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5 Things Your Car Insurance Company Doesn’t Want You to Know

Every month, you make a payment to your car insurance provider to cover your premium. You know you’re covered, but do you know how car insurance companies come up with the amount you pay for your premium?

If you’re like just about every other car insurance customer, you’re probably shaking your head and saying “no” for good reason. The simple truth is that car insurance companies don’t exactly tell you what fees you’re being charged to come up with your total premium amount. They give you a total amount, and you’re pretty much expected to accept it at face value.

After all, you need car insurance if you want to put your car on the road.

So why is your neighbor down the street paying less than you are for car insurance?

You both drive the same car, and even have the same auto insurance provider. So why is your bill more expensive?

The answer can most likely be found in these five things that auto insurance companies would rather you didn’t know.

  1. You Can Save Money By Switching Providers

Car insurance companies rely on the hope that you’ll remain a loyal customer that doesn’t ask too many questions. In truth, that’s exactly what most of us are.

We perform an initial rate comparison, choose the best rate, and then stay with that company for years without every questioning the amount we are paying for our premium. All the while, our yearly car insurance rates continue creeping upward.

Auto insurance companies spend millions every year on commercials informing us that we could save money by switching our allegiance to them. However, we’ve always been led to believe that brand/company loyalty is important, and that we’re better off staying put. Boy, were we taught wrong!

Forget about brand loyalty when it comes to car insurance providers – it doesn’t pay off.

Instead, perform a rate comparison every year to see what other companies are offering? There’s a good chance that you’ll save a decent chunk off the amount that you’ve been paying with your current auto insurance provider.

So why is your neighbor paying less than you are when you both have the same car insurer?

Chances are that he or she just recently switched to your company while you’ve been a loyal customer with that provider for years. As has been said, loyalty does not pay off when it comes to car insurance!

  1. It’s Good to Be a Woman

You’ve probably heard more than once that women typically pay less for their carWomen by Automobile insurance premiums than men do. Well, it’s true, and the difference is substantial! On average, women pay as much as 10-12 percent less than men for car insurance. When you add up the difference over one’s lifetime, the total that men overpay amounts to as much as $10,000 or more!

So why is there such a huge difference between what men and women pay for car insurance? While insurance companies don’t give a specific reason for the difference in percentage they charge men and women, they do cite the fact that men file more claims than women on average. It is believed that men, particularly those that are single, drive more aggressively than women, which attributes to the difference in the number of claims filed.

  1. Your Credit Score Makes a Difference

If it seems like your credit score has an impact on just about everything in life, that’s because it does. It’s well known that a strong credit score will get you a low mortgage or car loan. However, most don’t realize that one’s credit score may actually be the most important factor when it comes to determining their car insurance rates.

Auto insurance providers use credit score data to determine whether or not the person being insured will be able to pay their monthly premiums. Additionally, they cite that those with low credit may be riskier drivers.

The state of California has ruled the practice of using credit scores to determine insurance rates as discriminatory. However, if you live in any other state, you may want to look into improving your credit score as soon as possible.

  1. Your Education Influences How Much You’ll Pay

In addition to your credit score, the amount of education you have received also plays a significant part in the calculation of your car insurance rate. Those with higher level degrees often pay less.

That means that if you only have a high school diploma, you’ll likely be paying a good amount more than someone who has a bachelor’s or master’s degree. However, don’t expect your car insurance provider to disclose that unless they’re asked.

So why do those with less education pay more for car insurance? It boils down to location. Statistics show that individuals with less education typically live in areas with higher crime. The greater the crime rate in your area, the more costly your insurance premium is going to be.

  1. Location

As already mentioned, your location plays a big role in the amount you’ll pay for car insurance.

When we think of location, we typically think of zip codes, cities, and states. However, car insurance companies get even more specific than that. Your auto insurance rates could go up or down depending on the neighborhood you live in!

That’s right – if you’re neighborhood is associated with higher crime, there’s a good chance that you’re going to be paying more than someone who lives in another neighborhood just one block away.

Don’t Hesitate to Ask Questions!

The next time you compare auto insurance rates, make sure to ask your car insurance agent how they came about determining your annual and monthly rates. Not only will you better understand why you are paying what you’re paying, but you also may find out that you’re eligible for discounts that you didn’t know existed!

Greg Fowler

Greg Fowler

Managing Member of AutoInsureSavings LLC, Greg has been in the insurance industry for 12 years and enjoys rebuilding vehicles. His goal is to help drivers save on anything related to automobiles. Travel and enjoying the outdoors are some of his hobbies. The best way to reach him is at his Twitter or Facebook Profile.

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