What are insurance companies looking for when they are deciding how much to charge you for car insurance? After all, anyone who has ever shopped and compared rates knows that quotes can vary by hundreds of dollars for the same amount of coverage. Here at G&L Insurance, we know what goes into a typical car insurance premium. Continue reading to learn what types of factors may be affecting your costs and what you can do to maximize your savings without jeopardizing your coverage.
Rate variables are unique to each driver. They include things that insurers associate with your risk of filing a future claim. Every insurance company uses its own formula for calculating their risk of insuring you based on these variables. That means that certain factors may bear more weight with one insurer than another. Some factors may be overlooked altogether by others. Examples of common risk variables include:
Age plays a big role in the cost of coverage – particularly for very young drivers and very experienced drivers. Teens under age 20 are nearly three times more likely to be in a collision, which is why they tend to pay much more for coverage. On the other hand, drivers in their 50s and 60s tend to pay less due to fewer miles driven on the road and more experience behind the wheel.
The type of vehicle you drive is important for a number of reasons. First, insurers want to know if the make and model of your vehicle makes it a prime target for theft since certain models tend to be stolen more than others. Second, insurers want to know how much it will cost to repair or replace your vehicle if you are in an accident. Finally, vehicles equipped with certain safety features may present less risk to the insurer, which could translate to discounts on your premiums.
Your credit history might be directly related to your safe driving abilities, but some insurers correlate your credit score with your risk of filing a future claim. Research has shown that drivers with low credit scores tend to file more claims than those with excellent credit. In some cases, a driver with excellent credit could pay as little as half of the premium of a driver with collections, bankruptcies, and other negative factors in his or her credit report.
Nearly all insurance companies will review your claims history when determining how much to charge you for car insurance coverage. However, it typically is not the value of the claims you have filed or how much insurance companies have paid toward those claims; rather, most insurers are much more concerned with the number of claims you have filed in recent years. Your CLUE report shows paid and denied claims – both of which can be used to calculate your insurance costs.
Several additional factors can raise or lower your insurance premiums. Examples include:
- Marital status
- Where you live
- How many miles you drive each year
- Your primary purpose for driving
- The number of violations on your driving record
- And more
Here at G&L Insurance, we can help you better understand which factors could be working against you or in your favor. We will work to find discounts for the low-risk variables in your profile, and we will shop around for an insurer that will be more favorable toward the higher risk variables you face. For more information or to request your free quotes, contact our office today. We look forward to serving you soon.