You might be surprised to learn what some of the most important factors are that go into determining how much of an insurance premium you pay each month.
A new report from InsuranceQuotes.com sheds some light on how frequently people accurately recognize relevant factors in determining their insurance costs. Conversely, there are quite a few factors that have little to no effect on what you pay despite common misconceptions.
“Drivers can control most of these factors,” InsuranceQuotes.com senior analyst Laura Adams said. “In addition to maintaining a good driving record and credit history, drivers should consider all available discounts, including pay-as-you-drive programs. And they should compare rates from at least three carriers annually.”
For example, the report suggests that only 43 percent of Americans know their education level can affect their premium. Home ownership can also affect the rate an insurance company charges, although the results of a survey conducted by Princeton Survey Research Associates International suggests that just over half of Americans are aware of that. Your gender, the make and model of your vehicle and how old it is are also key in determining premiums.
Credit scores are also weighed along with your ZIP code and how old you are. Believe it or not, your income doesn’t have an affect on what insurers will ask you to pay each month. Similarly, retirement savings isn’t factored in although the survey revealed that 34 percent of people incorrectly assume it is.
“There are more different risk factors than there were a decade ago because insurance companies have gotten more sophisticated at determining risk,” executive director of the Rocky Mountain Insurance Information Association Carole Walker said.
Pay-as-you-drive programs are relatively new but offer less frequent drivers a chance to reduce premiums. For example, Progressive offers something called “Snapshot,” a service that uses a device plugged into your car’s OBDII port to monitor behavior behind the wheel. Good drivers can see reduced rates.
But above all, comparing companies and shopping for discounts is one of the the best ways to pay the least according to senior vice president and chief communications officer for the Insurance Information Institute Jeanna Salvatore. “Unless you have a terrible driving record – you’ve been convicted of drunk driving and speeding and you drive a sports car – you’re going to have a lot of choice,” she said.