Habits That Could Impact Your Insurance Rates

Car insurance is essential for motorists today. Not only is it forbidden to drive without insurance in all 50 states, but that insurance can also help you to cover the costs incurred by an accident. Many drivers want to obtain the least expensive insurance rates they can while still receiving good coverage. What drivers may not realize is that many of their behaviors, both on and off the road, can greatly affect the price of insurance.

Factor #1: Choosing where to live

According to Bridget Clerkin of the DMV, location is the single most important indicator of how much you’ll be paying for insurance. Rates vary depending on what state you live in and even the area of the state you call home. North Carolina had one of the lowest insurance rates in 2017 with an annual average of just $865, according to the DMV. Meanwhile, Michigan residents had to pay up to $2,610 that year. Writing for The Penny Hoarder, Dana Sitar says that drivers in urban environments tend to pay more for their insurance. This is due to the higher rates of auto thefts and accidents in a city versus a rural area.

Factor #2: Choosing an expensive car

Carroll Lachnit of Edmunds explains that another important factor in determining how much you’ll pay for insurance is what kind of vehicle you drive. Generally, the more expensive your car is, the more you’ll have to pay to insure it. Vehicles like the Honda CR-V cost roughly $1,317 per year to insure while insuring a model like the Mercedes-Benz E-Class could cost as much as $3,541 per year. Furthermore, insuring a used car generally ends up costing less than insuring a new vehicle. Additionally, repairs for a more advanced automobile tend to cost more than a car with less complicated systems.

Factor #3: Your occupation and education

Not every factor in determining your credit score is under your control. Indeed, even your age and marital status can affect your credit score. Clerkin says that teenage drivers often incur the most expensive insurance rates. Additionally, men typically pay more for car insurance than women do. Other demographic factors that can affect your score include your education and occupation. Drivers with graduate degrees generally pay less for insurance than those with no high school diploma.

Factor #4: How you drive

One factor that drivers do have control over is their driving history. Clerkin notes that a less-than-stellar driving history can cause insurance rates to increase. Speeding tickets can be a major cause for insurance rate increases. If drivers accumulate speeding tickets, their insurance can go up by as much as 28 percent. However, collisions cause rates to increase even more. According to Clerkin, a not-at-fault accident generally leads to a 7 percent rate increase, while those at fault can see insurance rate increases up to 85 percent.

Factor #5: The health of your credit history

Your driving history isn’t the only history that could affect your car insurance. Kelley Blue Book notes that your credit history can have one of the greatest effects on your car insurance rates. Sitar references a University of Texas study that found that people with lower credit scores incur more losses and higher claim payouts. Still, certain states don’t allow insurance companies to consider this factor. California, Massachusetts and Hawaii are among the states where your credit score won’t affect your insurance rates.

Understanding the personal habits that affect your credit score and other factors can help you eventually secure a better insurance rate for your vehicle.


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