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What Affects Car Insurance Rates?

If you think your insurance company just comes up with car insurance rates out of the blue, think again. The amount you pay in car insurance actually comes from careful scrutiny of various factors and your personal information. In short, a lot of things can affect your car insurance rate.

The information used to determine how much you pay in auto insurance is called rating factors. They start with a base amount reflecting your age, gender and state where you live. For example, if you are an over-35 male living in Texas, you have a specific base rate assigned to you.

After the base rate is set, other factors that come into play include:

  • Geographic location – Individuals living in rural areas tend to get lower rates than those who live in highly populated areas. This is because insurance companies equate population density with the prevalence of accidents because there are more people and vehicles in these areas.
  • Age – The younger you are, the higher your rates. That is because younger drivers are seen to be more immature and lack focus when they are behind the wheel. This usually means a higher possibility of accidents.
  • Marital status – Married drivers are given lower rates because they are seen as more responsible behind the wheel than single drivers. There is even a study that shows single drivers are more likely to get into accidents than drivers who are married.
  • Gender – It has been noted that men are more likely to take risks behind the wheel than women, so they are usually given higher rates. This changes when age is added to the mix. When men and women in their 30s get auto insurance, they usually get almost the same rates.
  • Driving experience – The longer you have been driving, the better the rate. An experienced driver is seen as less of a risk than a new driver.
  • Driving record – The fewer traffic violations you have, the better your chances of getting lower insurance rates.
  • Credit history – While some believe credit history should not have any bearing on your auto insurance, it does. Research has shown that those with lower credit scores are more likely to file more claims.
  • Claims history – The more claims you’ve made in the past, the higher a risk you are to an insurance company. This usually means higher rates for you.

Other factors used to determine how much you pay for auto insurance include the type of vehicle you own, what it is used for, how many miles you drive every year, and the type of coverage you are getting.

What You Can Do to Lower Your Rates

There are a lot of ways for you to lower your auto insurance rates. The things that are in your control include your driving record, your credit rating, and the type of vehicle that you drive. To find the best insurance rates for your needs, you should shop around before you choose which insurance company to sign up with.

In Houston and Cypress Texas, one of the most competitive providers of affordable insurance is Low Cost Insurance Texas. Aside from auto insurance, we also offer homeowner’s insurance, renter’s insurance, and business insurance. Find out how we can help you with your insurance needs by contacting us today at 281-612-7178.