Five Reasons You Maybe Unaware of That Could Be Hiking Your Car Insurance Premium

When a car insurance company gives you a quote on a policy, the premium is arrived at after considering a number of factors. You can readily understand that the premium will depend on the car’s make, model, and value as well as usage and the track record of the driver. However, there are a number of other reasons that could be driving up the amount of the car insurance premium. The first step to lower the premium amount is getting to know why it is getting affected in the first place. Some practical tips on what you should be looking out for:

Chrysler Automobile

Home Is Rented Not Owned

While the connection may not be readily apparent, it is true that if you are a tenant you will in all likelihood be paying as much as 6% more than homeowners. According to a report by the Consumer Federation of America that while companies have their own unique ways of arriving at the premium amount, many of the top insurance companies charge more for renters. Ask the company if they differentiate and if they admit they do, you might be better off with another company if you are a renter.

Car Fares Poorly In Safety Tests

If your car does not perform too well in the safety tests carried out by bodies such as the Insurance Institute for Highway Safety (IIHS), and the National Highway Traffic Safety Administration (NHTSA), then not only do you increase your accident risk exposure but also your insurance premium. This is simply because cars that are not crash-resistant enough will be damaged more in accidents and will be thus more expensive to repair.

Daily Commute Is Long

It may seem surprising that your insurance company would even care how distant your workplace is.However, the risk perception increases with every extra minute you spend driving your car. This is simply because there are a number of hazards like weather conditions, traffic delays, road construction, reckless drivers, etc. that you would need to deal with more if your commute is long. A quicker and safer route or even carpooling a few days of the week may reduce your auto insurance premium.

Increased Propensity of Your Car Being Stolen

Some cars, because of their cost, exclusivity or even because they are in high demand attract the attention of car thieves more than the rest. Often, for high-value cars, the thieves may just steal some parts or accessories and not the entire car. There are quite a few other cars, which are not expensive but are so easy to dispose of that they pose a lesser risk to thieves and hence are in high demand. Check out the Internet for a list of cars that get stolen the most.

Credit Is Not Good

While this has come under a fair amount of debate, you can be pretty sure that if your insurance company requires you to provide your social security number then it will be checking out your credit report and adjusting the premium amount appropriately. This factor is now being increasingly taken into account by insurance companies as a number of studies, including one by the Federal Trade Commission, has established that people with poor credit scores are inclined to be involved in more accidents that result in larger losses than others with a better credit rating.

According to experts, people with better credit scores are more organized and financially disciplined, and this disciplined behavior rubs on their lifestyle too making them less susceptible to road accidents. With time, virtually everyone can improve their credit ratings by paying off loans and credit card dues on time, having no bills that remain outstanding, and by keeping their outstanding balance on credit cards low.


Author Bio: Walter Moore is a senior manager in a reputed car insurance company. He  writes extensively in both the print and online media regarding various aspects of car insurance. He also edits a comprehensive auto insurance guide published annually by his company.

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