To drive legally all drivers in the United States must carry some form of car insurance. For many people, one of the most confusing aspects of car insurance is understanding how their rates are determined.
The first factor that goes into determining your car insurance rate is the level of coverage you receive. In most states, liability car insurance is the only required form of insurance. However, this insurance does not cover you fully in the event that you are hit by an uninsured motorist, if your car is stolen, or if you car is vandalized. To have these incidents covered, you will need to have collision and comprehensive coverage. To have these levels of coverage, you will pay more than someone would pay if they only had liability.
The second factor that goes into determining your rate is your driving history. For starters, records have shown that younger and inexperienced drivers are far more likely to be involved in an accident than more seasoned drivers. Because of this, drivers that are under the age of 25 will always have a higher rate than older drivers. For people of all ages, driving history also has a large impact on car insurance rates. An individual who has multiple at fault accidents, moving violations, or driving related arrests on their driving record will pay more for insurance than someone who has a clean record. Most negative marks on your driving record will clear up after about 5 years.
Another factor that goes into determining your car insurance rate is the type of car that is being driven. All insurance carriers have information that shows the rate of accident, theft, and damage for every make and model of car. Cars that are more likely to be stolen or involved in accidents will result in higher insurance rates. Furthermore, cars that are worth more money and more expensive for the insurer to repair or replace will have higher rates.
The location of your residence is another factor that goes into determining your rate. Cars that are stored in areas that have high rates of crime, accidents, or automobile theft will come with high rates. Furthermore, if you car is parked on the street or in an unsecured spot, your rate will be higher than if the car was parked in a secured garage. The location is also important because those who drive further to get to work will spend more time behind the wheel which increases their chance of having an accident.
Surprisingly, a driver’s credit score and marital status are also factors that go into determining a car insurance rate. Both of these factors have been historically correlated with higher rates of insurance claims being filed. People that are married or have better credit historically are cheaper to insure than single people with bad credit.