There are many things in this world that are left to chance, but the cost of an auto insurance policy is not one of them. Although auto insurance rates may seem quite arbitrary, your personal rate is a carefully calculated based on a number of factors.
Insurance agencies use algorithms based on your personal information in order to determine how likely you are to file claim, or in other words, how much you could cost potentially them. The riskier you seem, the higher your car insurance policy rate will be, while customers that appear safer will pay less.
Some factors, such as your driving record, are pretty obvious and most people are aware of their impact. But there are a number of other seemingly unrelated factors, backed by statistical data, that play an important role in determining how much your car insurance policy will cost. Here are just a few of them.
Your marital status
Did you know married couples generally pay less for car insurance due to their martial status? Research has indicated that married couples are a less of a risk to car insurance providers than those who are single, divorced, or widowed. Studies have shown that married couples are less active and have safer driving habits, which in turn results in fewer accidents and therefore fewer auto claims.
It’s easy to see how a driver’s age might affect their car insurance policy rate based on the fact that young drivers are usually inexperienced and therefore more likely to have an accident. But how does gender affect your car insurance policy?
Car accident data has statistically proven that male drivers, especially those who are young, not only drive more miles but are more likely to engage in riskier driving behavior such as speeding, aggressive driving, driver under the influence, and not wearing a seat belt. This doesn’t mean that male drivers will always pay more, as statistical gender differences level out at about age 30. For senior drivers however, policy rates tend to be higher for men. It’s important to note that not all states use gender as a determining factor, but the majority do.
Your credit history
Yes, you read that right: your credit history. Although this is often considered a controversial practice, research has indicated that drivers lower credit scores are more likely to file claims that are either inflated or completely fraudulent. A low credit score can result in a hike in your car insurance premiums, and it may also affect how a car insurance agency allows you to pay for your policy. Insurance agencies may ask customers with low credit scores to pay a larger portion of their policy upfront, since research has shown that those with low credit are more likely to miss payments. Some states, such as California, do not use credit score or history as a factor.