How do insurance companies come up with a quote for your car insurance? Why are rates so drastically different from driver to driver and insurer to insurer? The type and amount of coverage you select have a lot to do with it, as does your deductible. However, other factors, such as where you live and what type of car you drive can also play a role. Continue reading to learn what types of variables can influence your insurance rates the most and what you can do to minimize the cost of your coverage.
Car and Driving Habits
Certain types of vehicles can be more expensive to insure than others. For example, expensive new cars can cost more to replace and repair after an accident than used vehicles. Likewise, certain models tend to be bigger targets for theft. For insurers, it also matters how often you drive your vehicle, how many miles you put on it, and your primary purpose for using it. The longer you are on the road, the greater the chance of an accident. Be sure to let your agent know if you are retired, work from home, or only drive your vehicle for leisure. Drivers who put fewer than 10,000 miles on their cars per year are often eligible for discounted rates.
There are government and consumer reports that car insurance companies will review to assess your risk of filing future claims. The information in these reports is automatically generated according to data reported by creditors, past insurers, and state traffic enforcement.
Your credit report is generated by three major credit bureaus, which keep track of your debts, history of on-time payments, and any negative events you may have experienced, such as bankruptcies and foreclosures. People with good or excellent credit tend to pay less for coverage than those with poor or average credit.
Your CLUE Report generates a list of past claims you have made against your insurance – including very small claims and those that may have been denied. Insurers use your claims frequency to determine the likelihood that you might file another claim in the future. Fortunately, if you have not filed any claims against your insurance policy in the past 5-7 years, you are unlikely to be penalized by your insurer for having any past claims.
Finally, your driving record contains information about traffic citations and violations. If you have multiple speeding tickets or a DUI, for example, you could be perceived as a higher risk driver than someone a spotless driving record.
Age can be a major influence in the price of your car insurance – especially if you are over age 55 or if you have a teen driver on your policy. Young drivers ages 16-19 are nearly three times as likely to crash as more experienced drivers over age 20. If you have a teen driver on your policy, be sure to ask about good student discounts for young drivers who maintain good grades. On the other hand, drivers with more experience tend to pay less for coverage – especially those ages 55-70. These drivers tend to be at low risk of accidents due to their decades of driving experience and fewer miles spent on the road after retirement.
An Independent Agent Can Help Lower Costs
Here at Patriot Insurance, we understand the importance of finding quality coverage at an affordable price. As an independent agency, we have the luxury of shopping around for coverage from multiple providers instead of just one. If you have negative risk factors working against your premiums, we can help match you with a more favorable carrier. For more information or to request your free quotes, contact our office today.