A lot of factors influence your auto insurance prices. These factors combine to create a risk profile that indicates to insurers how much to charge you for your coverage. Some of these factors cannot be manipulated. However, others you can influence to possibly get better prices down the road. These include your credit score, driving habits and SR-22 risks. How can you improve these factors to make your insurance prices better?
Risks That Drive Up Insurance Premiums
Most insurers will base your insurance premiums on your risk profile. Essentially, if your insurer has a higher chance of paying a claim on your account, they'll likely raise your risk profile. That usually leads to higher policy costs. Risk profiles vary because everyone behaves differently as a driver. Some of the risks insures consider might include:
- Your location
- The type and value of your car
- How you use your vehicle
- Demographic factors, such as age and years licensed
- Your driving records
- Existing driving penalties, like SR-22s
- Your credit scores
Together, these factors will paint a picture of you as a driver. They'll often show the insurer if you may prove dangerous behind the wheel.
That's why it's important to control some of these factors as you can. Start by looking at your credit score, driving record and SR-22 risks.
Why Credit Matters
Your credit is a lender's way of measuring how reliably you will make payments on existing accounts. Those with better credit usually are those who pay on time and don't rack up a lot of debt. Credit's important, as it can help you qualify for such benefits as low interest rates or mortgages. Likewise, it can help you get better insurance prices.
If your insurer sees a good credit rating, they'll likely view you as more financially secure. Therefore, they'll often see you as someone who will pay your premiums on time. They also might see you as more responsible when it comes to vehicle upkeep. In these cases, they might charge you a lower rate than they would someone with lower credit.
What can you do to make your credit profile more trustworthy?
- Manage debt payments. If you have such loans as mortgages or vehicle notes, pay the required amount on time, every period.
- Avoid credit card debt. Though most people carry some debt, you should never max out your credit cards.
- Attempt not to open too many lines of credit at once. You don't want to indicate that you are desperate for credit.
- Work on your savings account. The better your capital, the better your chances of creating more financial stability.
Building credit takes time. Still, with close attention to your financial health, you can create more prosperity. Your insurance agency might reward you as a result.
Improving Driving Risks
Alongside credit, another way to greatly improve your insurance risks is to be a good driver. It sounds simple, but we all have habits behind the wheel that might prove harmful. What can you do to become safer?
- Never drive without active auto insurance in place. Most states require drivers to have coverage. Thus, going without spells a clear risk to future insurers.
- Obey the rules of the road. Don't speed, do use your lights and wipers, and do come to a full stop before proceeding. If needed, take a driver's safety course to brush up on your skills.
- Keep your car in good working order. Monitor your tire tread length, engine performance and other vehicle health factors.
- Do not drive distracted. Avoid cell phone use, loud music and excessive conversation.
- Use extra caution in hazardous conditions. This might include wet or wintry weather.
By avoiding mishaps, you'll likely put yourself in a better financial position. Not only that, your insurer might reward you with discounts for being accident-free.
For those who commit driving offenses, an SR-22 penalty might result. SR-22s are forms that some states require high-risk drivers to attach to their policy. They mandate that the driver carry certain amounts of coverage at all times. The state then keeps a copy of the form for several years. You must keep your coverage active for this amount of time.
Drivers who get SR-22s often see their insurance premiums rise. That's because the SR-22 is a clear indicator that you've committed serious driving offenses. Some of these infractions that might trigger the penalty include:
- Driving without auto insurance
- Driving with a suspended driver's license
- Receiving a DUI charge
- Receiving multiple tickets in a short time
- Having multiple accidents for which you are at fault
Avoiding the SR-22 thus means refocusing your attention on the road. The more you commit to be a good driver, the lower your chances of getting a penalty. Thus, your insurer will likely see you as a lower risk to insure.
There are things you can do as a driver to make yourself a lower insurance cost risk. The better you watch your credit and driving behavior, the lower your costs will often be. Make personal security your priority. You will likely thank yourself for it when buying insurance.