4 Things To Know About Your Car Insurance Premiums

21 September 2020
 Categories: Insurance, Blog

You probably have car insurance because it is a legal requirement and for protection, but there might be things you did not know about your car insurance policy. Car insurance protects you if you cause an accident, but do you know how insurance companies calculate your premiums? Here are four vital things you should know about your car insurance policy and how your provider calculates your rates.

Demographics Can Affect Your Rates

The first thing you might not realize is that demographics affect the rates you pay for your auto insurance coverage. Demographics include things like gender, age, and occupation. These factors affect your rates because they tell insurance providers a lot about risk. For example, young drivers have a higher chance of filing claims. Therefore, younger drivers pay higher rates. The same is true for other types of demographic information.

You Pay More When You Pay in Monthly Installments

The second thing to understand is that you probably pay more for your insurance if you pay your premiums in monthly installments. When you receive a quote for coverage, it generally refers to a six-month period. If you pay this upfront, you pay the total cost of the six-month premium. If you split it into monthly payments, the provider might charge an extra fee each month. Therefore, you will pay more when making monthly payments.

You Pay More When You Drive More

The next thing to know is that your mileage affects your rates. When you drive more, you pay higher rates than when you drive less. The more time you spend on the road, your chances of getting in an accident increase. Therefore, you pay more for driving more. If you want a simple way to qualify for a discount on your car insurance, try to drive fewer miles each year.

Your Credit Score Might Affect Your Rates

The fourth thing to know is that your credit score might impact your rates. Insurance companies base rates on statistical information relating to risk. As a result, some insurance companies charge higher rates for people with poor credit. Therefore, you might save some money if you have a high credit score.

Every insurance company uses a different model for calculating premiums, and you can request quotes from as many companies as you would like. To learn more about car insurance rates and premiums, or to get a quote, contact a car insurance agent.