Car insurance is expensive and more complicated than it may seem. Insurance companies use algorithms to decide how much money you should pay to cover your vehicle, but there are some things affecting your premium that you’d never expect.
Purpose for Driving
Whether you drive your car for work or pleasure can impact and sometimes raise how much you pay for car insurance. When you drive for pleasure, companies consider you less likely to get in an accident even though you drive further. Driving for work increases the amount you spend on your premium because your car is in constant use—even if you drive fewer miles.
Car insurance companies use your credit history as a way to determine how likely it is you'll get in accidents. Some studies state that people who have poor credit are more likely to drive dangerously and get in more collisions. Rather than using the credit score from the major credit reporting bureaus, insurance companies often pull your score and run it through a new system to determine their own version of your credit score. If you ask your insurance company, they may inform you of the program used for determining their customer's credit ratings. Some states (including Hawai'i, Massachusetts, and California) make it illegal for car insurance companies to use your credit history when determining your premium, which is great news for those with poor credit.
If you are under the age of 25 and unmarried, your insurance premiums will be more expensive. Those who are married and under the age of 25 statistically have fewer accidents, according to insurance companies. Unfortunately, if you’re over the age of 25, and you choose to get married, your insurance company may not reduce your premium since the rate of you getting in an accident is about the same for someone who is single.
Having a gap in your coverage history is never a good thing, but it can be really bad for your insurance premiums. If you’re looking for a new policy and you’ve had an insurance gap in your past, expect to pay a higher than someone who has been covered throughout their life without any breaks in coverage. Also, carrying insurance that is less-than-recommended can also increase your premium when it comes time to renew or get a new policy.
Age and Gender
We all know that your age matters if you’re under the age of 25, but as your age increases toward 50, your premiums will also increase. Those who are older can also experience increased monthly payments because their age group is more likely to have accidents. Additionally, your gender is taken into account by many businesses. Females are less likely to get in a car accident when compared to males, so men are prone to pay more for auto insurance.