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   What Affect Your Auto Insurance Rate

Top Five Factors That Affect Your Auto Insurance Rate & Five Ways to Counteract Them

Why Are You Paying So Much For Auto Insurance?

Buying auto insurance is a funny thing. You know you have to have it but you hope you never use it. You’re not always sure of what you’re covered for, but you almost always think you’re paying too much.  The reasons behind your rates don’t have to be a mystery, though. You just have to speak the language of insurance and understand the things that can raise your rates.

A Bad Driving Record.  Every ticket and violation adds up on your insurance bill.  License suspensions and revocations count against you too.  Fender benders can raise your rate a lot, even if they’re not your fault.  Avoid violations by not speeding or multitasking behind the wheel.  For those you already have, taking a driver improvement class can remove them from your dmv record.  And don’t forget that most offenses fall off your record after a few years.

The Vehicle You Drive.  Insurance sticker shock is not uncommon.  Every company has their own system for rating cars, based on factors like probablity of road accidents, theft and expensive repairs or replacement.  The newer and more exotic your car, the higher your premiums will be.  Avoid surprises by getting a quote on the insurance before you leave the dealership. But if you can’t resist the allure of that shiny new sports car, make sure that your agent knows about all the cool features that might bring down the premium, like an alarm system or anti-lock breaks.

Your Personal Status.  Most companies use your age and the number of years you’ve been driving to determine your premiums.  Depending on the state, some companies can also use sex, education, and profession as small factors, too.  Married couple  generally get a discount.  And almost everyone will give you a deep price break if you’ve had prior insurance without any coverage gaps.  Now you can’t change who you are, but you can minimize the effect.  So that means that if you’re young and inexperienced, you should probably stay on your parents’ policy. Give it some time and you’ll have enough experience and age under your belt to get your own. 

Bad Credit.  Like it or not, credit has become a staple in a lot of business transactions and insurance companies have started using it to determine rates. People who pay their bills on time are more likely to be good policyholders than those who have delinquent accounts or bankruptcies.  Fixing your credit is a great idea, not just for insurance matters. Request a copy of your credit reports and make sure everything’s accurate. Contact any creditors with accounts in collections. You may even want to contact a debt consolidation agency to help you.

Too Much Coverage and Not Enough Discounts.  Too much coverage is better than not enough. But if you’re trying to save your pennies, you might want to trim it down. Some common unnecessary coverage include physical damage coverage on vehicles older than seven years. Maybe you’ve got gap insurance through both your loan and your insurance companies. Or you have road assistance on your policy, but you’ve already got AAA.  Have any of the drivers on your policy gone off to school or been deployed by the military?  Are you a member of any professional organizations? Have you taken recent driver improvement courses? Do you have your home or life insurance policies under the same company? All of these things can bring your rate down. It’s a good idea to make sure your policy is up to date at every renewal to ensure you’re getting the best coverage at the best price.

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Updated November 29, 2007
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