There are many factors that go into the amount that you pay for car insurance. Some of them are obvious, like your driving record and your age, but some of them are not so obvious. We know we have to pay the bill, but we may have no clue how the carrier arrived at that rate. With insurance as with anything else, the best shoppers are the ones that are armed with knowledge. Here are some surprising things that you should know about car insurance.
Women Pay Less
If you are a woman, you will pay less for car insurance than a man of similar age and status. Men tend to drive more aggressively and therefore submit claims more often than women do. Because of this, insurance companies assign men a higher risk value and assume that they will have to pay out more over the lifetime of their policies. On average, women pay around 12% less than men will for the same insurance policy.
Higher Educations Means Lower Premiums
The level of education you have achieved is also a factor in the amount of that you will pay for your insurance. A person with only a high school education pays a little more than a person with a bachelor’s degree, who pays slightly more than someone with a master’s degree. Some opponents have argued that it is discrimination to charge someone more for insurance just because they have a lower education level, but the practice has withstood court challenges.
Your Credit Score Can Count Against You
When insurers are determining how financially responsible you are, they check your credit score. If your credit score is below a certain level, it raises a red flag for the insurance companies, who fear that you might not pay your bills. Unless you live in California, where it is illegal for insurers to factor in credit scores when determining a rate, having a pristine credit history and a high credit score will get you the lower price for your insurance.
Where You Live Dictates What You Pay
Most everyone knows that someone who lives a relatively crime-free suburb will pay less for their car insurance than someone that lives in a crime-riddled area of a city. Fewer people know that people that live in certain states pay much more for insurance than consumers living in neighboring states. Louisiana currently has highest premiums in the country.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.