Ah, car insurance. Perhaps one of the least fun parts of having a car, apart from maybe oil changes – and even with them there is stuff you can pick up to make that process a littler easier. Organizing your car insurance is a pain – no one enjoys doing it – which is why some people never give it the effort it deserves. Hey, nothing wrong with that, we’re guilty as charged ourselves.
But, and it’s a big but, it is really worth your while to make a bit of an extra effort. Car insurance rates have risen by 20% since 2011, a phenomenal increase that is hitting deep into the pockets of American drivers everywhere. Or at least it is hitting some drivers.
Some other drivers – and we hope that you will soon be one of them – know enough about the various factors that can affect your car insurance rates to be able to do their best to mitigate or remove any factors that are pumping up their insurance rates. In this article, we’re going to highlight 7 of the most common factors that insurance companies take into consideration when pricing up your car insurance.
How Far, When and Where You Drive
This section of data is so important we could have even broken this up into separate sections. But then this article would be called 9 factors that affect your insurance rates, and we’d already decided that 7 was the magic number. So instead we’ll just break down these three important factors within this one section. What, you don’t like it? Go and write your own article.
So lets start with how far. The ideal driver, at least in the minds of car insurance providers, would be the driver who never actually drives anywhere. Think about it, if you’re car is not on the road, it is far, far less likely to be in an accident. Ever had a fender bender with the car parked up in the garage? Didn’t think so.
That is why they are so keen to know how far you drive. If you tell them you use your car to commute to work – as about 85% of us do – then that is a big old red flag you are waving over your insurance request. They will want to know how many miles you drive a year, they may well ask what kind of driving too – whether it is primarily rural, urban, freeway, etc.
The takeaway here is that the more you drive the higher risk you are – even if you are a very safe driver.
Speaking of where you drive, your address also has a big influence on your insurance rates. Your potential insurer will look at the crime stats for where you live – literally down to the street you live in. Guess what, if you live in an area with high rates of car crime like vandalism and theft, then that is going to spike your premium. Sorry to break that to you.
Finally when you drive will also have an impact. If you work shift work for example, and your commute sees you driving between midnight and 2am, that will increase your premium, as that is one of the most dangerous times for crashes and car collisions.
The good news is that as this is such a huge part of the way that insurance companies work out your rates, they are also keen to help you to manage these factors to keep your costs down. They don’t do that for your own good though, they do it to remain competitive with other insurance suppliers. Whatever though, you can still work it to get a sweet deal.
What you could consider is getting a usage-based insurance device to put into your vehicle. This little device is kind of like a GPS tracker, except the data will be used by your insurance company instead of by you. The most basic models will merely monitor the time you are driving, the route and maybe the speed. The more accurate ones can really provide a lot of data though, such as speed and harsh braking or steering.
If – and this is a big if – you drive with a pretty safe style, then you should certainly consider asking your insurance company to install one of these devices as they can really help trim some big bucks off your insurance rates. If you’re driving style is… lets say “aggressive,” then maybe this isn’t the thing for you, and it could be better for you insurance company not to know you treat stop signs more as suggestions than rules.
Ok, that’s the biggest chunk of the article taken care off, the next sections won’t be so big, we promise. One reason is that, as we mentioned above, those three things are all the biggest factors on your car insurance rates, and are also things you can – kind off – positively affect.
These next factors you can consider more as Wildcard factors. For one thing, to some insurance companies they will more important than to others. They are also, broadly speaking, not really things you can influence too much. Therefore yes, do know about these factors, as they may explain your overall insurance rate. At the same time, don’t lose too much sleep over them.
Bringing Home the Bacon
Ever heard of The Zebra? No, not the stripy horses that wander around the Serengeti plains. We’re talking about the online Car Insurance comparison company based in the wilds of Austin, Texas. This year, the year of our Lord 2018, they delivered a State of Auto Insurance Report that was about as fun and interesting as you would assume.
Don’t worry, we read it for you whilst drinking a crate of Red Bull. One of the more interesting nuggets of information related to how employment status affects car insurance rates. If you work full time you can expect to pay around $30 on average less than a person who is unemployed – even if you drive the car more. If you are a veteran – or are currently serving in the military – that discount jumps to about $50 on average.
