We may think we know what factors are used to calculate our auto insurance. Do we have a history of speeding or accidents? Our age and where we live are major factors. Young, inexperienced drivers are more likely to be involved in an accident. The age and type of vehicle you drive are also important.
Is it a two-door sports car or a minivan? Does it have all the newest safety features? Most of these seem fairly obvious, but did you know your job can affect your insurance premium? What about your credit score? Did you know your previous insurance carrier can affect the rates of your new insurance carrier?
1. When Did You Get Your Driver's License?
You won't be able to change this, but it is something to think about if you have a child. Some kids put off getting their driver's license. On many car insurance applications, there is a question asking at what age you first received your license. This question is used to calculate driving experience.
Maybe you've heard that car insurance rates decrease when you turn 25. This is partly because by age 25, many drivers have been driving for nearly a decade. If someone waits until age 18 or 20 to get licensed, they may not have the same driving experience at 25.
2. How Much You Drive
Low-mileage drivers often receive lower premiums. If you drive less, you should generally pay less. Less time on the road means less opportunity for an accident.
When you take out your policy, your agent will ask how many miles you drive. If you are working from home or driving much less than before, contact your agent. Updating your annual mileage may help lower your premium.
3. Home Ownership
Some companies give homeowners a price break on car insurance, even if you do not buy homeowners coverage through the same insurer. Many companies also offer discounts when you bundle multiple policies, such as home and auto insurance.
Some companies may offer an even larger discount if you bundle home, auto, and umbrella policies together. Bundling can sometimes improve coverage and reduce total premium.
4. Where You Park
Keeping your car in a garage is less risky than parking it on the street, and your insurance rates may reflect this. Parking location can affect theft risk, weather exposure, vandalism risk, and claim frequency.
5. Your Education
Some auto insurance companies ask about your level of education. In some rating models, drivers with college degrees may pay less for car insurance. However, the use of education in insurance pricing has been debated, and some states have moved away from allowing this practice.
6. Your Insurance Score
Insurance companies may use an insurance score, which is often based in part on credit-related information. This does not give the insurance agent access to your credit report, and it does not count as a hard inquiry.
Insurance companies use insurance scores as one factor to help predict the likelihood of future claims or payment issues. A lower insurance score can sometimes result in higher premiums.
7. Your Job
Some jobs involve longer commutes, late nights, or more time on the road. More time driving can mean more exposure to accidents. If your job requires regular driving, delivery work, rideshare driving, or other business use, special insurance coverage may be needed.
8. Your Previous Insurance Company
If you are coming from a nonstandard insurer, some insurance companies may assume you represent a greater risk. A nonstandard company often covers drivers who may have accidents, violations, credit concerns, lapses in coverage, or other underwriting issues.
If you are insured with a nonstandard company, ask why. Improving your driving record, credit-related insurance score, or maintaining continuous coverage may help you qualify for better options in the future.
9. Your Current Insurance Company
Insurance premiums can vary greatly from one insurance company to another. Rates may differ because companies have different claim experience, underwriting rules, discounts, target markets, and pricing models.
This is one reason it helps to work with an independent insurance agency. We can compare options from multiple companies and help find a fit for your situation.
10. Loyalty
Many people assume staying with the same company automatically means lower rates over time. That is not always the case. Some companies may offer loyalty discounts, but rates can still increase based on pricing models, claim trends, and other factors.
Your loyalty should be with an independent agent who is willing to review multiple companies and help keep you with the carrier that best fits your current needs.