6 Factors that Affect Your Car Insurance Rates
Understanding the basics of car insurance can be difficult and seem frustrating when looking for car insurance. Below we have outlined important insurance facts that will help you have a better understanding of insurance and how it works.
Fact 1: Rating Factors
Insurance premiums are calculated using rating factors. These factors include marital status, age/gender, and location.
| Female Vs. Male Driver | Average Monthly Rate |
|---|---|
| Progressive Insurance Female Driver | $140 |
| Progressive Insurance Male Drivers | $188 |
For example, if you look at the snapshot above of an actual monthly premium for a male driver using Progressive, they are paying a noticeable amount more than a female driver.
Statistics also show that married people get in less accidents and/or cause less property damage in the event of an accident.
Younger drivers cost more to insure because they are considered higher risk, usually the possibility of getting into an accident is greater than someone with more driving experience.
Fact 2: Credit Scores Impact Your Insurance Premiums
Credit plays an important role in insurance, just like it does when making a big purchase like buying a home or financing a car.
Insurance companies look at credit to determine what type of risk you are; low, or high risk.
| Good. Vs. Bad Credit | Average Monthly Rate |
|---|---|
| Nationwide Good Credit | $140 |
| Nationwide Bad/Poor Credit | $169 |
A customer with excellent credit has a history of making payments on time, and will receive a cheaper insurance rate.
Fact 3: Cancelling Your Insurance Will Cost You
Whether you own a vehicle or not, you should keep your auto insurance active.
If you sell your car, or no longer need insurance on that vehicle, consider switching your policy to a Non Owners, Or Broad Form policy.
This way you will not lose a huge discount for having continuous insurance when you need to purchase a new policy.
You can get different types of insurance policies to reduce the cost if you have sold your vehicle, until you buy a new one.
Fact 4: Insurance Prices Vary Upon Companies
Car Insurance companies specialize in different things, whether it be SR22 Insurance, high risk drivers, vintage/foreign vehicles, etc. Companies like Progressive, while premiums are higher for high risk drivers, might have better deals.
However, some companies will decline coverage for that same customer because they are a greater risk.
A lot of companies will not offer coverage for a customer with an excessive amount of points, or may not offer coverage for foreign vehicles, like the BMW.
| Progressive Insurance | Average Monthly Premium |
|---|---|
| High Risk Driver/Poor Driving History | $163 |
| Farmers Auto Insurance | Average Monthly Premium |
|---|---|
| High Risk Driver/Poor Driving History | $194 |
Fact 5: Insurance Discounts Will Save You Money
Many companies offer discounts, like continuous insurance discounts, bundling discounts, Accident Free discounts, safe driver discounts, and Paid In Full Discounts.
| Potential Discounts Available |
|---|
| Advanced Quote |
| Paperless Discount |
| Homeowners |
| Education Discount |
| Military |
| Continuous Insurance |
| No Accidents or Violations |
| Multi Vehicle |
| Multi Policy |
Check with your insurance provider to see what types of discounts they offer.
Fact 6: Coverages Affect Your Premium
Insurance premiums will vary depending upon the types of coverages you have.
You can choose to only carry liability insurance, which is the bare minimum requirements.
| Progressive Insurance | Average Monthly Premium |
|---|---|
| Liability Only Insurance | $82 |
| Full Coverage Insurance | $160 |
You can customize your policy by adding on additional coverages like Uninsured Motorist or Medical Payments.
Aside from Liability, you can choose to Carry Full coverage which covers the vehicle in the event of an accident. Adjusting your deductibles will impact the rate, as well as extras like Rental Reimbursement and Roadside.
Other Helpful Insurance Guides
| 8 Types of Insurance You Should Know About |
|---|
| 1. Health insurance |
| 2. Car insurance3. Life insurance |
| 4. Homeowners insurance |
| 5. Umbrella insurance |
| 6. Renters insurance |
| 7. Travel insurance |
| 8. Pet insurance |
Last Updated on November 11, 2021 by Shawn Christie