There are many assumptions about car insurance and factors that affect car insurance rates. Misconceptions about insurance rates lead many people to skimp or even skip insurance all together. All drivers are required to carry at least the state minimum insurance requirements, but they are encouraged to purchase additional coverage to protect themselves and their vehicle. Here are a few things that could actually affect your rates.
1. Driver History
Anytime you apply for car insurance or request a quote, you are typically asked how much you will be driving a car, how many tickets you have had, and any accidents that you have been involved in as a driver.
The answers to these provide the insurance information about your driving habits that can increase or decrease your risk for an accident. The high the risk you are, the more your premium will be.
2. Personal Information
More general information about you such as your age, occupation, and where you live are also factors that can affect your risk for filing an insurance claim.
Teenagers are seen as a higher risk behind the wheel than drivers in the forties and as a result, they end up with higher premiums. The type of job you hold may require you to travel for work, and thus, prove you to be more susceptible to an accident because you spend more time on the road than an average person. As for where you live, those living in neighborhoods with more break ins or vehicle thefts reported may have high premiums because they are at a higher risk for having a damaged or stolen car – and more at risk to file a claim with their carrier for compensation.
3. Credit Score
Once you turn 18, your credit score is used to judge you more that your SAT score ever will over the course of your life. Getting an apartment, getting a loan, purchasing a car, home, or boat, and even buying car insurance will also be based on your credit score. Using your credit score to influence your car insurance premium can seem unfair to many but it is still a practice that is allowed. According to insurance companies, how a person handles or maintains their finances influences how many claims they may make against the insurance company.
4. Your Car’s Information
Insurance companies are all about risk mitigation. They counter higher risk individuals with higher premiums to offset their expected cost for that specific individual. The type of car you drive is another big factor in determining your risk. The year, make, and model of a car are all factors that may affect how you drive – or may affect how likely the car is to be stolen. Insurance companies will also consider the cost of your vehicle, more expensive cars are likely to be expensive to fix or replace after an accident. Having safety features built into your car can help to counter the risk your car may pose to insurance companies.
5. Type of Insurance Chosen
The State of Florida only requires drivers to carry a minimum of $10,000 in Personal Injury Protection and Property Damage Liability. Adding additional coverage options such as comprehensive, collision, or underinsured motorist coverage will increase your premium.
The higher the coverage limit you select, the more your monthly payment will be ($25,000 vs $50,000 vs $100,000). Also, the deductible you select will also greatly affect your premium. The lower the deductible (the amount you are responsible for out of pocket) the higher your premium will be.
Other coverages that may affect the monthly price are accident forgiveness, car rental reimbursement, and towing services.