5 Demographic Factors That Affect Car Insurance Rates

When you are investing in a car insurance policy, it may be tempting to reduce your rate by selecting lower coverage or by increasing your deductibles. These are, obviously, the two most evident factors that affect the cost of your auto insurance.

However, the overall insurance rate is also affected by many other factors that are not usually known to the general public. But don’t stress! We are here to tell you about the five basic physical factors that contribute to the determination of your car insurance rates. Knowing what affects your premium rate can enable you to make a more informed decision while purchasing car insurance.

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1.      Age and gender

The age and gender of the driver influence the premium cost a lot. Young men usually incur a higher rate than young women as it is established that male teenagers have more accidents as compared to female teenagers. On the other hand, older men generally have better rates than older women as evidence suggests that older women are in more accidents than older men.

2.      Marital status

It is suggested that married people potentially have fewer accidents as compared to single people. Therefore, if you are married your rates will probably be lower than an unmarried man. However, the rates also depend upon your driving history – if you have a clean driving record, you can get your insurance rate nearly halved.

3.     Your location

Your car insurance rate depends greatly on your geographical location. Your locality depicts the sort of traffic that you will be regularly facing which shows the probability of accidents.

Geographical location also shows the insurance laws that are applicable in that particular jurisdiction. Each place has its own automobile insurance laws. Each state in Australia, for instance, has its own compulsory third party (CTP) insurance scheme:

  • In New South Wales, each vehicle must be insured before registration.
  • In Queensland, CTP is included in the registration fee.
  • For car insurance in Victoria the TAC provide CTP through the levy.

Hence, your locality, neighborhood and geographical location have a remarkable effect on your car insurance rates.

4.      Credit score

Many insurance providers consider your credit score when calculating your car insurance rates. There is no specified rule as to how it affects your rates, but generally, lower credit score means higher insurance premiums.

5.      Profession

The profession of the driver may also be used to determine the insurance premiums. The insurance providers relate a person’s job with his probability of getting into an accident. For example, delivery drivers and journalists usually drive in a rush and under pressure, so their rates will be higher as compared to a pilot or nun.

Paying for car insurance is a major component of the cost of owning a car, thus anything that lowers the rate is advantageous for your budget and will surely help in the long as well as short term. Therefore, be wise when purchasing an insurance policy for your car!