Factors that Raise Auto Insurance Rates

Owning a vehicle is a costly expense with taxes, gas prices and maintenance all adding to the running costs. Auto insurance is a necessity that can make car owners cringe when the bills arrive.  Understanding the factors that raise auto insurance rates makes it easier to control the price paid rather than complacently accept the billed amount.

There are some inherent factors which raise insurance rates and shopping around between providers is the only non drastic solution. The neighborhood you live in plays a significant part in the premium set, as does the type of vehicle you drive. Purchasing the latest fancy new car will result in a higher premium than driving a more modest older vehicle. Living in a desirable area with a garage is preferable to parking your car in a crime hot spot with on street parking.

The factor which most influences auto insurance rates is your financial reputation. A high credit score is interpreted as an indication of a more responsible individual who will maintain their vehicle in better condition and drive with more caution. Those with a poor credit score can expect to pay far more than those with a solid credit reputation. The majority of insurers now factor in credit scores when determining auto insurance rates. This is a factor that the driver has complete control of by ensuring that a credit score is high.

Credit scoring plays a larger role in determining rates than driving records. Nevertheless bad drivers with recorded points against them should expect to pay more than cautious drivers who are less likely to make insurance claims.

Insurance companies appreciate drivers who invest in good security measures for their vehicles. If you fail to install any security measures such as anti-theft devices, then premiums will be higher. Individual companies have lists of security measures which reduce premiums allowing drivers to make informed decisions before electing for a certain insurer.

In a similar way taking too much liability coverage can result in higher rates. The higher the threshold of liability the less the premium will be. This needs to be an individual decision weighted against the probability of making a claim. Naturally those who make frequent insurance claims will find their insurance rates soar as they appear more of a risk to the insurer.

Knowing which factors raise auto insurance rates allows drivers the opportunity to make changes to benefit from lower premiums. It may well take some initial investment which will pay off over time, as in the case of installing security features, but simple things such as improving credit can be done easily at will result in long term gains. Drivers should shop around between insurers to ascertain which factors particular companies apply to certain criteria that can make a dollar difference in the insurance rates applied.