Numerous variables play into the calculation of your car insurance premium, and their underlying reasons might surprise you. If you’re contemplating buying a new vehicle, it’s important to understand these three key factors that insurers take into account when setting your premium, as well as the rationale behind each one.
Vehicle Type
Insurers evaluate the nature of the car you own due to factors like its theft susceptibility, engine size, safety history, repair costs, and the potential harm it could inflict on another vehicle.
Yearly mileage
Insurers often categorize drivers into different risk groups based on how much they drive. The logic behind this is simple: the more miles you cover, the higher your chances of being involved in an accident. Consequently, if you’re a high-mileage driver, you may have to pay higher premiums compared to someone who drives less frequently. However, different insurance companies may have varying policies regarding this, so it’s always a good idea to shop around for the best rates.
Credit Score Impact
Studies have identified a relationship between credit scores and car insurance claims. Individuals with lower credit scores tend to file auto insurance claims more frequently. This correlation suggests that your credit score plays a significant role in determining your car insurance rates. Insurers use this information as predictive of future accidents or insurance claims, so a lower score might lead to higher premiums123.
At Path Financial and Insurance Agency, our commitment lies in safeguarding your vehicle while ensuring you receive the most affordable car insurance premium. Whether you’re considering adding auto insurance to your existing policy or exploring options to reduce your premium, we’re here to help. Don’t hesitate to reach out to us – we look forward to assisting you with all your car insurance needs!
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