How do insurance companies determine what rate you will pay? What can you do to ensure you get the best rate?
It can seem like a deep mystery when you get your monthly auto insurance bill. Behind the scenes there are several calculations that determine how much you will pay. So let us go and unravel the mystery behind your auto insurance quotations shall we.
Marital Status, Age and Gender
Did you know you can get a lower insurance rate by being married? Insurance companies look at married people over 25 as lower risk to insure on their policies. This will help you score a great rate when searching for a new car insurance deal.
Female driver also pay consistently less to drive a car than males. This is due to female drivers being in less accidents on average than their male counterparts. Insurance companies look at data from highway agencies to make these determinations. Some insurance providers may cater for female only drivers.
Special State Considerations
Certain states impose restrictions on what factors insurance companies can use to raise or lower your rates. For instance, California bans insurance companies from using credit scores as a determinant of auto insurance rates. These type of laws can help consumers get better (or worse) deals when paying for insurance.
Check with your local DMV to see if there are any special considerations based on the State you live in.
What Kind Of Driving Record Do You Have?
By far the most important determinant of your rate is your driving record. Insurance companies will look how many accidents you have been in. Insurance companies want to see that you have a clean driving record. We can’t always control how we drove in the past. Lucky for us, there are ways to remove accidents from a driving record!
Past Insurance Claims
Insurance companies value not making auto insurance claims in the past. They want to see that you will not be getting into future accidents. For instance, if you have been in three accidents in the past, they look at you as likely to get into another accident. They may offer what is known as a no claims discount if you have not made a claim on your policy.
Think about whether you should file an insurance claim for small paint chip, scratch and dent issues. It may be more beneficial to fix small issues yourself. DIY shops like Home Depot sell paint chip kits. These allow you to match the paint from your vehicle and fix minor scrapes. Fixing the issue yourself rather than filing a claim can save you thousands. There are many local businesses that specialize in dent and chip removal.
The Model Of Vehicle You Are Driving
A red sports car may seem like a fun drive, but you will pay more for insurance than a used grey Toyota Camry. Make sure you check with your insurance agent before you buy a new car. They can give you advice on how much your auto insurance rate will go up depending on the car you buy. The engine power and performance of the vehicle may also be a big factor as well as where the car is kept overnight.
The Big Auto Insurance Take Home
All of these lifestyle factors can contribute to a higher ( or lower ) car insurance quotation, rate and premium. Sometimes it may seem as if you are being unfairly penalized for making legitimate lifestyle choices.
In reality each insurance company has their own criteria. Although they all share commonalities. Nevertheless it is always important to shop around when searching for low cost auto insurance that meets your lifestyle choice.