8 Key Factors That Affect The Cost Of Your Car Insurance

8 Key Factors That Affect The Cost Of Your Car Insurance


Many of the factors that drive the cost of your car insurance are beyond your control. However, there are some you have power over such as your credit score or choice of vehicle. Study the following eight key factors that influence the price of your auto insurance premium and then see about improving the ones that are within your control.

Profession

Certain jobs have been known to carry more risks. If you are a journalist or a delivery man, for example, your insurance rate may be higher because you are almost always on the road and have an increased risk for accidents. On the other hand, an airline pilot, who is likely to use his car to drive from his home to the airport, will have a lower insurance rate.

If your profession requires you to drive during ungodly hours or long distances, then expect a higher cost for your premium. If you belong to low-risk groups–like insurance underwriters, lawyers, nuns, paramedics, police officers, and school teachers–who are viewed as more careful compared to average drivers, then you incur a lower insurance rate.

Driving Activity

How often, how far, and where you drive greatly impact the cost of your premium. You may be tempted to report a lower figure for your annual mileage, but that can invalidate your insurance. If your job-related commute is along busy roads, then that can increase your risk for accidents, upping your insurance rate. A low-mileage discount may be available for you if your everyday commute is less than five miles.  

Driving History

You are in for an increased cost of premium if your driving record is marred by previous car insurance claims, tickets, and accidents. A typical insurer automatically raises the premium if the policyholder is found to be at fault in an accident, had a moving violation, or made claims. A no-claims bonus and a discount are usually available for people who make no claims for at least a year.

Meanwhile, your DUI ticket will generally fuel the cost of your auto insurance for up to ten years. For most traffic tickets, they will affect your car insurance rate for three years, while accidents resulting to injuries have a five-year span as blemishes on your driving record.

Age and Gender

Generally, young men have higher car insurance rates than young women. Older men, on the other hand, incur lower rates compared to older women. Upon retirement, your auto insurance rate will be reduced by your insurer. So, if you are headed for retirement, contact the car insurance company to notify them of the fact.

Also, if you are adding a male teenager to your car insurance, be prepared to potentially double the cost of your premium. To save money and to take advantage of a discount that may be offered by the insurance company, have your teen driver undergo and complete a defensive driving course. 

Marital Status

If you are under 30 years of age, your marital status–whether you are married or divorced–will impact the cost of your insurance. Statistics show that those who are married are involved in fewer accidents compared to single people, so they are less risky to insure and get meted with lower rates. If you are married, you also qualify for multiple-car discounts.

Credit Score 

Your financial stability is reflected by your credit score. The better your score, the more trustworthy you are and thus perceived as a low-risk individual by the car insurance company. Because people with bad credit scores are cash-strapped, insurers expect that they are more likely to file claims and are therefore more risky to insure. You should also know that some auto insurance companies offer significant discounts to people with an excellent credit score.  

Location

Where you live also matters in calculating your insurance rate. Your location influences the cost of repair and the probability of encountering traffic accidents and car theft. So, if you happen to live in an area where theft is at its peak and insurance fraud is high, carefully choose your insurer and look for ways to get your premium discounted.

Insure.com has listed the top ten states where average car insurance rates are highest–Michigan, West Virginia, Georgia, Washington, D.C., Rhode Island, Montana, Louisiana, California, New Jersey, and Florida.

Vehicle Make, Model, Year, and Safety Features (or Lack Thereof)

The vehicle you are insuring has a far-reaching effect on how much your auto insurance premium will cost. Large vehicles with high safety ratings can help minimize or prevent injuries in the case of accidents, so they can help you save money by lowering your rates. Among the safety features that can minimize the cost of your premium include air bags, car alarms, and LoJacks.

The larger the car’s engine size, the higher the insurance rate. A newer car also translates to a higher insurance rate, because repairing or replacing a damaged new car is far more expensive compared to simply doing away and replacing a totaled old vehicle. Popular car models also net higher premiums, because they are more likely to be targeted by thieves.

Unsurprisingly, powerful fancy cars rack up the highest auto insurance rates. According to Insure.com, 2014’s priciest cars to insure are Nissan GT-R Track Edition, BMW M6, Mercedes-Benz CL550 4Matic AWD, Mercedes-Benz SLS AMG GT, Porsche Panamera Turbo S, Audi R8 5.2 Spyder Quattro, Mercedes-Benz G63 AMG, Audi A8 L 6.3 Quattro, Jaguar XKR Supercharged, and Jaguar XK. On the other end of the spectrum, the cheapest vehicles to insure in 2014 are Jeep Wrangler Sport, Honda Odyssey LX, Jeep Patriot Sport, Honda CR-V LX, Jeep Compass Sport, Chrysler Town & Country Touring, Subaru Outback 2.5i, Dodge Journey SE, Honda Odyssey EX, and Dodge Grand Caravan SE.