If you’ve ever shopped around for car insurance, you know different companies charge different rates for the same coverage. Obvious factors like age and the type of car you drive also impact how much you’ll pay for coverage. That makes sense; a teenager driving a sports car is more likely to file a claim than a 45-year old driving a station wagon.
But companies look at dozens of factors when determining your car insurance rate. Let’s look at a few lesser-known ones that can impact how much you’ll fork over in premiums.
1. Your credit score
You know you need a good credit score to land a competitive mortgage rate, but did you know it also impacts your car insurance rates? In some states, insurance companies look at your credit score to determine how likely you are to file a claim and how much that claim might cost them. A lower credit score can lead to a higher insurance rate, which means that a maxed-out credit card might cost you more than just interest.
2. The year, make, and model of your car
It makes sense that the type of car you drive will impact your rates, but insurance looks at far more than just the maker. The year and model can also impact rates. Newer cars are likely to have more security and safety features than older models, which can result in lower claims — and lower insurance premiums. Even factors like the weight of your car can impact rates because a heavier car may cause more damage in a crash.
3. Your driving experience
Age matters for insurance rates, but so does how long (and how well) you’ve driven in the past. A driver with 20 years of driving experience will pay lower premiums than a driver with two years of driving experience — even if they’re the same age. Taking driving lessons and having a clean driving record can help lower your rates.
4. Where you park your car
Where you live and park your car each night can also impact your rates. If you live in a densely populated area with high crime rates, you’ll pay more than someone who lives in a more rural area. But where you physically park your car (on the street or in a secure garage) can also impact what you’ll pay for car insurance.
5. Insurance laws in your state
When I moved from Jacksonville, Florida, to Chicago, Illinois, my car insurance rates actually dropped. That’s because Florida is a no-fault state, which means every driver pays for the damage to their own vehicle, no matter who caused the accident. This results in higher insurance payouts and higher premiums.
Illinois is an at-fault state, which means whoever causes the accident has to pay. (Or, more accurately, their insurance company pays.) If you live in a no-fault state, you may pay more.
6. How much you drive
The more miles you drive, the more likely you are to get into a car accident. If you work from home and walk your kids to school, you’ll pay less than a person with an hour-long commute each day. If your driving habits change, make sure your insurance company knows so it can adjust your rates.
Understanding the factors insurance companies use to calculate your premiums can help you find the best deal. If you don’t drive often, have a garage, or your car has after-market security features, you may qualify for lower rates.
