How Much Is Car Insurance?
If you want to know how much is car insurance, you should first know what factors are important to your insurance premium. Your credit score will play a major role in your insurance premium. In addition, your age and the type of vehicle you drive will play an important role. For example, drivers with a clean driving record will pay a lower rate than drivers with traffic violations. Getting the right type of insurance will ensure you don’t end up paying more than you need to.
Credit score plays a major role in determining car insurance rates
Your credit score, or FICO score, is used to determine many financial transactions. Insurers use your credit score to determine your car insurance rates, and it has a noticeable impact on your cost. A credit score is calculated by using information in your credit report and reflects your payment history. There is no one standardized definition of credit scores, but most insurers use some variation of a credit score range.
Many states prohibit insurers from using your credit score to determine your rates, however. Credit information is not used as a sole factor in determining your car insurance rates in Michigan, Massachusetts, and Hawaii. Washington State recently passed a law banning the use of credit scores as a factor in determining rates. However, the ban has not taken effect in other states yet. Many companies use credit as a factor in determining rates, and you can expect the same treatment if your credit score is good.
Age of driver
Depending on the driver’s age, car insurance rates vary significantly. According to the Insurance Institute for Highway Safety (IIHS), drivers under twenty are four times more likely to be involved in a car accident than older drivers. This inexperience, combined with their lack of experience on the road, is one of the primary factors that insurers use to set their rates. Consequently, young drivers are generally required to pay more for car insurance than older drivers.
In general, young male drivers are considered a greater risk than their female counterparts. This effect decreases as a driver approaches thirty. However, the age gap never closes. As a result, the average price for young male drivers is about $18 higher than that of young female drivers. For younger drivers, the price difference is less significant than it is for older drivers. Gender also has a bearing on car insurance rates.
Many factors are incorporated into how much car insurance costs. The type of car you drive can affect the cost. Insuring a sports car is more expensive than insuring an older car. Newer vehicles have a higher replacement value, so they require more coverage than older cars. However, older cars are less likely to suffer damage and may cost less to insure. Those factors can impact the amount you pay for car insurance each month.
Your credit score will impact the cost of your car insurance. In most states, your credit score will play a major role in your insurance premium. According to the Federal Trade Commission, drivers with poor credit file more claims and pay more in insurance premiums. For the same coverage, a driver with good credit pays $783 less per year. However, a person with poor credit may be better off purchasing a full coverage policy with higher limits.