Just because you are a good driver doesn’t necessarily mean your car insurance rate will be the lowest. Although being a good driver is something that will lower your premiums, it’s not the only factor used by insurance companies when setting their rates.
Insurance companies have people who crunch numbers and underwriters that look at a lot of factors when setting their rates. Their job is to spread their risk as much as possible.
When it comes to car insurance, the following factors affect your rates:
- Driving record (How many convictions you’ve had in the past 3 years)
- How many claims you have made in the past 6 years
- Credit scores
- The type of car you drive
- Age of the vehicle
- Where you live
- The deductible you choose
- How many km’s you drive annually
- How far you drive to work
Several factors that can affect your car insurance rates are based on demographics. For example, people that live in a highly populated area will have a slightly higher auto premium than people who live in an area that is less populated. This is because more people mean more drivers or congestion on the road, which ultimately means more risk of accidents.
Additionally your age is a determining factor as well. If you’re under 25 years old, you may be classified at a little higher risk because most young people under 25 are inexperienced and tend to drive too fast and have bad driving habits. Even if you are a careful driver, you will still be considered in that classification. I know – it’s not fair. Car insurance carriers have to do this as premiums are based on averages. Your best option to keep your premiums under control is to be sure you don’t get any tickets and stay claim free.
The best way to save on your next policy is to talk to your licensed insurance broker and see what kind of discounts you might qualify for. You might be able to get a discount by having your auto and home insurance with the same company, so check out your options and who knows, you might even save some money in the process.