Factors That Affect Your Car Insurance Rate
When shopping for car insurance, it can be tempting to reduce your rates by choosing lower amounts of coverage or by raising your deductibles. These are, of course, the two most obvious factors that affect the cost of your auto insurance.
You may not realize it, but your overall rate is also affected by many more different factors – some of which you can control, and many of which you cannot. However, knowing what affects your rate can help you make a more informed decision when purchasing insurance, and can help you know exactly what to do to lower your expenses.
A number of factors can affect the cost of your car insurance – some of which you can control and some that are beyond your control.
The type of car you drive, the purpose the car serves, your driving record, and where the car is garaged can all affect how much your automobile insurance will cost you.
Even your marital status can affect your cost of insurance.
Statistics show that married people tend to have fewer and less costly accidents than do single people.
The rates of automobile insurance are the result of many variables such as the prior costs of injuries and property damage.
Each state has their own Department of Insurance that regulates their own automobile insurance.
They look at all the issues related to consumer driving and have to decide what needs to be done to remain profitable.
They also need to have the resources available for the unpredictable wrath of mother nature.
Listed below are facto
rs that will affect your automobile insurance.
8 Factors That Affect Your Car Insurance Rate
1) Your driving record
No other factor affects your car insurance rate more than your driving history. If you’ve had no car accidents, your car insurance rate will be lower than someone who has been in an accident, due to a lower risk. Car accidents cost the insurer money, so it is reflected in your rate.
2) Your age.
Statistically speaking, if you’re younger and less experienced driving, your risk of a collision is higher, so naturally, your insurance rate will be as well. Drivers under 25 have the highest rates and drivers between 50-65 usually have the lowest rates.
3) Your location
The smaller the town, the lower your rate will likely be. Bigger cities have higher likeliness for car accidents, vandalism, and theft, so your rate will likely be higher if you live in a bigger city.
4) Your marital status.
Statistically, married drivers have fewer accidents, so if you’re married, you pay less for auto insurance.
5) Your gender.
With the exception of Pennsylvania or North Carolina, usually young men in most states pay higher rates for auto insurance.
6) Your financial responsibility.
With the exception of California, most states consider your credit record when determining your auto insurance rate. Good credit and good driving records are both indicators of lower accident risk.
7) Your vehicle.
Some vehicles are more costly to repair, so if yours costs a lot to repair, your insurance rate will reflect so.
8) Discounts available.
Depending on your insurance carrier, there are discounts available to you that affect your rate such as multi-car discount, anti-theft credit, homeowner benefit, paying your premium in one or fewer installments, etc.
Other Factors That Affect Your Car Insurance Rate Are;
Increase in costs associated with rising accident frequency.
The auto industry has seen a dramatic increase in the number of claims over the last year.
This increase is driven by factors such as:
Population growth
Distracted driving (driving while engaged in other activities such as texting, talking on the phone or to a passenger, watching videos, eating, or reading)
Increase in the number of registered vehicles Claims severity
More cars on the road often result in more accidents, and GEICO needs to rate all affected policies for this shared risk.
Growing costs of injury payments and auto repairs.
Auto insurance claims costs include vehicle repair costs, medical costs, and at times, legal fees. Since insurance can cover services from other industries, as costs fluctuate over time in other industries, auto insurance rates are adjusted to reflect those costs.
Does The Color of Your Car One of The Factors That Affect Your Car Insurance Rate?
The color of your car does NOT affect its insurance premium! It can, however, greatly impact its resale value.
A recent study come Manufacturer’s Suggested Retail Prices (MSRP) of more than 650,000 recently sold 3-year-old used vehicles.
Bold colors tend to hold their color best, making their value depreciate very little. Yellow cars only depreciated an average of 4.5% over three years! “Yellow is among the least popular car colors with the lowest vehicle share and is commonly a color for sports cars and other low-volume vehicles that hold their value relatively well,” said iSeeCars Executive Analyst Karl Brauer “Because yellow vehicles are so novel in the secondhand marketplace, people are willing to pay a premium for them.”
Compare that to the overall average depreciation rate of 15%.
More “neutral” colored cars tend to depreciate in value more quickly, with brown having the worst rate of 17.8%. Brauer explains, ” If a color doesn’t resonate with enough used car shoppers it will hurt resale value, even if it’s uncommon.”
If you plan on eventually reselling your car, be sure to carefully consider your color choice!
How does age compare to the other top risk factors for insurance companies?
Let’s find out what is more and less influential in your cost!
1. Age vs Gender: Age affects car insurance rates more than gender. Male drivers under the age of 18 pay the most of any demographic – almost 50% more than teenage female drivers.
2. Age vs. Location: Age affects rates more than location. Young drivers pay significantly more than older drivers, regardless of where they live.
3. Age vs. Vehicle Type: Age affects car insurance rates more than vehicle type, especially with drivers under 25. However, as you get older, a your choice of car affects their premium more noticeably.
Age vs. Driving Record & Insurance History: A person’s driving record & insurance history affects their car insurance rates more than their age does. Even the youngest, most untested drivers aren’t as much of a liability as drivers with a DUI. High-risk drivers can see an increase of anywhere from 50% to 300%.
SEE ALSO : INSURANCE : STEPS TO TAKE WHEN YOU ARE INVOLVED IN CAR ACCIDENT
Age vs. Credit Score: A driver’s credit score can have more of an impact on their cost than just their age alone.