Perhaps you pay a certain amount of vehicle insurance, your spouse pays a different amount, and your neighbor still pays another amount. What’s the difference? Is it because your car is more expensive or cheaper than your neighbor’s or spouse’s? What are the specific factors that insurers consider when determining the amount you will pay for your vehicle insurance?
Your marital status, gender, age, credit score, and geographical location all affect your car insurance premiums. Here is how.
Age and gender: Young men are likely to pay higher rates compared to young women. Studies show that teenage males cause more car accidents compared to teenage ladies. On the other hand, older men are likely to pay better insurance rates compared to older women.
Geographical location: Given the traffic accident statistics associated with the area you live, this could affect your vehicle insurance premiums. More densely populated residential areas with many vehicles mean that there is a higher risk of vehicle theft and collisions. This could increase the amount of insurance premiums.
Profession: Insurers also make a correlation between your profession and the risk of getting involved in a vehicle collision. If your profession increases the risk of accidents and injuries, your auto insurance premiums will be adjusted accordingly.
Credit score: Though there’s no particular point your credit score will start to affect your auto insurance rates, lower scores might mean higher auto insurance premiums.
Marital status: Studies reveal that married people tend to cause fewer accidents compared to single people. Thus, getting married, particularly for men, could lower your auto insurance premiums significantly.
Your driving habits and history
According to Powers and Santola, vehicle owners who have been involved in collisions, made previous insurance claims or received tickets are likely to pay higher auto insurance premiums. This is because the insurers have learned that such individuals are more likely to file another claim compared to a driver with no blemishes on their driving records. And if your driving record is too damaged, some insurers might deny you coverage.
The good news is that driving record blemishes tend to fade with time. So, even if you had received several tickets and filed one or two claims, it’s best to correct your driving habits. In most cases, tickets and non-injury accidents are likely to stop affecting your driving record after three years, while injury incidences affect your record for five years.
The safety rating, size, and the age of your vehicle
Owning a car with a high safety rating implies that there’s a lower chance of having to pay healthcare expenses for passengers. Larger vehicles are generally safer compared to small cars in case an accident happens. These factors translate to lower premiums. Though the repair costs of an older car are similar to the repair expenses of a new one, an old vehicle is likely to be ‘totaled’ in a collision, and that means newer cars attract more premiums compared to older ones.