5 Factors That Could Impact Your Auto Insurance Rates

How much have you paid for auto insurance? According to the Insurance Information Institute, the average person spent $841.23 on auto insurance coverage in 2013. You may be wondering if you're getting your money's worth from your insurance coverage, especially if you've recently found out a neighbor or loved one is enjoying cheaper coverage. But there are plenty of reasons why their monthly premiums are much lower (or in some cases, higher) than what you're currently paying. The following takes a look at five factors that could affect how much you pay each month.

Your Choice of Coverage

First and foremost, your auto insurance rates depend on the amount of coverage you choose to carry. For instance, you can choose to carry more than the mandatory minimum liability coverage that's mandated by your state. This may cost a bit more, but it also gives you more protection if you end up in an accident.

There's also comprehensive and collision coverage that goes beyond your typical liability coverage. Comprehensive and collision coverage both ensure that you're able to have your vehicle repaired or replaced without paying out-of-pocket expenses beyond your deductible. Like increasing your liability coverage, adding comprehensive and collision coverage increases your monthly premiums, but it also increases your protection.

Your Choice of Automobile

The type of automobile you own may also have a sizable impact on how much you'll pay in insurance premiums each month. There are plenty of variables that can influence your ultimate costs, including the vehicle's body type, model year, retail price when new, and its current cash value. Other factors, including auto theft rates for similar vehicles, repair costs, safety record, and overall reliability, may also affect your insurance rates for that given vehicle.

Since all of these factors can influence how much you'll end up paying each month, it's usually good idea to consult with your insurance provider and get a quote in advance, especially if you're currently shopping for a new vehicle.

Your Location

Where you live can also have a tremendous influence and how much you pay for auto insurance coverage. Just like your vehicle, there are plenty of factors insurance companies look at when it comes to where you keep your vehicle at night. For instance, living in a ZIP code with abnormally high auto theft rates may drive your insurance provider to charge you more for coverage due to the greater risk of theft. On the other hand, living in an area with low auto theft rates can result in lower premiums.

In some cases, living in a suburban area may offer cheaper auto insurance rates than living in an urban area. Having assigned or garaged parking could also result in lower rates, while relying solely on streetside parking could increase your premiums due to the higher risk of damage to your vehicle overnight.

Your Claims History

Accidents do happen, but the number of claims you've recently filed can also have a tremendous impact on your auto insurance rates. Many insurance companies tend to predict a customer's risk level based on previous behavior. This means if you've filed several auto insurance claims within the last few years, then chances are you'll be seen as a riskier customer and end up with higher premiums as a result.

Your Credit Score

In most states, your auto insurance premiums may also depend on your current credit score. Like many financial institutions, many insurance companies also factor in FICO scores when determining auto insurance premiums for their customers. A financially responsible driver is more likely to refrain from unsafe driving behaviors and is less likely to file an auto insurance claim, so it's little wonder that a high FICO score often translates into lower monthly premiums.

In California, Hawaii, and Massachusetts, however, the practice of using credit scores as a factor in determining auto insurance rates is prohibited. In these states, insurance companies must rely solely on driving history and the other above factors when it comes to setting rates.

For more information, contact an insurance agency like Wolf Insurance Agency.

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