{"id":6145,"date":"2024-10-12T13:51:10","date_gmt":"2024-10-12T13:51:10","guid":{"rendered":"https:\/\/finderica.com\/what-affects-car-insurance-rates-these-7-surprising-factors\/"},"modified":"2024-10-12T13:51:10","modified_gmt":"2024-10-12T13:51:10","slug":"what-affects-car-insurance-rates-these-7-surprising-factors","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6145","title":{"rendered":"What Affects Car Insurance Rates? These 7 Surprising Factors"},"content":{"rendered":"\n
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Car insurance premium rates can feel arbitrary and unjust to many of us. But what affects car insurance rates \u2014 and why?<\/p>\n

Turns out, it\u2019s not so arbitrary.<\/p>\n

Your rate is actually determined through a complicated algorithm aiming to predict how likely you are to cost your provider money.<\/p>\n

\u201cDepending on the state, we may use your vehicle type, where you live, gender and age, amongst other (factors), to determine your rate,\u201d said Progressive Insurance spokesperson Ron Davis.<\/p>\n

We dug into what these factors are and why they\u2019re included to help you understand where your rate comes from \u2014 and what you can do to reduce it.\n<\/p>\n

What Affects Car Insurance Rates?<\/h2>\n

Let\u2019s start with the obvious: your driving record.<\/p>\n

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\u201cYour driving record and a continuous car insurance history are two important factors,\u201d Davis said.<\/p>\n

Even minor violations, like a speeding ticket, can affect your rates by 20% to 40%, according to Insure.com<\/b><\/a>. \u201cIf you have a major violation, like a DUI, your rates can go up 100% or more due to the combination of lost discounts and increased rates.\u201d<\/p>\n

The number, frequency and circumstances of your insurance claims will also be major factors. More claims, especially if you\u2019re at fault, make you riskier to an insurance company, so your rate will be higher.<\/p>\n

Your age and driving experience will have a major impact.<\/p>\n

It\u2019s not about discrimination. As Insure.com points out, it\u2019s all about the numbers.<\/p>\n

\u201cYoung, novice drivers have statistically shown to be immature behind the wheel, easily distracted and to crash \u2014 a lot \u2014 so they are the riskiest category of drivers to insure,\u201d the site explains.<\/p>\n

However, California<\/b><\/a>,<\/b> Hawaii and Massachusetts<\/b><\/a> do not allow insurers to use age to determine your rate.<\/p>\n

What are the parts of the algorithm you don\u2019t know about? Here are seven surprising factors that may affect your car insurance rate.<\/p>\n

1. Your Sex<\/h3>\n

In most states, your sex can directly affect your rate.<\/p>\n

Men typically drive more miles than women and tend to be less safe \u2014 not using seatbelts, drinking and driving, and speeding, according to an Insurance Institute for Highway Safety<\/b><\/a> study.<\/p>\n

Those differences \u2014 and the rate differences they cause \u2014 diminish with age.<\/p>\n

These states do not allow<\/a> your sex to affect car insurance rates:<\/p>\n

2. What Kind of Car You Drive<\/h3>\n

First, let\u2019s debunk a big myth: Red cars don\u2019t<\/i> cost more to insure.<\/p>\n

\u201cYou may have heard the color of your car is used in calculating car insurance rates,\u201d Davis explains, \u201cbut this is something we don\u2019t even ask for when you get a quote from us.\u201d<\/p>\n

However, the make and model of your car could make a difference.<\/p>\n

Different cars cost different amounts of money to insure. That\u2019s because data shows certain cars are more likely to be in accidents or have insurance claims filed.<\/p>\n

For example, \u201cSporty cars tend to be driven in ways that lead to more crashes,\u201d Russ Rader, spokesman for the Insurance Institute for Highway Safety told Bankrate<\/a>. \u201cThey also tend to be driven by younger, riskier drivers.\u201d<\/p>\n

An insurance company will also look at your car\u2019s purchase price, the typical cost of repairs and how it performed in safety tests \u2014 all factors that will determine how much it might cost them.<\/p>\n

3. Where You Live<\/h3>\n

\u201cDrivers are sometimes surprised to learn that where you live can impact your rates,\u201d Michal Brower, a State Farm spokesperson, told us. \u201cBut once you consider why, it makes sense: If you live in a big city with tons of traffic, you are more likely to get in a wreck than if you live in an extremely rural area with little traffic.<\/p>\n

\u201cGenerally, due to higher rates of vandalism, theft and accidents, urban drivers pay more for car insurance than do those in small towns or rural areas.\u201d<\/p>\n

Weird regional data may affect your rate, too.<\/p>\n

My mom told me her rate went up when she moved from a relatively urban county in Wisconsin to a more rural county where deer-related collisions are more common. It all adds up.<\/p>\n

The car insurance laws in your state could also affect your rate, according to SS<\/b><\/a>.<\/p>\n

Not all states require you to have the same types of coverage, so you could wind up paying more just by moving to a state that requires more comprehensive insurance coverage.<\/p>\n

4. Your Marital Status<\/h3>\n

Drivers who\u2019ve never been married are twice as likely to be in a car accident as married drivers, according to a National Institute of Health<\/a> study.<\/p>\n

