7 Factors That Impact Your Car Insurance Costs

Paying for car insurance can get expensive. Find out 7 Factors That Impact Your Car Insurance Costs

 

 

7 Factors That Impact Your Car Insurance Costs

Many factors can influence your car insurance costs, some of which are in your control and others that are not. These factors include the type of car you own, your annual mileage, and your location.

You can also choose the type and amount of coverage you want to carry on your policy. Additional coverage typically gives you added financial protection but can add to your monthly cost.

Your Age

Car insurance rates are typically higher for younger drivers. Insurers like those at https://carinsurancecheap.net/, believe teenagers are more likely to get into accidents due to inexperience, so they charge more for their coverage. This demographic also tends to have poorer eyesight and slower reflexes, making them more prone to injury in an accident.

However, the gap closes by age 20 and becomes less of a factor at age 25. Data shows that married drivers pay less for auto insurance than single drivers.

Your Driving Record

Your driving history is an essential factor that determines your car insurance rates. A clean driving record tells them you’re a low-risk driver, resulting in lower rates. A blemished driving record, on the other hand, can increase your speed significantly. It can even prevent you from getting specific jobs that require a driver’s license.

The easiest way to keep your rates low is to avoid future traffic violations or accidents. You can also reduce the points on your record by participating in your state’s point reduction program.

Your Vehicle

Car insurance companies factor in your vehicle’s cost to repair, likelihood of theft, and more when determining its premium. High-end vehicles like luxury or sports cars tend to have higher insurance rates because of the expensive parts and labor involved in their repair.

Your state’s laws regarding minimum coverage may also majorly impact your costs. Some states require more comprehensive coverage, resulting in higher premiums.

Your age and gender also play a role in your car insurance rates. Young drivers pay the most, followed by middle-aged drivers and seniors. 

Your Credit Score

Credit scores play a significant role in car insurance rates, especially for people with poor credit. Forbes reports that a single driver in the 46 states that allow insurance companies to use credit as a rating factor can see their premium increase by 76% with a bad credit score.

The factors that impact your insurance rate, based on your credit report, include your payment history, amount of debt, credit utilization, and pursuit of new credit lines.

While improving your credit score isn’t a quick fix, it can help you save hundreds of dollars on car insurance every year. Shopping around is also a great way to lower rates without hurting your credit score.

Your Location

Your location can impact the cost of your car insurance in different ways. Depending on the population density, traffic and crime rates, and frequency of weather events (like hurricanes), your rates could go up or down.

Cities with higher rates of accidents, theft, vandalism, and other risks typically have higher premiums than rural areas. The length of your daily commute and how much you drive throughout the year also impact rates, as if you park your car on the street or in a garage.

While many of these factors are things you can control, like your age, marital status, and credit score, your location is something you can stay the same. However, it’s still important to consider when determining your car insurance costs.

Your Car’s Safety Rating

When shopping for a new or used vehicle, checking the car’s safety ratings is essential. Cars with good ratings are typically safer, which can help reduce your rates.

Both the NHTSA and IIHS have crash test programs that rate vehicles. They also conduct various other tests, including side-impact and rollover tests.

A top car safety rating doesn’t guarantee that you won’t be involved in an accident, but it will raise your chances of escaping a collision unscathed. Your insurance company considers this when calculating your rates.

Your Claims History

Your CLUE, or Comprehensive Loss Underwriting Exchange, report is a snapshot of your insurance claims history that helps set future rates. If you have a lot of previous claims, the insurance company will consider you a risk and charge you more.

The car you drive is another factor in your insurance costs, especially the value of the vehicle and safety rating. A high-end sports car can cost more to insure than a baseline model, as it is more expensive to repair and replace.

Your credit score is also considered a risk factor. Studies show drivers with lower credit scores file more claims, paying more for car insurance on average.