When it comes to car insurance do you ever feel as if you have no control over what you pay for insurance premiums? Some factors are within your control and some factors are just out of your control.
Just like in real estate, with car insurance it can be about location. Believe it of not, where you live can influence your car insurance premiums.
But location is not the only thing that determines what you pay for car insurance premiums…you can control a few things…like your credit score, that’s not determined by location.
Let’s break down for you the other factors that control cheap car insurance.
Factors That Determine Insurance Premiums
It’s A Regional Thing
- Some insurance company’s offer cheap car insurance in certain regions of the country.
- One reason for regional differences is because of the general age of the population in that region.
- Another reason for regional differences is the weather of a region.
- Certain regions just produce more claims on account of weather.
- Even the road hazards of a region can impact the amount of claims, thus insurance rates.
- A flat region will have fewer claims than a region with more mountains.
- Low claim activity results in cheap insurance.
- An area that never has ice storms will have fewer claims than a region that is known for ice storms; resulting in lower claim activity thus cheap insurance.
- Frequency of claims in a region due to an aging population will not bring cheap insurance to that region.
- Older drivers tend to have more claims; so a region with more senior citizens will generally have higher insurance premiums.
- Increased claim activity costs the insurance company more so they pass that increased cost of doing business onto you, the policyholder.
- Can you control the weather or the population of where you live – no – but you can control other factors that are figured into cheap insurance.
What You Can Control
Your Credit Score
- Get to know your credit score.
- Your credit score will determine your insurance premiums.
- Order your free credit reports once a year.
- Credit reports tell your financial story.
- Insurance companies take credit reports very seriously when determining rate.
- If your credit score is below 750, you will pay higher insurance premiums.
- The insurance industry looks at 750 as a credit score bench mark.
Your Personal Claim Activity
- Watch your claims.
- The more claims you file, the more you will pay for insurance; there’s just no way around that.
Your Insurance Deductible
- Cheap insurance can be obtained by what deductible you carry on your policy.
- You can lower your insurance premiums by raising your deductible.
Your Insurance Coverages
- You can get cheap insurance by lowering your insurance coverages.
- If you own an older car, ask your insurance agent about possibly dropping the comprehensive or collision coverage.
So to offset the insurance company’s regional actuarial guidelines and obtain cheap insurance focus on what you have control over vs what you have no control over – – – focus on your credit score, your deductibles and your coverages not location.