6 Key Factors That Impact Your Car Insurance Rates

If you own a vehicle, it is essential to know how your premium rate is calculated so that you can take the necessary steps to keep your premium rate as low as possible. Various factors impact your car insurance rate, some of which are in your control and others that are outside of your control.

Key Factor #1: Age

Your age plays a significant role in what you are charged for insurance. Generally, both younger and older drivers face higher insurance rates because the rate of accidents for drivers in those age ranges is the highest, making both younger and older drivers riskier to provide insurance to, which is reflected in higher rates.

Key Factor #2: State Requirements

The insurance requirements and laws in the state that you live in will play a role in what you are charged. The more requirements your state has, the more expensive your premium is likely to be.

Key Factor #3: Mileage

How many miles you drive matters. If you spend more hours and miles on the road, your premium is likely to be higher than someone who spends fewer hours and miles on the road. It is essential to know how many miles you drive monthly or yearly, as this will impact your rate.

Key Factor #4: Credit History

In many states, but not all states, they are allowed to consider your credit history when figuring out what your premium rate should be. The logic behind this is that someone who pays their bills and has a great credit score is less likely to fail to pay their insurance, which can result in premium savings for you if you have a good credit score. Some states ban the practice of using credit history as an insurance premium factor.

Key Factor #5: Zip Code

Where you live plays a role in what you are charged. The zip code where you park your car at night can have a significant impact on your rates. If the vehicular crime rate is high in the neighborhood where you live or there is high accident rate, you could face a higher premium. Or if the vehicular crime rate and the accident rate are lower, you could face a lower premium.

Key Factor #6: Driving Record

Your driving record will impact your premium rate as well. A driving record without any major accidents or tickets can help you enjoy a lower premium rate.

These are just a few of the factors that are taken into consideration when figuring out what your premium rate is. Some of these factors are things you can control, such as how many miles you drive, where you live, your credit history, and your driving record. Others are not factors you can control, such as your age. All of this information is used to calculate your rates. 

For more information on your auto insurance policy, contact an insurance agency near you.