How Your Car Insurance Premiums are Determined

A Insurance Article Contributed by Brandie King

Introduction to How Your Car Insurance Premiums are Determined

There are many things that determine what premiums you will pay for your car insurance. Understanding what they are is an important step in learning about car insurance and should be done before purchasing any car insurance. There is not much you can do to change most of the factors that will affect your car insurance premiums, but that does not mean that you should not learn what those factors are.

Your Driving Habits Will Affect Your Car Insurance Premiums

You probably already know this, but what is on your driving record could have a huge impact on how much you will pay for your insurance premiums. If you have a clean driving record then your premiums will be lower. On the other hand, if you have had major traffic violations, accidents, or have not been insured for awhile (or not at all), then your premiums will most likely go through the roof. Also, how much you drive every year could have an impact on how much your premiums are.

This is because you are more likely to get in an accident if you drive a whole lot of miles every year. A lot of insurance companies will give you a discount on your premiums if you drive less than a certain amount of miles in a year and some will even give you discounts for car pooling. That is something that you will need to discuss with your insurance agent.

Your Credit Can Affect Your Car Insurance Premiums

Did you know that most insurance companies will run a check on your credit during the quote process? They do. Your credit score is one of the main determining factors in what your premiums will be. If you have exceptional credit then you do not have much to worry about. On the other hand, if you have poor credit then you will pay more for your insurance premiums.

One way that you can improve your credit is to check your credit reports for errors, inaccuracies, and incorrect information, then dispute (or correct) any of those items that you find. The major three credit bureaus are Experian, Equifax, and TransUnion. They are the agencies that you need to order your reports from. All three have websites and all three have online dispute forms that you can use.

Other Factors That Can Affect Your Car Insurance Premiums

Companies that provide car insurance will look at trends where you live when they are determining what to charge your for your premiums. Trends they will look at are the number of accidents and stolen cars, as well as medical care and car repair costs, in your area. Your age will also be a consideration and insurance will normally cost more for drivers under 25 years of age. The type of car you drive will also affect your premiums, as some cars are more likely to be stolen, cost more to buy, cost more to repair, or have a lower safety record.