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Sep 23

Top factors that affect your car insurance rate

Reading Time: 4 mins

It can be tempting to increase your deductible or reduce your coverage to lower the cost of your car insurance.

These are the two things that will most effectively reduce your expenses.

These aren’t the only things that can affect your cost, however. You can and should pay attention to many other factors.

Although not all things are within your control, there are some things you can do. Even knowing the details of your insurance rates can help you a lot.


1. Your driving record

It should not surprise you that your driving record matters. If you had an accident or even a claim, your chances of finding cheap car insurance get lower.

While the last three to five years are most important, a company can go back further. You could get lower rates if you don’t have a ticket or an accident during that period.

Rates could rise for those who have been in an accident or ticket.

For example, those who are convicted of a DUI see a 36% increase.

Remember that all claims will count against you. However, at-fault claims will increase your rates more than comprehensive claims.

To ensure that your insurance doesn’t get cancelled, you want to be as safe as possible.

You are more at risk the more claims you make.

Even if the claims are minor or you are not at fault, they could still be considered. This is because your car insurance company still considers you a risk and could charge you for damages.


2. Your Coverage

Another important aspect is the coverage you select.

Your state may require that you have certain types of coverage. However, you will have final say over any additional coverage.

You’ll pay less if you only go with the minimum. You’ll pay more if your limits of liability are higher or you add collision or comprehensive coverage.

Remember that you are trading lower costs for greater protection in the event of an accident. If your costs are low, you may end up paying more in the case you get into an accident or don’t have enough coverage.


3. Location

Your area includes your state as well as your zip code. This is because every state has its own regulations regarding car insurance. You may require something different.

Car accidents in urban areas are more frequent, and insurance claims are more common. You will pay more for insurance than someone who lives in a rural area.

The claims you have for vandalism, stolen cars, commonality of claims, weather patterns, and vandalism are reflected in your zip code. These factors can increase your risk, which can lead to a higher cost.

It’s vital to find out if your state allows insurance companies to use your location to determine your eligibility. Not all states allow this.

California residents must provide their address only after they have checked your driving records, mileage and how long you’ve been driving.


4. Deductible

You are responsible for paying a portion of the cost of repairs to your vehicle before your insurance covers it. This is the deductible.

When it comes to your deductible, you can usually choose from many options.

You’ll pay more for a lower premium, such as $100, but you will be able to get help if you have a problem.

You’ll pay less if you have a high deductible like $1,000.


5. Your Car Worth

Another factor that influences how much you pay is the car you drive.

Some vehicles will be more expensive than others, or more likely to be stolen.

A larger vehicle is generally safer than a smaller one. This means that you will get a higher premium due to the safety rating of your vehicle.

However, if your vehicle is older than you think it should be, you might end up spending more on repairs.

This could result in a higher premium as you are paying for repairs that could be required. You could file a claim with your insurance company to cover these costs.

A vehicle with a higher rating means that your passengers are less likely to get hurt.

Because your insurance company will not have to pay for medical expenses, you will have a lower premium.

You could pay a lot more if your vehicle doesn’t have a high safety rating. This is even more if your vehicle is on the top 10 most stolen vehicles.


6. Your Mileage

Those who drive less and travel less are likely to pay less than those who drive extensively.

You have to remember that if you drive your car more, you are more likely to crash than someone who drives less. It’s important to accurately report your annual driving.

You could be in serious trouble with your insurance company if you estimate too low or fudge your numbers. You could end up paying a lot more if you estimate too high.

This will also affect how much insurance you pay if you drive to work. This is because you drive more and at busier times of the day.

You can reduce your insurance premium by using other modes of transport for your commute to work, but that’s just a part of the equation.

Top factors that affect your car insurance rate

7. Your credit score

When deciding the rate of your car insurance, almost every company will use your credit score.

You’re more likely to pay more for your premium if you have lower credit scores (except in states that prohibit it).

A higher credit score means that you are considered less risk. This means that you won’t need to pay as much premium.

This is because people with low credit scores can file more claims.

If your credit score can be included in your premium valuation, you could actually see a significant increase in your costs.

Research suggests that people with fair credit may be eligible for a rate up to 17% higher than those with good credit.

It is possible to have 67% more credit if you have poor credit than someone with excellent credit.


Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.



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