There are a lot of factors that go into determining car insurance rates. Whether you’re new to shopping for car insurance or trying to find ways to lower your car insurance premiums, you might be tempted to reduce your coverage to save money, but it’s important to know all of the factors that affect the price you pay. Here’s a guide to help you better understand how various factors can influence the cost of your car insurance.
5 Factors That Can Impact Your Auto Insurance Rates
Personal Characteristics
Your age can play a big role in determining your rates. The younger you are, the more of a risk you are considered to insure. The more experience you have driving, the better chance to have a more favorable rate. If you are new to driving, there are a couple opportunities to save money on your car insurance rates, including completing a defensive driving course, student discounts, telematics apps like Nationwide Smartride and Progressive Snapshot, and more.
Your credit score can also play a role in your rate as well. You can’t be denied car insurance because of a low credit score, but those with good credit scores can benefit from discounts and better rates.
Where You Live & What You Do
Where you live often plays a role in determining your rates. For example, living in a rural area is an entirely different driving experience than living in a busy city. Insurance companies can look at the likelihood of claims based on others in the area and also take crime, weather and more into account.
Vehicle Type and Use
If data shows that drivers with your model of car have been in more accidents or filed more claims, your rates will likely be higher. The purchase price, cost of repairs, safety tests and why you’re driving your car are also taken into consideration. A car that is driven once a week will often cost less to insure than a car that is driven to school or work every day.
Drive Record and Claims History
Your record as a driver plays a big part in determining your risk to insure. Drivers with a clean driver’s history typically qualify for better rates and can also be eligible for good or safe driving discounts. Insurance companies will also take your claims history into account.
Car Insurance Choices
Car insurance rates vary widely from company to company, making the company you choose one the biggest factors that can affect your rates. In order to find the best car insurance for you and your family, it’s important to shop around.
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