It’s bad news for people who use their car for business purposes however – delivery drivers, cab drivers, etc. Your insurance will be far higher than people who simply drive for commuting or pleasure purposes. But you probably knew that already, right?
Wedding Bells, Batman Smells
Yep, another part of your personal life that interests car insurance companies is whether you took Beyonce’s advice and a ring on it. Yes, for some reason insurance people typically see married drivers as being safer than single drivers.
No one knows why this is. Oh wait, we totally do know – it’s because of a DMV report from back in 2004 that suggested single drivers were twice as likely to have an accident as their betrothed fellow drivers. If you’re single and staring down the barrel of a big old insurance quote therefore, you have another thing to thank the DMV for.
The amount of money you save can also be dependent on a few other factors. For example, women will often see less of a reduction in their rates once they waltz down the aisle. This isn’t sexism, it’s because women are statistically safer drivers, so they are already getting a big old discount from most insurance companies for this reason alone.
A male driver with an excellent safety record who gets hitched could see their rates cut by as much as 30%, 40% or even 50% however. It almost pays for the ring itself if you think about it.
Wherever you Lay your Hat
Whether or not you own your own home will also have a big impact on your insurance rates. With home ownership falling year on year however, this may not be a factor that many of us can look forward to using to slash our insurance bills. This factor actually does not have any real basis in statistics, or least not one that we could find.
The general feeling seems to be that people who own their own homes are more responsible than renters, and they are also unlikely to face some of the sudden financial burdens that can befall some renters. Once you have a mortgage for example, generally it stays at a pretty similar level for the short to medium term at least.
Of course on the other side of the coin, let’s not forget we just emerged from one of the worst financial crashes in the history of mankind, which was to a large part caused by people taking out mortgages they could never hope to pay back or even maintain the payments on.
So maybe homeowners aren’t as smart as the insurance companies think.
Credit, Credit Everywhere
Another factor that has an influence on your car insurance rates – without any real concrete reason behind it – is your credit score. In fact, if you are a good driver and you have a decent record with little or no claims, and yet you still have expensive insurance the culprit could well be your credit score.
If you don’t know what your score is, it would really be a good idea to look into that as soon as possible. There are numerous services out there that investigate your score, so just bite the bullet and get it done. It’s worth doing because frankly your credit score is actually something you can improve on yourself. Getting married requires finding someone so desperate for companionship they will join themselves to your ugly ass for life, so that may be hard to tackle. Credit score though can be an easy fix so if you want to shave a few bucks off the insurance quotes you get then check it out.
The final factor is pure, dumb luck. Every insurance company has its own way of working out its charges. It will be a combination of the factors we’ve looked at above. Different companies will add different weighting to each factor, and that can mean that one or another has a different impact.
And do you know what? You will never know how your company does it. Yes, you can use the factors above to cut back on your charges by manipulating each factor to make it beneficial for you – and that is definitely what we suggest you do. But it is not an exact science, and each company will differ slightly.
So that’s it, the 6 big factors that affect your car insurance quote. Wait, 6?
We’re Forgetting Something…
Oh yeah, there is one final factor that can affect your car insurance rates – the car itself. How could we forget that? Yes, the type of car you drive will have a big impact on the quotes you get to insure it. It’s probably not very surprising to say that this is the joint most import factor (along with the three elements we outlined as point number 1) in determining what you will be asked to pay for car insurance.
There are obviously things about your car that will influence the insurance, with the flat out value being one of the biggest factors. That really just makes sense doesn’t it, as a $90,000 vehicle is obviously going to come with a higher insurance cost attached than a $500 rust bucket.
There are a few other considerations too. The type of vehicle is going to have an impact, with vehicles considered as racing vehicles attracting a higher premium than slower, mini-van type of cars. The safety rating will also come into play, as don’t forget many insurance documents include paying out to cover injuries you sustain in a crash. The safer the car, the more chance you will walk away from an accident – and so the cheaper your charges.
That really is the end this time, our run down of the 7 factors that can affect your insurance premium. As we mentioned, every insurance company will put different weightings on each factors as they calculate your charges. You at least know the factors that come into play now though, and you can consider which of them may be pumping up your insurance quotes – and if you can do anything about it.
- Car Insurance Spike, USAToday.com
- Work Commute Statistics, Statista.com
- Home Ownership Rates, WSJ.com