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What Affects Your Auto Insurance Rate

Did you know that when it comes to the price of your insurance, several things can impact your price? Many people don't realize that a lot goes into determining the dollar amount you pay for your insurance.

Before I started working in the insurance industry many years ago, I had no idea. I thought like most people, that you just give them your information and based on the car you were driving and how many tickets and accidents you had, you got a price. But it is so much more. Lets take a look at some of the factors that impact your price.

What you drive: The vehicle you drive can affect the price. Insurance companies look at the statistics and details for your specific car model from the Insurance Institute for Highway Safety. They look at factors like how fast does your vehicle stop when you hit the brakes, how much do replacement parts cost (which is why some older cars can be higher, because replacement parts are limited and therefore more expensive), statistically how likely will your car be in an accident (mustangs are more likely to be in an accident than a minivan because mustangs are typically driven by younger drivers who drive fast, and minivans are driven by parents who are more cautious because their kids are in the vehicle), how well does the vehicle protect the people in the car in an accident, and more.

Your household driving record: Insurance companies also look at the driving record of all the people living at your address. All accidents and tickets impact the price. So why does your spouse's bad driving record or teenager impact your perfect driving record? Simply, they have access to your car and increase the likelihood of an accident to your car. Some companies will do what is called a driver exclusion for the bad driver in the household. When you sign this form you are assuming all responsibility and cost if that driver has an accident in your car.

Your credit score: Your credit does influence the price of your insurance. Why? From the company stand point credit reflects the level of responsibility you have toward paying your bill and the likelihood of you filing a claim.

Other factors: Depending on the company, other things can come into play that may surprise you. Your age, education level, occupation, whether you live in the city or rural area, are you set up on back draft, how consistent you have been at paying your insurance bill on time, how long you were with your previous company, and what liability limits you have are all things that can come into play. Information over many years has been gathered on these things to give statistics on how likely a customer is to pay and stay with a company, and therefore influences the price of your insurance.

Where you live: Many people don't realized that the state you live in also has influence on the price. Every state has different state laws that impact how insurance legally has to be written for the state you reside in. Also, you will find that some states have higher rates of uninsured motorist accidents, and some states have more natural disasters than others which have an impact as well.

Because all these factors can change over time, they can influence your price at renewal. Now you know more about what impacts your price, and I hope this article has help shed some light on how the price of your auto insurance is determined.

If you found this helpful feel free to share with friends. Our goal at Insured Local is transparency when it comes to your insurance, because it shouldn't be complicated or leave you feeling like you were in the dark when there is a claim. For more articles like this go to our blog