Inside Look How Auto Insurance Companies Create Rates

February 12, 2018

© Sonya Etchison | Dreamstime

There is so much information about you that goes into your automobile insurance.  Of course your driving record, type of car and miles you drive can affect the premiums, but you may not know that education, credit score and even weather can too?  It's called nondriving factors and it can make a big difference in what you pay for insurance and it varies from state to state. The 2018 State of Auto Insurance Report found that rates are up 37% to 44% in California, Florida, Illinois, and Texas since 2011, yet down 10% to 13% in Connecticut and New York. What can make insurance shopping aggravating is there is no standardization of nondriving factors.  For instance a recent Consumers Report study found that excellent drivers with clean driving records but with poor credit paid higher premiums than drivers with a drunken driving conviction and an excellent credit history. Also your education pays into factor. A driver without a high school diploma paid $44 more per year for insurance than a driver with a  Ph.D. As a civil servant he paid $35 more than a medical doctor. And as a driver with a “fair” credit score of 580 to 669 pays about $696 more per year than when he had a “very good” score of 740 to 799. Fortunately there is an insurance comparison web site called, The Zebra [CLICK HERE & TRY IT OUT], which is shedding the light on what nondriving factors insurance companies use when offering you a policy. For instance, more insurance companies are penalizing drivers who have been texting while driving compared to a couple of years ago. The average premium increase is around 11%.  Running a red increases your premium by 22%. There is almost no discounts for safety technology.  Safety features such as driver alertness monitoring, lane-departure warning, collision preparation system, or blind-spot warning The only exception is Electronic stability which did save you around $7 annually. As automatic monthly payments, skip if you wish.  The discount is only about 1.5% and if you're able to pay your premium in full, instead of in monthly installments, you can cut your annual price by 5%, or $67 per year.

SOURCE: Consumer Reports

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