Insurance: A Guide for the Masses

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4 Factors That Impact Your Auto Insurance Rates

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As a driver, one of the big responsibilities that you face is carrying insurance on your vehicle. Almost every state requires drivers to carry insurance. Without car insurance, if you cause an accident, the other driver could sue you for all your personal assets. Without car insurance, you may not have the necessary funds to fix up your vehicle or pay for medical bills.

Car insurance is important and is not an expense that you can just skip out on, which is why it is important to understand the factors that impact your car insurance. Car insurance rates are not straightforward, and multiple factors come into play to determine your rates.

Factor #1: Your Credit Score

Most states allow car insurance providers to consider your credit score when they figure out what your car insurance rates will be. Having a poor credit rating can significantly increase the amount that you pay for your car insurance, which is why you want to monitor your credit report, even if you are not looking to purchase a car or take out a loan.

Your credit report can impact the cost of your car insurance, so keeping your score high is important if you want to save money regardless of the other financial goals you have.

Factor #2: How Much You Drive

How often you drive a vehicle impacts what you pay for insurance as well. When it comes to car insurance rates, when the insurance company asks you how many miles you put on the car each year or each month, don't just guess.

Track your mileage so you can provide them with an accurate estimate of how much you drive. You will save money if you don't drive that much or if you don't use your car for regularly commuting to work.

Factor #3: Your Driving Record

Your driving record plays a very important role when it comes to your insurance rates. Keeping a clean driving record, which means no accidents nor tickets, can go a long way to getting you more affordable car insurance premiums.

If you get a ticket, don't just accept it; always fight it in court and try to get the ticket revoked or dropped to a simple fine that will not go on your driving record. Work to protect your driving record.

Factor #4: Pay All at Once

Although your car insurance will allow you to pay your premium over a six-month period, your insurance company will often reward you if you pay your insurance premium all at once. Paying upfront helps you save money as well.

When it comes to your insurance premium, your driving record, how much you drive, and your credit score play important roles in figuring out what your premium will be. Agreeing to pay your premium upfront instead of dividing it into six payments is a smart strategy that will lower your overall premium costs.

To learn more about auto insurance policies, contact an insurance company.