Car insurance providers can get a general idea of how much your rates will be just by looking at you.
It’s not all the information they require, but it gets the ball rolling in the insurance policy underwriting process. In every case of car insurance, there are non-driving factors about the potential policyholder. Someone once said that you can be the best driver in the world who has never gotten into an accident or filed a claim and still pay a lot for your car insurance. Let’s look at how car insurance rates and how much you pay is circumstantial.
Even a car insurance company’s quote calculator uses personal factors to estimate how much someone could be paying for auto coverage. Outside of your driving record, car type, and how much you drive, car insurance companies will look at the following personal factors:
Age - First and foremost is the look the car insurance agents give you as they try to gauge your age before confirming it on your driver’s license. It’s common knowledge in auto insurance that younger drivers pay higher premiums than older ones. This is due to a lack of a driving record and experience. As you grow older, you’ll notice your car insurance rates lowering to the average.
Zip Code - Even where you live has a role in determining how much you pay for car insurance. Rural towns will see lower car insurance rates than a big metropolitan area would due to more traffic and chances of getting into an accident. That’s just a proven fact; more drivers mean more accidents.
Sex - While not every state allows the listed sex on a driver’s license to be assessed when underwriting for car insurance, whether you’re a man or a woman may affect your rates. Studies have found that men tend to be more risky drivers than women, so they are subject to slightly higher car insurance rates.
Marital status - Similarly, another study has found that married couples tend to be more careful drivers than those unmarried. As such, car insurance rates are sure to reflect it.
Credit Score - This is another factor that affects your car insurance cost that is looked at in some states. A big part of car insurance is making your premium payments on time. Credit scores are used to rate your financial responsibility. So as you can infer, drivers with less attractive credit scores may pay higher rates.
As you may have noticed, some of the factors we’ve gone over which affect your car insurance rates can’t exactly be helped, especially age. But it’s always the case that the car insurance rates you start out with won’t stay that way forever. With the passage of time, and by doing the following on your part, you can reduce your car insurance cost even if a non-driving factor is holding you back:
Avoid insurance claims - Car insurance claims can increase your rates up to 20%, so it helps to avoid any unnecessary claims that you can handle on your own.
Increase your deductible - Your car insurance deductible is what you pay before the insurer provides the payout for a claim. It has a direct inverse relationship with how much you pay for car insurance. The higher your deductible is, then the lower your insurance rates will be. Just be sure you can afford it.
Check for discounts - Car insurance companies offer several discounts. Some depend on personal factors like a student, veteran, or job-based discounts. Others are based on your insurance, like if you bundle another form of coverage with the insurer. Always ask the car insurance agent about discounts because there may be more than one you qualify for.
Maintain a safe driving record - Car insurance providers will always smile upon safe drivers, and their rates will reflect it. This is the oldest trick in the book for lowering your car insurance cost. Several insurers give discounts for completing driving classes, so there is an incentive to make safe driving a habit.
The business of car insurance is based on risk and the likelihood that the insurance provider will have to payout. These factors that seem unrelated at first glance, like marriage and sex, are how insurance companies gauge risk. Despite their industry, they don’t prefer to pay out since it's their money. That’s why they are rewarded for not filing claims. So, in conclusion, the risk a car insurance provider perceives you to be shouldn’t hold you back from getting good coverage.