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7 Factors Impacting Your Car Insurance Rates

By Teri Dormer

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Whether you’re a constant commuter, traveling to and from work and family appointments, or someone who finds themselves behind the wheel on a much more infrequent basis, drivers all have one thing in common: insurance. 

Regardless of how much you drive, we all need proper coverage to hit the road, but that doesn’t mean each of us pays the same amount of money for our car insurance premiums.

In reality, there are a number of diverse factors that go into determining car insurance rates that can make the prices different for everyone, and it doesn’t necessarily matter how long or far your travel.

Trying to determine why your rate is so high? Let’s take a look at seven of the most common factors now.

What’s Affecting My Car Insurance Rates?

Every year your car insurance provider makes the decision to renew your policy and determine if there should be any changes to your premiums.

If you’ve ever gone online or gotten a policy breakdown in the mail, you may have discovered that the fine print can be a bit ambiguous at best. 

For help deciphering which factors have a major impact on the cost of your auto coverage, here are seven of the most important considerations insurance providers take into account when determining your rates.

1. Driving History 

Whether you’re a seasoned driver or you’re still getting comfortable behind the wheel, your driving history has a heavy weight in determining your car insurance rates with providers. 

Because your auto coverage is designed to protect you (and anyone else involved) in the event of an accident, the higher the likelihood you’ll be involved in an accident, the higher your premiums will be.

If you’re deemed to be a high-risk driver due to having multiple accidents or driving citations on your driving record, you can expect to pay a higher rate than someone with fewer incidents.

If you’re a young driver, the insurance provider may err on the side of caution and charge a higher rate until you have more driving history to show how safe you are. 

2. The City and State You Live In 

Where you live matters in determining your car insurance premiums. If your city or neighborhood has a higher volume of accidents, the insurance company may see this as a sign that you’re more likely to be involved in an accident, even one that isn’t your fault. 

Busy cities with more traffic are usually on the receiving end of these premium price hike, so don’t be surprised if moving to a big city comes hand in hand with a major rate change. 

3. The Kind of Car You Drive

When it comes to the kind of car you drive, there are two major elements at play: how expensive your car would be to replace, and how safe your car is for both you and the drivers around you. 

A more expensive vehicle, particularly a vintage or classic car, will cost more to replace and thus more to insure.

On the other side of the equation, if your car comes loaded with plenty of extra safety features (like collision detection or a backup camera), your insurance provider may see this as an opportunity to provide you with a discount on your premiums instead.

4. How Frequently You Drive 

All drivers need coverage. But if you don’t drive as often, the likelihood of filing a claim against your auto coverage is obviously lowered.

Insurance providers take these details into consideration, and typically charge heavy drivers more, and lighter drivers less.

5. What You Use Your Car For 

Yes, we all use our vehicles for transportation, but the what and the why behind your commuting can have a major impact on how much your coverage costs. 

If you’re using your vehicle for any commercial purposes, it’s important to make sure your insurance provider understands this usage so you’re properly insured.

Using your car for business purposes may not immediately equate to a higher premium. But if you’re doing a little ride sharing on the side, it’s important to make sure you have the right policy in place. You can read more about rideshare insurance here.

6. Your Credit Score 

Your insurance premiums represent a contract between you and your insurance provider, and your financial situation plays a role in helping to determine your reliability as a driver.

While your credit score shouldn’t have a major impact on your monthly car insurance rates, it can impact the deposit an insurance company requires in order to write your policy.

7. The Coverage You Enroll In 

As with every type of insurance, the coverage and deductible levels you chose to enroll in will play a major role in determining how much you pay on your premiums every year.

Higher levels of coverage will equate to higher premiums. Similarly, opting for a lower deductible (so lower out of pocket expenses in the event of an accident) will also equal higher premium rates.

Lowering Your Insurance Premiums 

If your auto insurance premiums are too high, you aren’t completely out of luck.

You still have some control over your insurance rates, and you should start by calling your insurance provider to see what kinds of discounts are available that you might not be taking advantage of. 

If that doesn’t work, it’s probably time to start shopping around. You may want to consider other insurance providers, bundling your other insurance policies together, or adjusting your coverage levels to help lower the amount of money you spend every month on your auto insurance premiums.

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