Buying car insurance is not easy. The process of buying car insurance can be confusing, complicated and frustrating. Sometimes, it’s hard to accurately compare rates, since coverages don’t always match from company to company.
However, to help you understand the factors that insurance companies use to determine your car insurance rate, I’ve listed the Top Ten factors that affect your car insurance rates.
1. Driving record. The number of traffic violation convictions you’ve received will directly affect your rate. If you have a clean record, you’ll likely be eligible for Safe Driver Discounts. Speeding tickets, DUI convictions and reckless driving tickets will likely affect your rate the most. Insurance companies like to know your driving record for the last 2, 3 or 5 years to see patterns of behavior.
2. Claims history. Once again, if your record is clean, you’ll get Safe Driver Discounts. If you have had at-fault claims, they will affect the rate more than non-at-fault claims. But an insurer might even count non-at-fault accidents against your rate.
3. Your Vehicle. It’s mostly about the value of the vehicle. But, the type of vehicle is important, too. A Cadillac and a Corvette may cost the same, but the Corvette will have a higher rate as a sports car.
4. Coverage. A policy with liability only will make you legal in your state. But when you add physical damage coverage, such as Collision and Comprehensive, your rates jump.
5. Drivers personal information. Age, gender, marital status and number of drivers are all important factors. Teens have high rates. Teen boys have higher rates than teen girls. Older drivers tend to have less tickets and accidents. Married people are usually safer drivers.
6. Vehicle use. The more miles you drive per year, the higher your rate. Also, vehicles used for only pleasure have lower rates than vehicles used for business.
7. Occupation. There is a correlation between your occupation and risk. For example, an office worker who drives only to and from work is a lower risk than a person who delivers newspapers with his car.
8. Credit score. Insurers are increasingly using credit score to set car insurance rates. They have found that those people who have bad credit statistically make more claims than those with good credit.
9. Geography. Where you live makes a difference. Rural drivers usually get lower rates than urban drivers because urban areas have lots more accidents. Sometimes, even the neighborhood (like a high crime area) you live in can affect your car insurance rates.
10. Deductibles. The deductibles you choose will have a significant affect on your insurance rates. Generally, the higher your deductible, the lower your rate. Always choose the highest deductible your budget will allow. Then, set aside one deductible in your savings account to take the financial pressure off your deductible choice.
A change in any of these Top Ten factors can cause a change in your car insurance premium. Make sure that you fully disclose the correct information about each of these factors to your agent. That way, you’ll be most certain to get the lowest car insurance rates you can.
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