5/9/2012 2:23 AM

The Good, The Bad, and The Not-So-Pretty Factors in The Cost of Car Insurance

To some folks shopping for car insurance is ranked up there with waiting in line at the DMV.  With all the different rates and options most people wonder how insurance companies come up with the cost of car insurance premiums.

Here are some factors companies use to determine car insurance rates and hopefully,  help take out the confusion from the decisions made by the man behind the curtain.

  •  Age: Those young whipper-snappers have it tough!  Insurance companies have a dim view on young drivers between the ages of 18-20, where rates are most likely to shoot up.  The average 18 year old can pay almost twice what an adult pays! 

  • Location:  If you have to dress your car with a bumper guard you probably live in a congested area.  Insurance companies know that the more congested the area you live; the more likely you are to get into an accident.  Companies take into account the crime rate, traffic, and what kind of liability claims there are in your zip code. 
  • Credit: Most companies have determined that people with a poor credit history have more claims than people with good credit.  This doesn't sound very fair, but the NYS Insurance Department has approved this method of underwriting for many years.  Some states, however, are taking a second look at this. 
  • Driving Record:  Speeding tickets, DWI's, and too many fender-benders can put you at risk for higher premiums. 
  • Car Model:  Even though it's more fun to cruise in a red hot Camaro than a Honda Accord, the make and model of your car can take more out of your pocket. 
  •  Education:  According to most insurance companies, people with college degrees have less claims and are in a better tier than their high school peers.  So hit the books and save money on your insurance!   

Now, that's a lot of factors!  I know you are thinking, "What can I do to help lower my premium?" Well..keep on reading...

~~ Taking a Defensive Driving course can help lower your premium.  By the way, Brooks Waterburn offers an online course.  To learn more, click here.

~~ Insurance companies will actually give you a better rate when you are shopping for insurance 14 days prior to renewal than if you wait less than two weeks to do so.

~~ Having multiple insurance policies (e.g., more than one car, house and a car, rental and car) can help lower your car insurance.

So, there are some secrets and tips on what insurance companies use to determine your rate and what you can do to help lower it.  By the way, if you would like a quote, give us a call at 888-997-9801.


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