Sophisticated algorithms used to calculate vehicle insurance premiums take into account numerous intricate details and factors during the assessment of each application, and some of these considerations can be rather unexpected. While many motorists are aware that their age, driving experience, driving records, and vehicle specifics play a role in determining their insurance premiums, they might not be familiar with the below additional factors that can influence their car insurance rates:
- Lapse in coverage: Many people might believe they can cancel their automobile insurance when their vehicles are not in use or during extended holidays, with the intention to resume coverage whenever they desire. Regrettably, this belief is mistaken for several reasons. Firstly, if they wish to drop their state-required liability coverage, they must take their automobiles off the road. Secondly, they are required to inform the DMV that the vehicle is not being driven and is currently off-road, thereby seeking an exemption from insurance requirements. Moreover, there is a high likelihood of having to pay higher premiums due to the recorded lapse in coverage when they decide to insure their automobiles again.
- Single or Divorced: Typically, car insurance companies consider married motorists more responsible and offer them lower rates. There are many studies from the Consumer Federation of America showing that single and divorced motorists pay higher vehicle insurance rates in comparison to married motorists.
- Renters: Homeowners also often get better auto insurance rates in comparison to renters. They may get even better rates when they bundle their home and auto insurance together but they still get cheaper rates even without bundling policies.
- Spreading Premiums: Most car insurance companies give large discounts for paying the premium in full. So, if you are always spreading your premium payments for ease of budgeting, you may be paying higher premiums all that time.
- Bad Credit Score: Many people may know or heard that credit score affects their premiums but they may not know that bad credit can even double their car insurance premiums according to Consumer Federation of America.
- Education: Some insurers offer lower rates to people with higher education degrees. So, if you are a high school dropout, you may pay more for vehicle insurance with some companies.
- Unusual Cars: If you have an unusual, highly modified or with rebuilt title automobile, you are likely to pay more for auto insurance and some companies may not even quote. In addition, you may have to pay higher premiums if you have a vehicle with a bad safety rating or prone to theft.
- Deductibles: According to surveys, most people prefer policies with lower deductibles. If you get two quotes with similar prices and coverage but one has lower deductibles, it makes sense to go with the lower deductibles. However, often insurers charge higher rates when you lower the deductibles.
- Long Commute: Some underwriters take the commute distance into account when they calculate the yearly mileage and premiums. So, if you have a long commute every day, you may be paying higher auto insurance rates with your current provider. Some other companies don’t consider the commute distance and they may offer you lower rates.
- Primary Driver: If you have more than one car and driver in your household, you should inform your insurer who is the primary driver for each vehicle. If you don’t, your insurer is likely to elect the highest risk driver as the primary driver for the highest risk car and charge you more for car insurance.
- Neighborhood: Living in a high-risk neighborhood may increase your auto insurance rates in comparison to a nice and peaceful suburb. Companies check auto theft, vandalism and accident ratios in your zip code and charge more when the numbers are high.
- Roommate: The general understanding is that having a high-risk driver in the family will lead to higher auto insurance rates due to the need to include them in the coverage. However, what many people may not realize is that even having a roommate with a poor driving record can also impact your premium, even if they don’t drive your vehicle. Insurance providers typically inquire about all individuals of driving age residing in the same household and assess their risk factors. Therefore, if you have a roommate with a problematic driving history who doesn’t drive your car, it might be worth considering excluding them from your policy using a named driver exclusion clause. This action can prevent their record from affecting your premiums.
- Seniors: Again, many people know that teenage drivers pay higher premiums but seniors may be charged higher auto insurance premiums too.
- Current Insurer: It is a known practice among some traditional auto insurers to offer higher quotes to individuals who are currently insured by non-standard insurers. Often, people turn to non-standard carriers when they face difficulties obtaining coverage from traditional insurers due to various factors. However, when these individuals attempt to switch to standard carriers later on, they may encounter resistance in the form of higher rates.
It appears, the above reasons may not favor motorists who are single, have low credit, rent, and reside in high crime neighborhoods. The Consumer Federation of America, in particular, has extensively studied and published posts highlighting the potential disadvantages faced by financially challenged drivers when seeking to purchase automobile insurance.