You might find it extremely frustrating the moment you realize your car insurance rate has just gone higher.
To top it off, even the fine prints do not exactly explain why your provider is asking more money for the same coverage. Exasperating isn’t it?
Insurance premium cost and the manner of identifying it are matters that insurance companies keep private. And even if the formula is laid on the table, you probably would say no solving it. Yet, it’s one good thing that you understand the factors that dictate insurance price hike. They are as follows.
Your financial status is one of the risks taken accounted for by the insurance provider. If they see that you are financially unstable and might allow your coverage to lapse in the future, you are considered high-risk. Credit score is one thing that they consider when checking one’s financial standing. If you have a poor credit score, you may end up paying higher monthly premiums.
Insurance companies also look at an individual’s driving history. If you had DUIs and other traffic violations, or perhaps have been in an accident most recently, they may interpret this that you’re one risky driver. In turn, your insurance rates will increase.
Area of residence or work
A neighborhood with a high number of theft cases and vandalism reports trigger an increase in premium rates. If you live or moved to a high-risk area, expect to be paying more. Likewise, if your place of work is not completely secure, you may also be looking at higher rates.
Furthermore, the distance between your office and home is another identifier. The longer the distance to travel means longer driving time and therefore equates to higher chances of your car getting into an accident or incurring damages.
Car make and model
Another consideration in determining the cost of auto insurance is the amount of money needed to replace or repair car parts or the car itself. Car part replacement for luxury cars and high-performance vehicles are way more expensive compared to other makes and models.