Auto Insurance is one line of insurance that almost everyone carries. Unlike Homeowners Insurance rates, which are mostly based on the home, Auto Insurance rates are mostly based on the named insured – the person who holds the policy. Here are the top ten factors that affect your rate:
1. Age: Most of these factors are based on statistics, and this one is no exception. If you are younger than 25 or older than 70, you are more likely to be involved in an accident.
2. Driving History: Speeding tickets, moving violations, DUIs (especially DUIs) all affect your Auto Insurance rate. As part of the quoting process, your Motor Vehicle Record (MVR) is ordered. Violations found in your MVR will increase your rate. Typically, minor violations affect your rate for 3 years and major violations for 5 years.
3. Claim History: Insurance companies love collecting premiums, but they’re generally not so thrilled about paying out claims. If any insurance company has paid a claim to you or on your behalf in the past, chances are better that it will happen again vs. someone else who’s never had a claim. It makes no difference at all if you were the one who was at fault in the prior claim. If your policy was the one that paid, your rate will be the one affected.
4. Credit Score: Statistically, a more responsible person is a more responsible person. If you pay your bills on time and manage your finances, you also probably take fewer risks on the road. They’re also more likely to get their premium from you on time.
5. Insurance History: If you’ve spent a long time with your previous Auto Insurer, chances are that you’ll spend a long time with your next one, too. That longevity will buy you a cheaper rate. Conversely, if you’ve let your insurance lapse, you’re a bad risk. You’ll pay more (or be declined).
6. Driving Practices: How many miles you drive per year, whether you commute to work, whether you use your vehicle for business and whether you have multiple vehicles and/or drivers in your household all affect your rate.
7. Location: Urban areas have more roads, more cars and more drivers. Living in these areas puts you in greater contact with all of these and increases your risk of an accident. In addition, if you live in a higher-crime area, you’ll pay more for the increased risk of theft and vandalism.
8. Vehicles: The type of vehicles on the policy does affect the rate, just not nearly as much as most people think. Older vehicles are worth less and are thus cheaper to insure. Among vehicles from the same year, the lowest valued car will be less expensive to insure. Airbags, anti-lock brakes, alarm systems and other safety features give you a break on the premium.
9. Marital Status: Married folks pay less; they are a better statistical risk.
10. Gender: Sorry, guys, but rates tend to be lower for women. They’re shown to take fewer risks on the road.
These ten factors are used by every Auto Insurance company in determining your individual rate. Different companies give different amounts of weight to each factor, explaining why quotes can vary so widely. Good credit but a less-than-perfect driving history will get you a cheaper rate with a company who puts more emphasis on credit and less on your MVR.
Though you can’t do anything about some of these factors, you can try to improve your credit and driving history and find your way to a lower rate.
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