Car insurance can often seem perplexing, with numerous factors affecting your premium costs. In this article, we’ll unveil some lesser-known aspects of car insurance pricing that insurance companies may not readily disclose.
Car vs. Driver
Car insurance is primarily tied to the vehicle itself. If you allow someone else to drive your car, your insurance might cover accidents, but policies vary, so review your coverage details. You can also exclude certain drivers from your policy if you don’t want them affecting your premium.
Car Type Matters
The value, make, model, and safety rating of your car influence your policy cost. Other considerations include annual mileage, parking location, and additional features in your vehicle.
Driving Record Impact
Every claim and even inquiries about potential claims get recorded in a database accessible to current and future insurers. Recent accidents or traffic violations can increase your insurance expenses, as can past claims history.
Check Your Insurance Reports
Insurers share data with databases like CLUE and A-PLUS, which store your claims history for five to seven years. You’re entitled to one free report annually and can dispute inaccuracies. Requesting reports won’t affect your credit score.
Credit Score
In almost all states, your credit score can affect your insurance cost. Poor credit suggests higher risk, prompting insurers to charge more to offset potential future claims. However, California, Massachusetts, and Hawaii prohibit using credit scores for pricing.
Location Matters
Where you live plays a significant role in your insurance premium. States like Michigan, Louisiana, and Florida historically have higher average premiums, while Vermont, Ohio, and Virginia tend to have lower averages.
Age and Other Factors
Age significantly impacts premiums, with the youngest and oldest drivers generally paying the most. Premiums peak at 18, decrease until 25, remain stable until around 55, then increase after 75. Gender, marital status, education level, and occupation can also affect rates.
Loan Impact
If you haven’t fully paid for your vehicle and have a loan, your insurance cost might be higher. Lenders usually need comprehensive and collision coverage to protect their investment, making policies with these added features more expensive.
Understanding these factors can help you to make informed decisions about your car insurance. It’s essential to review your policy carefully, consider your personal circumstances, and shop around for the best rates. Moreover, keep an eye on your driving record and credit score to maintain favorable insurance pricing.
