These Factors Can Impact Your Insurance Payments As Much As The Type Of Car You Drive

The type of car being insured hugely influences how much the owner's insurance premium is going to set them back, with power and price being some of the most important factors insurance companies consider. Therefore, while something like a Honda CR-V or Mazda CX-5 is going to attract fairly modest premiums, a six-figure exotic sports car could command thousands just to keep it insured.

Obviously, if someone crashes into a high-value car, their insurance premiums will rise too, but it's also surprising to learn about all the other lesser-known factors that insurers take into account when calculating insurance rates. Those include the driver's demographic, residence, credit history, driving record, and much more. This is the case regardless of which insurance company you take out a policy with — from the smallest to the best car insurance companies out there, they all look at the policyholder's application as a whole, rather than just zeroing in on what car they drive. Here's what that means for you.

Most U.S. states, allow insurance companies to base their rates on the policyholder's credit status to some degree, as long as it's not the only deciding factor. For folks who reside in California, Oregon, Hawaii, Maryland, Massachusetts, Michigan, and Utah, insurance laws are a little stricter, but credit scores can still affect rates.

According to an analysis conducted by insurance comparison site The Zebra, drivers with a score below 580 pay, on average, 69% more than drivers with credit scores of 800 and above. Several insurance companies are easier on owners with bad credit scores, though. For example, contact Nationwide for a quote if unforeseen life circumstances, such as a recent divorce or overseas deployment, have led to a sudden drop in your credit score, since the company may lower its premiums and offer discounts.

It may seem unfair that those with worse credit scores pay more, but there is evidence to suggest that policyholders with a poor credit history statistically pose a higher risk of submitting claims. To improve your credit score fast, ensure future payments are made on time, keep credit card balances below 30%, and dispute any inaccurate information on the file itself.

Drivers who are older and have been driving for longer are more experienced, and therefore insurers see them as less of a risk. Naturally, young drivers will have had less chance to build up that experience, so their premiums will be higher. Now, it is worth noting that at some point, this benefit begins to undo itself. As drivers approach 60 and beyond, their insurance rates begin to creep back up. However, certain insurers will reward older drivers who are willing to complete voluntary safety courses with healthy discounts on their premiums. Similar schemes are also available for drivers under the age of 25, particularly if they are performing well in education or complete similar safety-oriented courses.

As for gender, it turns out that women pose a lower risk of filing insurance claims than men (via Insurance Information Institute). In many instances, this equates to cheaper rates, although several states, such as California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania, have outlawed considering gender when calculating insurance premiums. That said, the gap between male and female policies does shrink as policyholders age. For instance, whereas males in their 20s on average pay more than $500 more than women their age, in middle-aged groups, this gap shrinks to less than $20, according to Nerdwallet.

Sorry singletons, but members of the lonely hearts club generally pay more for car insurance than married folk (via CNBC). It's partly because if someone's married, as a general rule, they will be older and more experienced, but that's far from the full picture. Insurers will usually require a policyholder's spouse to also be on the policy, and a joint car policy is typically cheaper. 

Multi-car policies are also a popular option with families, so it's possibly more to do with the type of policies that married couples have than the act of marriage actually saving them money. If there are numerous drivers living under one roof, pooling the policies together may net them the same sort of benefits that a married couple might typically expect to receive.

It's worth mentioning that having children could also positively affect your insurance premiums, as insurers may assume the policyholder will drive more safely and attentively with children in the back seat. Be warned, though, being married can also increase policy premiums, specifically if the spouse has a bad credit history. This can negatively impact what both parties pay on their coverage, so tying the knot isn't necessarily great for the bottom line here.

This is an obvious one. Having a clean driving record is a sure-fire way of keeping your car insurance premiums under control, but that's sometimes easier said than done. In certain states, it's possible to get a ticket for being just 1 mph above the limit. Generally speaking, minor offences like speeding tickets will cause insurance prices to rise, but in most cases, they will only be considered by insurance providers for between 3 and 5 years. 

More serious offences — such as a DUI — may be taken into account for longer. For anyone with such offences on their record, look for insurers that are known to provide decent premiums for high-risk drivers, such as Geico and Progressive. Kicking those bad habits earlier rather than later is the best move, though — and not just for the sake of lower policies.

Where the policyholder stores and drives their car will also have a direct effect on just how much their policy premium will be. Prices vary across the U.S., but as a general rule, those who live in urban areas will be paying higher premiums than those in rural areas. Cities will typically have a higher number of incidents, and so the risk of a crash — and therefore a claim — also goes up. Urban areas also see higher rates of both theft and vandalism, which again raises the risk of a claim being put through.

Furthermore, the minimums for liability cover will vary from state to state — that's the amount the policy provider has to pay out when damage is inflicted on another car, or person. The higher the liability cover demanded by the state, the higher the policy will typically cost. Several states, such as Kentucky, Michigan, New York, and Florida also require personal injury protection to be packaged in, which again is another cost to cover that will directly affect premiums. Finally, the exact location in which the car is stored can make a difference, too. While it's not a given and depends on your location and type of residence, parking the vehicle in a personal and locked garage can bring costs down, as risks are typically lower here than on a driveway, the road, or a public car park, says Varga Insurance.