Why? Well, being married is kind of boring, statistically.<\/p>\n

\u201cMarried couples have been found to be less active and safer than single drivers, resulting in fewer accidents and claims,\u201d reports Insure.com.<\/p>\n

It adds, \u201cCar insurance rates can be from 5% to 15% lower for married couples due to their marital status.\u201d<\/p>\n

Massachusetts is the only state that doesn\u2019t allow auto insurers to use marital status to set rates.<\/p>\n

5. Your Credit History<\/h3>\n

Ah. This again.<\/p>\n

If you\u2019ve lived with a poor credit score, you know it pops into your life unexpectedly.<\/p>\n

\u201cThough it may be controversial, research has shown that those with lower credit scores (typically under 600) are more likely to file more claims, file inflated claims and even commit insurance fraud. You\u2019ll likely see a hike in your premiums due to a low credit score,\u201d Insure.com reports.<\/p>\n

A University of Texas Study<\/a> also found those with lower credit scores incur more car insurance losses and higher claim payouts.<\/p>\n

Only California, Hawaii and Massachusetts<\/a> don\u2019t let insurance companies use credit scores to determine your rate.<\/p>\n

6. How You Use Your Car<\/h3>\n

This is important, especially if you make your living through the sharing economy.<\/p>\n

If you use your car for business\u2014 including ridesharing and food delivery \u2014 be sure to check whether it\u2019s covered under your personal insurance policy.<\/p>\n

\u201cYou may need a business-use or commercial policy instead and be voiding your personal policy by using your car for business,\u201d Insure.com reports.<\/p>\n

Unfortunately, these policies will probably cost you more than a personal policy. But they\u2019ll also cover you in case anything happens while you\u2019re driving for work.<\/p>\n

7. The Length of Your Commute<\/h3>\n

Even if you work for an employer, your commute could affect your insurance rate.<\/p>\n

\u201cYour insurer can try to determine from the length of your commute if you head into a metro area from your rural or suburban home,\u201d Insure.com states.<\/p>\n

\u201cIf you live outside of Atlanta, for instance, but your commute is 30 miles, your insurer can predict that though your local area is low risk, your commute into the heart of a heavily populated metropolitan area puts you at greater risk.\u201d<\/p>\n

Moving into the suburbs might not be as big a money-saver as you expect.<\/p>\n

\"Three
Getty Images<\/figcaption><\/figure>\n

How to Keep Your Rates Down<\/h2>\n

\u201cThere are several things you can do to try saving money on car insurance,\u201d Brower said. He recommends you:<\/p>\n

1. Buy a Cheaper Car<\/h3>\n

Generally, the more expensive the car, the more expensive it is to insure. You can save money upfront and over time by sticking with cheaper cars.<\/p>\n

Want to make sure you\u2019re still getting a quality vehicle? Check out our list of the cheapest (and most expensive) cars to maintain.<\/p>\n

2. Look Into Your Car\u2019s Safety Rating<\/h3>\n

\u201cInsurers often increase premiums for cars that are at a greater risk for damage or occupant injury,\u201d Brower said.<\/p>\n

Purchasing a car you know is safe will be better for your wallet \u2014 and your peace of mind.<\/p>\n

3. Ask About Discounts and Bundles<\/h3>\n

You could get a discount or refund on your car insurance for being a good student, insuring multiple vehicles, avoiding accidents and more.<\/p>\n

\u201cMost car insurers provide discounts to student drivers who maintain good grades,\u201d Brower said. \u201cIn some states, younger drivers are also able to take driver safety courses that will lower premiums.\u201d<\/p>\n

4. Drive Less Often and More Carefully<\/h3>\n

Consider joining a carpool, or take alternate transportation when possible. Driving fewer miles could help reduce your premium.<\/p>\n

And when you drive, be careful.<\/p>\n

\u201cSafe drivers can take their rates into their own hands with usage-based insurance programs like Progressive\u2019s Snapshot<\/a>,\u201d Davis explains.<\/p>\n

\u201cSnapshot offers discounts by collecting information on your actual driving habits. Drivers who avoid unsafe practices such as hard braking, rapid acceleration and driving late at night can earn a discount.\u201d<\/p>\n

\u201cInsurers love a clean driving record,\u201d Brower added.<\/p>\n

The drivers sharing the road with you will love it, too.<\/p>\n

5. Shop Around<\/h3>\n

Don\u2019t settle for the first quote you get.<\/p>\n

\u201cRates can vary by carrier, so we encourage people to shop around and find the right coverage at the right price for them,\u201d Davis said.<\/p>\n

He pointed out several surprising ways Progressive offers to save money on car insurance:<\/p>\n

\u201cDrivers can save simply by starting a policy online, bundling their auto insurance with another product (like renter\u2019s insurance), having multiple cars on a policy, paying in full or even being a good student,\u201d he says.<\/p>\n

Before signing up, make sure you do your research and find the best deal for your situation.<\/p>\n

Dana Sitar (@danasitar) is a former staff writer at The SS. She\u2019s written for Huffington Post, Entrepreneur.com, Writer\u2019s Digest and more, attempting humor wherever it\u2019s allowed (and sometimes where it\u2019s not).<\/i><\/p>\n

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