own your home. Also, you get discounts when you bundle your home and auto insurance.
- Profession
There are a few professions that can qualify for discounts. For example, you can get a great deal if you are a member of the US military. Doctors, teachers, emergency responders and engineers are only some of the professions that receive preferential vehicle insurance rates. You can also qualify if you are a member of certain associations or your employer has a special deal with certain carriers.
- Insurance history
Having a long continuous auto insurance history qualifies you for discounts. And motorists with no history get charged higher rates.
- Current insurer
Often companies look at who is your current insurer. If it is a non-standard insurer, you may get slightly higher rates from traditional insurers because non-standard carriers are known to cover high risk drivers.
- Insurers
Every company you apply for a quote will have their own risk assessment and premium calculation methods and therefore quotes can be significantly different amongst companies. So, the company you apply for or you are currently insured with determines how much you will be charged for car insurance.
- Your car
Every company rates vehicles in their own way. As a general rule, commonly sold automobiles with fair value are cheaper to insure in comparison to less popular cars with higher prices because it is cheaper to repair and replace them. Type, engine size, trim and value of the vehicle affects costs. Cars that protect passengers better, don’t cause large damages to other vehicles in accidents and are hard to be stolen attract lower rates too.
- Vehicle usage
Whether you use your car for commuting or not and your yearly mileage is influential in premium calculations.
- Parking spot
Although many companies may not offer noteable discounts for having a garage, still a few companies can offer you lower rates for parking in a garage than parking on the street. This may be a more influential factor depending on the car you own.
- Vehicle ownership
If you own your automobile outright, you have full flexibility. But you may pay more for car insurance when you lease it or have a loan on it because lenders and lessors have additional insurance requirements that can increase costs.
- Coverage
The more protection you want the higher premium you pay. Basic state required minimum coverage is the cheapest. Considering full coverage policies include liability and physical damages to your automobile, they can cost over three times more but they are still very popular. Premiums can get expensive pretty quickly when you start customizing your policy with endorsements.
- Deductibles
The higher the deductibles the lower your vehicle insurance premiums are but you pay more out-of-pocket for each and every claim. So, motorists may want to see how much they can save if they increase their deductibles to decide if it is worth increasing them.
- Credit score
Your credit score is a very significant factor as a driver with an excellent credit score can get 52% better rates in comparison to someone with a terrible score. Nearly all states, except California, Hawaii, Massachusetts and Michigan, allow credit scores to be considered in automobile insurance premium calculations. So, you need to pay attention to your credit score.
- Zip code
Companies look at population density, traffic congestion, crime figures, accident data and their own claim experience in every zip code and rate them separately. So, your rates will be affected for just being in a cheaper or more expensive zip code for insurance.
These are the key factors that affect auto insurance rates and it may take time to improve on them. If you are looking for an immediate effect on premiums your best bet would be shopping around for the lowest quotes and comparing them to find the best value coverage.