Having adequate auto insurance coverage is a must for protecting yourself in the event of an accident. In many places, driving without insurance is also a chargeable offence. However, it’s reasonable to want to get the best rates possible. After all, insurance is something you need to have, but hope you’ll never have to use.
Here are six factors that will impact your insurance rates, so that you can plan accordingly.
Getting a DUI
Many people who get a DUI have shown poor judgment, even if momentarily. They have chosen to drive under the influence, and did not choose to find an alternative way home. Getting a DUI has numerous adverse effects, from criminal charges to risking the lives of those around you. If your state is a member of the Driver License Compact (DLC), you may have to forfeit your driving privileges in other states, as well as your own.
Getting a DUI also dramatically increases your insurance rates for a significant period of time after the incident. It could also increase the insurance rates for anyone in your household. For example, if your spouse or teenager has a vehicle, their insurance rate could also go up.
Your Credit Score
Unlike a bank loan or mortgage, your credit score won’t limit you from getting insurance. This fact leads to the misconception that your credit score will not be a factor in your insurance rate. However, many insurance agencies do use your credit score to determine your rate.
Generally speaking, the better your credit score, the better your premium. This consideration is based on studies showing that those with a lower credit score are more likely to default on payments. However, some states prohibit the use of credit scores when calculating insurance premiums, so it’s wise to do some research before applying.
Job and Commute Considerations
Your job plays an integral role in calculating your auto insurance premiums. If you have a job that’s known for more car travel, such as a sales representative, you’re considered a higher risk because you’re on the road more often.
Another factor is your commute. You will be asked where you work in relation to your home and questions about your schedule to determine how much you will be driving every day. If you have been working from home due to the COVID-19 pandemic, it may be wise to call your insurance provider to ask for an adjustment.
The type of vehicle you are insuring will also impact your insurance. Some of the factors influencing your rate will include:
- The cost and value of your vehicle
- Safety ratings
- Vehicle age
- Vehicle size
- Risk of theft
If all other variables remain the same, insuring a new Porsche, for example, will cost you more than insuring a five-year-old Honda Civic.
Your Demographic Information
While it may be considered controversial, factors such as your age, gender, and marital status can play a part in determining your auto insurance rate. For example, a driver in their late teens may have a higher insurance rate than an older driver.
Also, young men tend to have higher rates than young women because statistics indicate that young men take more risks while driving. Similarly, single people may have higher rates than married people for the same reason. Even so, driving history still remains the most important factor affecting the final cost.
Location Related Risk Factors
Your insurance rates can also be impacted by where you live. If you live in a quiet area with low crime and accident rates, you may have lower premiums. Conversely, if you live or work in an urban area with higher crime and accident rates, you may end up paying more.
When it comes to auto insurance premiums, there are some aspects that you can control and others you cannot. Be sure to shop around and find the insurance provider that offers you the best possible rate for your coverage needs.