Study finds surprising factor when calculating car insurance -- and other factors to be aware of
Find out the surprising factors that determine how much you pay for insurance, and what else you should know on Credible. (iStock)
A recent study by Consumer Reports found that several large auto insurers asked prospective customers about their job title and education level when quoting car insurance rates. Based on the answers, Americans received different auto insurance quotes.
To target factors commonly used to determine costs for insurance coverage such as occupation, education level, homeownership and credit history, federal lawmakers have once again proposed a bill that would upend the insurance industry’s decades-long practices around which factors should be used to price auto insurance premiums.
Introduced in the Senate is the Prohibit Auto Insurance Discrimination Act (PAID) Act, H.R. 1270. This Act would require insurance carriers to use only driving-related criteria in determining eligibility and car insurance rates. Supporters of the PAID Act feel that by not focusing solely on driving records, insurance providers unfairly single out low-income individuals and people of color.
You can see how much you can save on insurance coverage by checking Credible to get your free quote from their auto insurance partners in less than three minutes.
HOW TO GET A DISCOUNT ON CAR INSURANCE
What factors affect car insurance rates?
Personal information such as employment and education level are not the only factors in determining your auto insurance rates. Auto insurance quotes also have a lot to do with driving history and other related factors, including:
- Driving habits
- Past collisions
- Speeding tickets
- Annual mileage
- Type of vehicle
- Recent traffic violations
- A pattern of claims
Besides your driving records, things like age, marital status, gender, location and credit history also factor in when calculating premiums.
Not all insurance carriers base auto insurance rates on the same factors, such as marital status or education, but many do. To find the best deal on car insurance online, compare multiple insurance quotes through Credible’s partners.
Does your credit score affect car insurance?
Yes. Insurers look at your credit score when quoting a car insurance premium. Generally, your credit score is used to determine whether you have poor credit and are a risk when it comes to paying back a personal loan, credit card debt and more. However, auto insurance companies use your credit score to determine how likely you are to use the claims center.
Drivers with poor credit may be charged a higher premium. And the increase can be significant – between $68 to $526 more per year on average for single drivers, depending on which state you live, according to Consumer Reports. A credit score below 580 could mean an increase of up to $1,301 per year on average.
Because insurance companies are not obligated to tell you how they use your credit score to determine your car insurance premium, you may not even realize your credit is being checked.
WHAT TO KNOW ABOUT PAY-PER-MILE CAR INSURANCE
Am I paying too much for car insurance?
The average national car insurance premium is a little more than $900 per year, according to several state governing departments and the National Association of Insurance Commissioners.
Of course, factors like where you live, your driving habits, type of vehicle and optional coverages all play a part in what premium you pay.
How do I get the best deal on car insurance?
Buying car insurance can be confusing, especially if this is your first time. How do you know you're getting the best rate, and how can you get a better deal if you think you may be paying too much. There are steps you can take when choosing coverage:
- Decide if you want to contact a local agent or buy online
- Figure out, if possible, how much insurance you need
- Comparison shop online with one of Credible's partners. They can eliminate the time-consuming part of your search
- Fill out an application to get quotes
- Choose a company and get insured
HOW TO PREPARE FOR POST-PANDEMIC AUTO INSURANCE HIKES
Besides driving safely and cleaning up your credit profile, comparison shopping is one of the best ways to get the best deal on car insurance. Other ways to get a deal include:
- Bundling your car insurance with other policies, like homeowners insurance
- Asking about discounts, like Insuring multiple cars with one policy, or paying your entire policy at one time
- Adding safety or anti-theft features to your vehicle
- Agreeing to paperless documents online
- Joining certain affiliate groups or professional organizations
Whether you're looking for a policy for the first time or you’ve had insurance for years, explore pricing and find the best auto insurance plan that fits your needs on Credible.
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