After a couple of years in college paying high car insurance rates, I started to see how exhausting it is to search through various sites and companies to find the cheapest insurance rates.
At that time in my life, I did not fully understand why I was consistently getting high insurance rates. Though I did not have a bad record, I even looked into bad driving record insurance to get the lowest monthly premium possible.
Car insurance premiums are curated based on a multitude of factors. Whether you realize it or not, you are in control of some of those factors. So if you are someone that believes they could pay less on your insurance, you more than likely can.
Understanding the main reasons why insurance rates are high can be a game-changer for many.
#1 – Your Age, Gender, and Marital Status
These factors are something that you clearly have very minimal control over, but they are significant factors when insurance providers are computing your insurance rate. The reason why rates are higher for different categories of people is that those individuals are deemed to be more of a risk.
Those who are younger than 25 usually have higher rates. This statement is also true of most males, especially those under the age of 25. Alternatively, if you are married under 25 years old, your rates tend to be a little lower compared to single 25-year olds.
Men mature slower than women, people 25 and younger are still grasping how to be responsible adults, and data shows that married individuals are less likely to get into a car accident compared to single individuals.
#2 – Your Credit Score and History
For those of you who do not know, your credit score and history affect almost everything in your adult life. So while deciding if it is better to file bankruptcy or consolidate your debt, consider how that decision will hinder your credit score, affecting your insurance premium.
Auto insurers sometimes check credit scores when deciding if a person is a risk or not. Like credit lenders, your potential insurer looks at your credit to determine if you are a responsible person by evaluating your spending habits, payment habits, and whether or not you have the ability to pay off debt.
While you cannot change your age or gender, you can most definitely change your credit score and improve your credit history. Merely consolidating your debt with good or bad credit can raise your credit score swiftly.
#3 – Your Driving Record
Similar to how insurers check your credit, they also check your driving record when gauging your individual risk level. Having too many tickets, especially speeding tickets, can negatively affect your insurance rate.
This is also something you can take care of on your own, too, though. You can control how you drive, and you can even go as far as requesting that certain citations be removed from your driving record.
However, keep in mind that the process of requesting the removal of something on your driving record depends on the state and court’s specific procedures.
Going forward, practicing good driving and following the laws of the road can keep your insurance premium low and affordable because you will not be viewed as a risk to your insurance provider.
#4 – The Area You Live
Living in a busy city poses many risks compared to living in a suburban neighborhood with low traffic. With that in mind, insurance providers use where you live, work, and anywhere your car is parked regularly to gauge the risk.
If you live or work somewhere with a high amount of traffic, you could deal with higher insurance rates because your providers are concerned about the greater chances of your car being damaged.
Theft, vandalism, and other crimes are higher in busier cities, so ideally, you can lower your rates by living in a less busy town. Those who live in the country tend to have reasonable priced insurance premiums.
#5 – Your Deductible and Any Policy Limits
Most, if not all, states require a driver to have a specified minimum level of auto insurance coverage. Operating your vehicle without the minimum coverage required in your state can result in having your car towed, being arrested, or getting a ticket.
So you can get higher rates in one state than another, depending on that state’s minimum coverage requirements. The more coverage you have equates to a higher monthly premium.
Your deductible, which is the amount of money you pay when you file a claim, can lead to higher payments if it is a low payment amount. However, if your deductible amount is higher, your monthly payments will be lower.
#6 – The Car You Drive and Your Car Loan
The last but the most common reason why your insurance rates may be high is the car you drive and if you have a loan out on that car (the amount of the loan matters, too). Pricier cars are more expensive to insure because they are expensive to fix and maintain.
When you have an expensive car and you have a car loan on that expensive car, your price jumps higher because most lenders require a higher level of car coverage. Higher insurance coverage obviously results in higher payments.
That same car loan can also be one reason you might be in debt, which can also be affecting your credit score.
Bonus Tip – How to Keep Up With Premium Payments
You can absolutely lower your insurance rate by making adjustments based on the different factors given above, but it may take time for the changes to be seen. While you wait to buy a less expensive car or build a healthier credit and driving history, you must keep up with your current premium payments.
Missing payments or continually being late can impact your future insurance rates just as all the other factors mentioned above can. Following the three R’s of budgeting your money, review, revision, and redo, can help you manage money to make payments on time.
Alternatively, reconfiguring your finances into one that follows healthier lifestyle habits is another route to take. One easy tool that people should use is the 50/30/20 model of financial management. This model means one will use 50 percent of their funds for necessities, 30 percent for spending money, and 20 percent for savings.
Adjust these ratios to your personal and lifestyle needs, and you will be able to live a more financially sound life.
About The Author: Imani Francies writes and researches for the auto insurance comparison site, Insurantly.com. She earned a Bachelor of Arts in Film and Media and specializes in various forms of media marketing.