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How Drivers Factor Into Car Insurance Rates

Owning a vehicle can be an expensive endeavor and the costs don’t end just because you’ve purchased one.  In fact, some of them take place only after the sale has been finalized.  Not only do you need to purchase the car, truck, SUV or minivan you’d like to own but you need to insure, license and maintain it.  While you may not be able to control all the costs that you could incur owning that vehicle, there is one key factor that insurance companies consider highly important… YOU, the driver.

How exactly do they do that?  While there is no set method and while each insurance company uses factors in their own way (and typically their own algorithms) to put together an insurance quote, these are the aspects that are individual to each driver…

 

Driving Record

They say that past behavior is the best indicator of future behavior, and while that may not apply to everything in life, insurance companies use your past driving experience and record to decide how safe you are behind the wheel today.  Therefore, drivers with a clean driving record are given better rates than those who have a history of moving violations and accidents.

 

Age

Experience and maturity come with age, at least that’s what insurance companies are banking on.  Statistically speaking, young drivers adept behind the wheel of a car and much more likely to get into accidents so being one or insuring one will cost you more.  But there is good news… rates typically go down around the age of 25 with most insurance companies.

 

Gender

Although Michigan, Hawaii, Massachusetts, Montana, North Carolina and Pennsylvania do not allow insurance companies to factor in gender as part of your insurance rate, all others in the USA can (and do) use a driver’s gender to come up with their insurance rate.  Going back to statistics, men typically drive more than women and engage in riskier driving behavior than women while they are younger but diminishes over time.

 

Marital Status

It’s a numbers game and when insurance companies are crunching them, they are factoring in if the prospective driver is married, single, divorced or widowed as a factor of your insurance rate.  While it may seem unfair, married drivers are considered to be safer drivers based on the figures and therefore get a better rate than their single, divorced and widowed counterparts.

 

Location

Whether you live in the urban jungle of a big city dealing with more traffic and congestion or closer to rural cornfields of a small town where deer are more prevalent and accidents are more serious, it’s all factoring into the rate you are going to get from insurance companies. 

 

Bundling

Own a home or have another vehicle you’ll be insuring as well?  Many insurance companies will offer a discount for those that combine a homeowner policy with a multicar policy so if you have another vehicle you own, consider insuring them with the same insurance company to get a better rate.

 

Primary Health Insurance

If a driver has a primary health insurance policy that use can use as the primary payer in the event of an accident, it can help lower your insurance rates but only if you claim them as the primary.

 

Claim History

Remember that thing about past behavior indicating future behavior?  To insurance companies, it applies to your claim history as well.  If a driver has filed multiple claims in the past, insurance companies assume they are more likely to file claims in the future.

 

Credit Rating

Insurance companies use credit-based insurance scores, along with other factors (except in California, Hawaii, and Massachusetts where it is banned) to determine how likely a driver is to stick to a payment plan or pay their full premium.

 

Miles Driven Annually

The less a driver is out on the road, the less likely they are to be involved in an accident and insurance companies understand this fact.  In addition, insurance companies also take into consideration where that commute may take the insured driver and vehicle, such as driving 35 miles from a rural area to the heart of a downtown area. Obviously, the driver faces different challenges in each area during that long commute and it may impact the driver’s rate.

 

 

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