There are many factors that affect a persons' auto insurance rates. Common knowledge says that age, driving record and gender can increase or even decrease auto insurance premiums. It can be a bit of a shock to find out that even without any of the common factors that drive rates up, one may not be able to get the cheapest rate.
Auto insurance companies also take in to account personal factors when assigning statistical risk to a potential policy holder. Following are three of the most common personal factors that auto insurance companies evaluate when calculating premiums, whether that's online through a quote service, or over the phone:
Location, Location, Location
We've all heard it before, location matters. The old saying holds true for auto insurance as well as business and real estate. Insurance companies will often charge higher premiums to insure cars in the city versus those in rural settings.
It seems fairly obvious that a car in the city runs a higher risk of damage or theft.
However, beyond city versus rural, premiums are also affected by the neighborhood where the car is typically parked overnight. It's understandable that elevated occurrences of auto thefts in a neighborhood can lead to residents being charged higher premiums because of increased risk factors.
Fox Business reports that beyond car theft in a neighborhood, the behavior of others in the same zip code also affects premiums. If within a zip code for instance, there has been reports of vandalism or false injury claims, it can cost residents in the same zip code hundreds of extra dollars a year in insurance premiums.
Housing in some parts of town may seem more economical on the surface than others until taking in to consideration one study that showed residents in some neighborhoods pay as much a $400 dollars more a year in higher premiums simply based on their zip code alone.
Occupation
According to DMV dot org, insurance companies take in to account a persons' occupation when determining statistical risk factor. It may surprise you to learn that a medical doctor has close to the same risk of accident as a teen driver.
Doctors work long hours often under extremely stressful conditions which has an effect on a persons' driving habits. While those whose chosen professions include jobs that require strong attention to detail like scientists, artists and pilots can look forward to lower rates than their doctor counterparts.
Credit Score
A credit score takes in consideration many factors. Income to debt ratio, demonstrated ability to repay loans on schedule, amount of time on the job, etc..., all help to determine the likelihood that a person will be a good credit risk or not.Auto insurance companies also use credit scores to determine an individual's risk of filing a future claim.
Unfortunately people who have a low credit score, insurance companies may not take any other factors in to account when assessing an individuals likelihood to file claims. Studies show that individuals with good credit ratings file fewer claims, therefore are a lower risk to insure than those with poor credit.
An article on Esurance cites two such studies on their website, one study was done in 2003 at The University of Texas and the other was conducted by The Federal Trade Commission. Both studies concluded that bad credit equals higher rate of insurance claims.
About the Author:
Tom Landon writes for a variety of blogs online, and appreciates covering insurance and financial topics. He also does some writing for Kanetix, a Canadian-based insurance company.