What Factors Affect Your Auto Insurance Rates?

As a responsible vehicle owner, you’re likely aware of the importance of auto insurance. However, while doing your duty and retaining appropriate coverage, you should also try to get the right deal on your policy. Your regular (e.g., monthly or annual) premiums maintain your auto insurance, but such payments can stretch your budget. Understanding how various factors can impact your rates can help you implement steps and pursue savings opportunities.

7 Auto Insurance Cost Factors

Although your auto insurance rates may be based on many factors, with exact calculations and formulas varying among insurers, you can generally expect the following criteria to be considered:

1. Location—Where you live and drive can significantly impact your auto insurance premiums. For example, if you live in an area with higher vehicle theft and vandalism rates, you may have to pay more for coverage. Similarly, areas at risk of natural disasters or with more traffic may mean greater costs.
2. Vehicle specifications—Your car’s make, model, year and replacement cost can influence how much you’ll need to pay for coverage. Generally, more expensive and newer vehicles cost more to insure, as carriers must account for potentially higher claims costs.
3. Insureds’ personal details—Whether you’re the only one on your policy or you plan to add a spouse or children, carriers will likely scrutinize insured drivers. For instance, adding a teenager to your policy may cause your rates to go up.
4. Driving records—Most insurance carriers heavily weigh your history behind the wheel. If you’ve been involved in several accidents or been issued several traffic citations, you’ll be considered riskier to insure and likely have to pay more for coverage.
5. Credit score—In many states, including Illinois, auto insurance companies use your credit score to help calculate an insurance score. Carriers believe that individuals with poor credit history are statistically more likely to file claims, potentially due to financial instability or a lack of responsible behavior.
6. Claims history—Carriers may quote you higher premiums if you’ve filed multiple claims against your auto insurance in recent years.
7. Policy details—The coverages you purchase as part of your auto insurance (e.g., liability, collision, comprehensive and gap), your deductible and limits can all influence your rates. For example, a higher deductible may help you save on premiums, but you’ll have to pay more out of pocket when filing a claim.

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Contact Ensured Advantaged in Chicago, IL, today to learn more about auto insurance and find the right policy at an ideal price.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.