We’ve all wondered how insurance companies determine the rate we pay for car insurance. Clearly the price you pay depends on lots of factors. Here are 7 factors that you can actually impact.
In her recent article, The 7 Deadly Sins of Car Insurance, Susan Ladika outlines the top 7 offenses that raise your car insurance. To view the complete article, click here.
Driving under the influence
Perhaps the deadliest sin of all when it comes to jacking up your auto insurance rates is a DUI conviction. You'll typically be considered a high-risk driver by your auto insurance company for between three and seven years if you have a DUI on your record. According to a survey commissioned by Insurance.com, the average increase after a DUI is 82%.
Driving recklessly
While reckless driving laws vary from state to state, it generally means driving in "willful or wanton disregard" for the safety of people or property. Several states classify reckless driving that injures another person as a felony. Being convicted of the charge is viewed as a big no-no by auto insurance companies.
Having a bad driving record
Start racking up the auto accidents or major moving violations, and you'll be propelled into the high-risk category. If you have three tickets or accidents, or a combination of three tickets and accidents within three years, you'll typically be considered a high-risk driver, says Penny Gusner, consumer analyst at Insure.com.
Being a serial offender
If you don't behave behind the wheel, you'll be considered high-risk for years, with even minor infractions having a big impact on your rates.
Failing to pay your insurance bill
Compared to drunken driving, it may seem like a minor sin to skip paying your auto insurance bill and letting your policy lapse. But it will cost you big with your car insurance company. By going without auto insurance, you'll have to pay nonstandard rates when you take out a new policy.
Having a crummy credit score
It may seem totally irrelevant in terms of your driving, but auto insurers generally look at your credit when it comes time to set your rates. Research has found that drivers with lower credit-based insurance scores tend to file more claims than those who have great credit scores.
Driving the wrong kind of car
Auto insurance is less about your car than the person behind the wheel. For example, if people who drive a certain model of car file claims more frequently, then everyone who buys that car pays more.
And lest anyone forget: Adding a teenage driver
Adding a newly licensed teen to your car insurance policy can cost you more than even a DUI. A teenage driver is 12 times more likely to crash in the first month of driving than he or she is just a year later.
Insurance companies cover that added risk by raising premiums – a lot. Boys cost a lot more, at least in the first few years of driving. Adding a 16-year-old male to your policy increases rates, on average, by 176 percent, while a teen female increases them by 129 percent.
Moving forward
At Dean & Draper we suggest that you shop your auto insurance when your policy is about to renew. You could learn that the speeding ticket you received is no longer considered by your insurer in determining your rates, or that your credit has improved, or simply that another insurance company sees you as a better risk.
We welcome the opportunity to review your current insurance policies, discuss your insurance needs, and provide you with recommendations on selecting the policies provide the best coverage for the best price. Please feel free to contact us.
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