Specific Factors That Affect Your Auto Insurance Rate

Auto Parts

Whether you’re a first-time car owner looking for the best car insurance in NC, or a seasoned driver who’s looking to save on car insurance, chances are you’re already prepared to spend way more than you’d like on your monthly premium. The truth is, while car insurance is expensive, it’s that way for a reason. Your insurance company isn’t pulling a number out of thin air, and while your rate might seem extravagant at first, it probably won’t seem so crazy once you take into account all the factors that go into the decision. From basic info like your driving history and your zip code to seemingly unrelated input like your gender and marital status, there are a ton of factors that contribute to your auto insurance rate being what it is. Whether you’re looking for a way to get better savings or simply want to better understand the whole process, here are a few things you’ll want to think about when figuring out how your monthly car insurance payment came to be.

Zip Code

While at first glance it might not seem to make much difference, where you live, as well as how long you’ve lived there, has a huge effect on what you pay for car insurance. For instance, if you live in a sleepy little town in the middle of the country, the likelihood of getting into an accident is slimmer than it would be for someone in a densely-populated city area where everyone drives. If you live in a “commute” town or a place that’s famously traffic-heavy, such as Los Angeles, your starting rate is automatically going to be higher than most. When your insurance company is calculating how much you pay, it’s all about risk and probability. In a place where millions of people hit the road each day, accidents simply happen, regardless of liability. However, if you live in a smaller town or a more bike-friendly place with great public transportation, it’s less likely that you’ll end up getting rear-ended on the highway or getting stuck in a rush hour pile up.

Driving History

Every driver has a record that encompasses a number of different areas of risk. Your record shows companies how responsible you are on the road, and it does this by compiling a ton of different offenses (or lack thereof) over the years, from speeding violations to parking tickets to major issues like DUIs. If you have too many serious violations on your record, insurance companies may be able to deny selling you insurance on the basis that you’re too much of a risk. However, if your record is clean save for a few unpaid parking tickets, you’ll most likely be able to get a pretty fairly priced standard policy.

Credit History

As with any payment service or loan, your car insurance company will use your credit history to assess risk. You may be wondering, why does having good credit matter if I’ve already purchased or rented my car? Here’s why: A lot of research has been done showing that drivers with a lower credit score (590-619) are more likely to file claims or engage in fraud. While it might seem to go above and beyond to check a driver’s credit score, insurance companies have their reasons. Having good credit translates, in many finance-related situations, to being trustworthy, and insurance companies have to be able to trust you before handing over their protection.

Claims Record

Perhaps the most obvious factor in your premium cost is your past history with accidents and filing claims. Not only does knowing the number of claims you’ve filed in the past help insurance companies assess risk, it clues them into the types of accidents or issues you’ve been involved in. For instance, if you’ve filed a few claims in the past few years for accidents where you were the wronged or “not at fault” party, it could still count against you, but not as much as if all those claims had shown you to be at fault for the accident. Insurance companies don’t want to have to pay out on a claim if they don’t have to, and each time you’re at fault, you’re proving yourself to essentially be a bad risk for the company.

Gender


This is an odd one. While gender might seem to be a stereotypical factor to use in judging whether or not someone is a good risk, studies have actually shown that men, especially in the first few years of driving, are more likely to be aggressive drivers and thus are more likely to get into accidents.