Factors That Affect the Cost of Insurance

When it comes to insurance, there are a variety of factors that can influence the cost of your premiums. For car insurance, these factors include the type of vehicle, driving history, claim history, state of residence, age, gender, credit rating and zip code. For life insurance, factors such as age, gender, health, family medical history, lifestyle and occupation can all play a role. Knowing these factors can help you compare auto and life insurance quotes and review policy renewals.

When it comes to car insurance, nearly all drivers must have a minimum amount of coverage to drive legally. However, there is no standard amount that each driver pays. Car insurance companies use many factors to determine the amount of your car insurance premiums. These factors include the type of vehicle, driving history, claim history and the state in which you live.

Depending on your state's car insurance regulations, other factors such as age, gender, credit rating and zip code may also be taken into consideration. Your credit score is important for more than just a car loan; it could also be a factor in applying for car insurance. Although insurers don't use their direct credit rating, they can refer to what is considered a credit-based credit score. However, some states such as California, Hawaii and Massachusetts don't allow the use of your credit score when calculating car insurance rates. Your location can also influence the determination of the amount of your premium in most states. This includes your state, city and even your zip code.

People who live in adverse climate areas may also face higher premiums due to related causes of loss. Your insurance history affects your car insurance rates in two different ways. Having continuous insurance shows that you have maintained coverage which is required in every state except New Hampshire. If you have five or more years with an insurance company, this will normally qualify you for better rates. Negligent driving habits can negatively affect your premiums even with a long insurance history. Having incidents on your driving record could cause insurers to consider you high-risk and charge you higher rates.

By comparison, people with a clean driving record can more easily find cheaper rates and qualify for additional savings such as discounts for safe and unclaimed drivers. The make and model of your vehicle can also affect the cost of car insurance. Newer cars tend to be more expensive to insure because they have new parts. However, if your new car qualifies for additional savings due to safety features it may be less expensive to insure than an older car that is a year older. When it comes to life insurance costs, factors such as age, gender, health, family medical history, lifestyle and occupation all play a role. The application could ask you about your job, hobbies and lifestyle.

If you work in a hazardous field or have any dangerous hobbies such as skydiving or racing car driving this could increase your costs. The insurer could also check your criminal and driving records which could lead to a higher cost or total denial of coverage. Three factors that determine the cost of your car insurance are the types and amounts of coverage you take out, your driving history and the make and model of your vehicle. Factors that can increase your insurance rates include negative information such as adding traffic violations to your driving record or increasing your coverage and reducing your deductibles. In California, Hawaii and Massachusetts age won't have a direct effect on what you pay for car insurance. The cost of car insurance generally declines the most between 18 and 19 years of age when rates drop by about 25% on average. If you want to reduce your own insurance costs address as many personal factors as you can.

Young drivers pay more for car insurance as they are considered to have less experience and are more likely to have an accident. Your state of residence is one of the factors that most affect car insurance rates since the premiums for minimum state coverage vary by up to 318%. This involves several factors such as the history of accidents in the area population density number of uninsured drivers crime statistics bad weather patterns etc. When it comes to life insurance women have a longer life expectancy and more time to pay premiums so the cost could be lower. Even so understanding the factors at play beforehand can give you an idea of what to expect so you can minimize any surprises as you begin the process.

Carl Somilleda
Carl Somilleda

General beer ninja. Hardcore social media guru. Devoted beer guru. Hardcore beer geek. Hipster-friendly web aficionado.