Six Things Auto Insurers Want to Know About You

by Darwin on September 3, 2020

If you are looking, or have ever looked for car insurance, you know that it can be an exhausting feat of shopping around, getting quotes, drawing comparisons, and making decisions based on an array of features. The hope, of course, is to find a plan that aligns with your needs and best interests for your budget and lifestyle. A key part of this process to keep in mind is that on the other side of all this, auto insurers are also assessing us drivers in order to whip up the perfect deal. Their job is to predict risk and assign premiums based on our individual qualities and demographics, and hopefully create a relationship that benefits both parties. You can have a head start on your process if you have an understanding of what factors insurers are considering, and how they may influence your premiums.

  1. Where You Live

Many forms of insurance are regulated at the state level, meaning their premiums will be influenced by state legislation. Car insurance is no different! Some states have certain requirements that other states do not have.Beyond this, within your state, your actual zip code can impact your premiums, as well. For example, if you live in a highly populated, denser area with a considerable history of insurance claims, chances are your premium will be hiked up, versus if you lived a few minutes outside of town in a slower, less-populated area. So, it is important to do some research in order to get a grasp on your specific state regulations, as well as your neighborhood’s history.

  1. Your Age

Age is one of the biggest factors affecting your car insurance premium. It should come as no surprise that, on average, new and inexperienced teenage drivers are more likely to acquire a few bumps and scratches on the road- and therefore file more claims- than seasoned adults. Potential insurers view younger drivers as a higher risk for this reason, and will raise a teen’s premium significantly in their early driving years, lowering every decade or so until they hit their 60s, when premiums begin to crawl upwards again in a driver’s old age.

  1. Your Marital Status

Auto insurance companies view married couples as less likely to file claims, being that married couples often share driving responsibilities. This, like all insurance rates, is a game of potential risk, and ultimately lowers premiums for married couples, versus for single car owners, or even divorced drivers. This can make a difference of $40 to $50 a month. Keep in mind, too, that having multiple drivers on the same policy, as many married couples do, often leads to discounted rates.

  1. Your Homeowner Status

Homeownership tends to lower auto insurance premiums. Between renters, condo owners, and homeowners, renters pay the highest premiums on average, with homeowners coming in at the cheapest. This is because insurance companies view homeowners as likely to be more financially stable, and therefore less of a risk to take on. It’s not a huge difference, roughly $20 a month, but worth noting for your insurance shopping endeavors.

  1. Your Education Level

According to your insurer, the higher your education, the lower the probable risk. Of course, as with any of these bulleted points, insurance companies are drawing bold conclusions based on generalizations. That being said, it is interesting to note that a driver who has pursued higher education in the form of a Master’s or Ph.D. could potentially be saving almost $30 a year compared to a driver without a degree. Let’s think back to number 1 on this list. We know that, often, insurance is left up to state legislation, so it is important to note that there are states, like New York, that do not consider a driver’s level of education when it comes to determining premium rates.

  1. Your Credit Score

Your credit score may impact your insurance rates the most of all the aforementioned qualities. This has to do with- surprise!- an insurance company’s risk assessment. Auto insurers will view those with higher credit scores as lower risk, and therefore reward them with lower premiums. Drivers with lower credit scores will also result in higher claim payouts by the insurance company, so to make up the difference, insurance companies will charge them more monthly. This difference in premiums can be as drastic as 100%, therefore doubling the average premium of a high-credited driver for a low-credited driver.

Though many of these listed attributes could certainly be considered crude generalizations made by our potential insurers, it can be helpful to know what you are up against before you start your auto insurance journey. There are other factors, such as a driver’s gender (women being awarding lower premiums than men on average), that can come into play, but the premium discrepancy is virtually negligible in comparison to those listed. It is also important to note that these considerations vary across states and insurance companies. Overall, in a world where we so often can feel powerless against the forces that be, it can make all the difference just to have an understanding about how the “man behind the curtain” works, so to speak. If knowledge truly is power, then the more you know, the more you can feel powerful on your search for the perfect car insurance. Best of luck!

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