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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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