Everyone who owns a car needs car insurance, but it can be a difficult concept to understand. How, for example, do agencies come up with the pricing? You’re likely going to be surprised by some of the factors that are considered. Here are some of the lesser known items.
Where You Live
Your car insurance premium will vary depending on where you live. As Marketwatch reports, if you live in Michigan, you’re paying about 64 percent more in premiums than the national average. There are a few reasons why premiums are different from state to state. Esurance says insurance agencies consider the weather (it snows a lot in Michigan), accident rates, property crime and more.
Unless you live in California, Massachusetts or Hawaii, your credit score impacts your car insurance rate. Those are the only states that don’t allow agencies to check credit before determining your premium. Studies have shown that consumers with higher credit scores cost agencies less overall, so agencies have taken notice. The higher your score, the lower your premium. In other words, this is yet another reason to make sure your credit score is as high as possible.
You know that making a claim will raise your premium, but did you know even asking about a claim could affect your costs? Every call you make to your insurance agent gets logged. Those logs are then accessible to any agency, and they may take into account everything on them — even asking about a claim — when calculating your rate.