3 Hidden Factors That Raise Your Auto Insurance Costs And How To Avoid Them

Did you know that there were more than six million car accidents in the USA in 2023 alone? This figure tells you that safety is paramount when it comes to vehicle ownership, and many people turn to insurance companies for this purpose.

However, high insurance premiums can act as obstacles here.

Many drivers assume that auto insurance rates are based solely on their driving history. In reality, a lot more is happening behind the scenes; insurance companies assess numerous aspects of your life before determining the charges.

Let’s look at three of these in detail to help you take control and potentially save hundreds.

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1. Your Credit Score

Your credit score is an indicator of financial responsibility to insurers. These companies claim that people with lower credit scores tend to file more claims, miss payments, or be involved in high-risk accidents.

As a result, your insurance premium may be more expensive, even if your driving record is spotless.

However, this is not the case everywhere. Some states, including California, Massachusetts, Hawaii, and Michigan, do not allow insurance companies to access your credit information. So, check your local laws and look for insurers who rely less on credit data. Here are some other tips you can follow to avoid high rates:

Monitor your credit report for errors or fraud.
Pay your bills on time.
Keep your credit utilization below 30% of your total available credit.
Dispute any inaccuracies with credit bureaus immediately.

2. Your Address

Your home address can significantly impact your auto insurance rate in a practice known as ‘’territorial rating.’’ Insurers use your ZIP code to evaluate risks, including accident rates, vehicle theft statistics, vandalism incidents, road conditions, and weather-related damage. Then, they charge you based on your area’s riskiness.

As such, your premium is likely higher if you live in a high-crime neighborhood or a busy area with heavy traffic congestion. Similarly, areas prone to natural disasters, such as floods and wildfires, might also experience heavy auto insurance rates. Here is how to mitigate this:

Examine insurance quotes before moving: Follow this auto insurance guide to get accurate insurance quotes, keeping in mind that even relocating one ZIP code over can raise premiums.
Park your car in a secure place: Reduce theft risk by parking your car in a garage or gated area.
Install anti-theft devices: GPS trackers, dashcams, car alarms, and other similar devices can qualify you for discounts.

3. Your Car’s Features

Your vehicle choice can play a major role in determining your insurance premium. This is not just about how your car looks, but its repair and replacement costs, and the statistical likelihood of being involved in accidents. For instance, high-performing vehicles, such as sports cars or rare imports, may also have higher insurance rates because:

They have turbocharged engines, which are associated with higher speeds and more severe crashes.
Their parts may be expensive and hard to source.
They might have advanced tech features that are costly to repair.

Here is how you can avoid paying extra here:

Check your vehicle’s group rating before buying to predict insurance cost.
Opt for safe, mid-range vehicles with strong test crash ratings.
Get an insurance quote before purchase to see how your opinions compare.

Endnote

Auto insurance costs can be frustrating as they creep up for reasons that seem out of your control. However, it does not have to be like this.

You can gain control of your insurance rates and take practical steps to reduce costs without sacrificing coverage by being aware of the hidden factors at play here. Follow the tips above and stay proactive to get the right coverage at the best possible value.