What affects my car insurance rates? That’s a really good question, but unfortunately the only accurate answer is: “That depends.” You see, insurance companies make a profit by accurately predicting a group’ s likely hood of having a claim and the likely cost of that claim. If they find a factor that improves predictability, even a little, they will use it, so the list of factors is very long. On top of that they combine the factors in literally thousands of different ways creating insurance rate calculations only a computer can do.
5 Things That Impact Auto Insurance Rates
Factor 1: Your Personal Driving History
I think we all expect this to make a difference, and it does, a big difference. Every claim, violation and accident makes a difference. How many “events” you have in a 5 year period usually makes more difference than how severe any one event claim is. The rationale for this is that if people have events, they will eventually have a very severe event.
Factor 2: Age and number of years you are licensed.
We’ve all heard the expression that experience is the best teacher and it certainly is. Age humbles us and teaches us to make safety a high priority. Experience is the only way to learn to safely drive a “2 ton bullet traveling 10 times faster than any of us can run on streets crowded with another 2 ton bullet aimed at their own destination and guided by people who may or may not be skilled at bullet guiding”.
Factor 3: Location – where you usually drive.
Obviously cities have more vehicles on the same roads so the risk of have an accident go up, but there are other considerations. The cost of repairing or replacing a vehicle varies widely across the country. The likelihood of being sued and losing that suit also changes depending on where the claim occurred.
Factor 4: Your vehicle
Of course owning a vehicle that is expensive to repair, high performance, or both will cost you more to insure. If all your other factors are good, then this falls into the category of “if you can afford the car, you can afford the insurance”. However, if you have other factors increasing your rates, it’s clearly best to avoid expensive vehicles till the other factors improve.
Factor 5: Insurance Score – Similar to an Credit Score
A lot of people will avoid talking about this because it is often seen as unfair. We think it is more important to be honest and informative with the people we serve and avoiding this subject is not in your best interest. There is an old saying out there: “Someone who is willing to lie for you, will also be willing to lie to you.”
Over a large number of people, the Insurance Score is still the best predictor of future claims the insurance industry has ever had, and this is why. Most people’s credit score is a fair representation of how responsible they are with money. If someone is responsible with money, they are likely responsible with other things, like cars and homes. The one big exception to this is if someone is devastated by a medical condition and medical bills it will have less impact on credit scores than other expenses. These are the Top 5 factors that determine your auto insurance cost and there are literally a hundred other things that are considered. What it comes down to is, you need to speak with an agent that is knowledgeable and is willing to take some time to learn about you. “Apples to apples” comparisons simply copy the previous agent’s mistakes. They are quick, easy and terrible for you.