Which Factors Affect My Car Insurance Premiums?
If you have been around the auto insurance business for any period of time, you will notice that there are some questions which continue to come up. One of the most common questions usually centers on what are the determinants of car insurance premiums. This article will attempt to answer this question.
Before we begin this discussion, it is important to note that the auto insurance industry revolves around a business model of risk. The riskier an insurance company perceives you to be, the higher insurance premiums you will be expected to pay.
The main determinant is your driving history. If you have a history of car accidents and speeding tickets, you are obviously going to have to pay higher premiums than a driver with no accidents or speeding tickets.
If you are a young driver, you may be wondering how your level of risk is determined. Since you do not have any driving history to fall back on, you will be considered a high risk until you prove otherwise (whether with a longer driving history or you decide to take some driver education classes).
Another determinant of your insurance premiums is your credit score. Many people are often surprised (and sometimes, sad) to learn this. The car insurance industry has done numerous studies and the evidence that they have collected show that drivers with higher credit scores are less of a driving risk than those with lower credit scores.
The last aspect that we are going to discuss is a driver’s geographical location. As a general rule, you can expect to pay higher insurance premiums if you live in an urban area (such as Miami) than you will if you live in a rural area (such as parts of Kentucky).
We believe this article has highlighted the three largest factors in determining your car insurance premiums. If you would like further information on auto insurance, please feel free to visit the Cheaper Car Insurance for Women Center or the Car Insurance for Teens Guide.