6 factors driving your auto insurance premiums

The job of an actuary is to look for statistical factors that can predict the chance that someone will file a claim. Some factors are obvious, such as past accidents or speeding infractions, but some are not.

Here are just a few factors that affect your auto insurance premiums.

1. Credit score

People with lower credit scores tend to pay higher premiums than those with higher scores, again because they tend to file more claims. Auto insurers won’t look only at the score, or the same things as a bank, like credit worthiness, but instead will look for adverse events. This means that major delinquencies, or the types of credit accounts you have open, will affect your auto insurance rates. Some states, like California, don’t permit insurers to take credit scores into account when determining premium rates. However, most do, including New Jersey.

2. Age

Younger drivers have higher insurance rates. This basically boils down to driving experience, and the fact that statistics show that younger people tend to take more risks. Young drivers are in much more accidents than older drivers, especially since the advent of smartphones and texting. The age that rates drop is different for each insurer, but tends to be around 25, when you can expect a premium drop-off of roughly 20 percent. Only the states of California, Hawaii, and Massachusetts disallow insurers from basing auto insurance rates on age.

3. Education

Auto insurers have found that there is a correlation between education level and the number of insurance claims filed. People with higher levels of education tend to file fewer claims. For every level of education you’ve completed, from high school up to a doctorate degree, your premiums will be lower. This is just another way education pays off.

4. Career

Blue collar workers tend to pay higher insurance rates because they tend to have more accidents, whatever the reason. Jobs like lawyers, executives, and teachers usually get offered the lowest rates.

5. Gender

Gender is another factor that almost every state, including New Jersey, can base auto insurance rates on. Crash statistics show that males are more likely to crash, especially in their early years of driving, often because of aggressive driving. Males tend to engage in riskier behavior like speeding, driving while intoxicated, and not using a seatbelt. However, as drivers age, the difference in premium between genders usually evens out.

6. Marital status

People who are married are statistically less likely to be involved in auto accidents. Married couples tend to be less active and safer than single drivers, engaging in less risky behavior. Typically car insurance rates for married couples range from 5-15% cheaper than single drivers.

While some of these factors might seem to some discriminatory, they are based on statistics, and thus, legally allowed (in most states). To find out what factors about you most affect your insurance rates, and how you can potentially lower your rates, contact an agent at John B. Wright Insurance.