Insurance companies have different variables when it comes to factors that will affect the insurance premium. It is important to have knowledge on such factors because studies show that people could be paying more than they should. When shopping for policies, you should be aware of factors that insurers use to determine the rates. Below are some of them;
According to research, 92% of insurers will use your credit information to determine your insurance rates. Therefore, a lowcredit score will lead to a higher insurance premium. People with low credit scores tend to file for more and higher claims. When insurers look at your credit scores, individuals with poor scores will end up paying higher premiums to cover the losses in case they default in paying.
Your driving records indicate the kind of a driver you are. Records of accidents and tickets show that you are a risky driver and that is a red flag to the insurers. They will check your files when you are applying for coverage and during the time of renewal. Violations will increase your rates for up to five years. However, you should be honest during the application because if the insurance company finds that you omitted some information, it is an offense.
How the vehicle is used will have an impact on the premium. If the vehicle is used for commercial purposes, you should include that in the application. Failure to that, the company can deny the claim when the vehicle is involved in an accident during work. If you have a long commute or you frequently drive at night, the rates may be higher.
Type Of Vehicle
The kind of car will affect the premium. If a car is expensive and flashy, the rates will be higher. This is because its parts are costly and hard to get. Therefore, in the case of an accident, it will be difficult to fix the car or repair the parts that have been damaged. Moreover, the costs of repair will be high. Consequently, the cheaper the car is, the lower the rates.
Statistics show that insurance companies will use age as a determining factor. Statistics show that young drivers are more susceptible to accidents because of experience and reckless driving. Therefore, their insurance rates will be higher as compared to the elderly who are considered as better drivers and more cautious on the road.