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Your credit
score.
It didn't used to be that credit scores were used in
determining insurance premiums. Now, in many states, your risk quotient is determined in part by your credit score.
Actuaries have determined that the lower a credit score, the higher the insurance risk. This is true for more than
just auto insurance. Those with "excellent" credit will have a FICO (credit) score of over 720. A score between 680
and 719 is average and still considered an acceptable risk. By the time you start dropping below 680, you start to
become an insurance risk. The lower the score, the higher the risk and the higher your insurance premium. It's a
good idea to check your credit score a minimum of once a year. By law, you can receive one report a year FREE. To
get your FREE credit report CLICK HERE. If you want or need a report more
frequently, as when you are trying to improve your credit score and want to keep tabs on it, CLICK HERE. Your credit
score is something you can change. First of all, never miss a payment on your rent, mortgage, credit cards,
etc., even if you can make only a minimum payment. Make sure your payments are always made on time. One 30-day
late car payment can lower your credit score by 100 points. Keep credit card debt at less than
50% of your high credit limit. For example, if your high credit limit on a card is $5000, you should never
charge more than $2500 on that card. These three simple steps can go a long way towards restoring and/or
maintaining good credit.
Number of drivers in the
family.
This can get a little complicated. If there is only one car
and one driver, no problem. The single driver is assigned to the single car. If you have two drivers in the
family, both adults (over 25) and both with good driving records, the driver with the highest degree of risk
will be assigned to the highest rated car. For example, let's say you have a 2005 Volvo Sedan and a 1999 Ford
Focus. You drive the Focus to work each day 7 miles and your wife uses the Volvo for pleasure use. In
this case, you are the riskiest driver because you are in commuter traffic, so you will be rated on the
highest rated vehicle. I guess insurance companies just figure that at sometime you're going to use that
Volvo to drive to work and that will be the day it gets involved in an accident. Now add a teenage driver to
the family, and guess who gets rated on the Volvo. Granted he's not rated as a primary driver on any vehicle
which is somewhat cheaper, but he will be rated on the Volvo. Insurers know that even if you say your
teenager never drives the Volvo, one day he or she will of course, you guessed it, have an accident. Teenage
girls are cheaper to insure than teenage boys. You can't change the fact
that you have kids. Nor can you change their gender. This is where it definitely pays to shop for insurance.
If your teenager has his or her own beater car to run around in, he or she can typically be assigned to that
car. Depending on their driving record, some insurers may want you to sign an exclusion for coverage on any
car except the one assigned to them. However, this practice is becoming rarer and rarer as somehow that teen
manages every so often to drive that very expensive car you own and, yes, they will probably have their only
accident at that moment. Driver training classes and good grades in school will help reduce a teen's
insurance rate.
Age of the drivers.
Needless to say, the younger the driver the more expensive the insurance. Not until age 25 do most
young people become adults in the eyes of insurance companies. However, in some states, girls begin receiving
lower premiums at age 21. Senior drivers are also experiencing higher rates in certain states. Once past the
age of 65, premiums for seniors tend to trend upward. Nothing takes the
place of a good driving record, good credit score and a sensible car to help keep insurance premiums as low
as possible.
Coverage limits.
Most
states require minimum limits of liability. These minimum limits, in my opinion, are grossly inadequate if
you have anything whatsoever to lose, like your home. The cost of many new cars and medical costs associated
with an injury accident are the factors that drive up liability insurance premiums -- that portion of an
auto insurance policy that pays for damage to other people or their property. This is the one area that you don't want to
skimp. The cost of increasing your limits of liability coverage above and beyond state required minimums
is relatively small in comparison to what it buys you in terms of peace of mind. Just because you increase
liability limits by let's say 10 times, doesn't mean your premium increase 10 fold.
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