The answer is yes. When it comes to auto insurance, wealthy people often get better rates. When calculating your premium, insurance companies consider how much you earn, what you drive, where you live, and your credit score.
Remember that an auto insurance company’s job is to take on a certain amount of risk in exchange for premiums, and the less risky you are, the lower your car insurance rates will be. Even if you have a recent driving violation, have little or no driving experience, and are relatively young, it is likely that your car insurance rate will be lower if you make a decent salary and live in a nice neighborhood.
5 Ways to Save on Auto Insurance
Increasing your net worth may take time, but there are other methods to decrease your insurance payments. One way to save money on your auto insurance is to compare car insurance rates. Don’t make the mistake of sticking with your current insurer if their rates are not competitive. Instead, choose an insurance company that meets your needs.
Following these tips can help you reduce your insurance premiums:
- Ask for a discount. Insurance companies offer discounts to drivers who maintain a safe driving record, have an airtight policy when paying bills on time, and don’t engage in risk-taking behaviors.
- Raise your deductible. A higher deductible means that you will have to pay more out-of-pocket if you file a claim, but you’ll get a lower monthly premium rate.
- Rethink your coverage. Eliminate optional features on your policy, such as towing and rental reimbursement, if they are not necessary for you. If you’re unsure, discuss your insurance needs with an advisor before deciding.
- Increase your credit score. A high credit score can help lower your premium. Check with your insurer to determine how long it will take for your score to rise.
- Park your car in the garage. Insurance premiums are lower for those who park their vehicle in a garage at night rather than leaving it on the street.
To make sure you are not overpaying for car insurance, check out your current policy and calculate how much you would get in a claim for your car. Next, get two or more policy quotes with the same coverage levels and compare premiums.
After reviewing your current policy, you may find that you are paying more than you need to for car insurance. If this is the case, call your insurer and ask them to lower your premiums. If they refuse, shop around and see if another insurer will give you a better deal for the same coverage level.
States That Do Not Require Car Insurance
Having car insurance is mandatory in most states. The exact minimum coverage might differ from one state to another, but there’s no avoiding it. Mandatory auto insurance serves to protect victims in the event of an accident. In some states, you don’t have to have auto insurance if you have enough money.
For example, residents in New Hampshire don’t need car insurance if they can afford to pay damages in the event of an accident. In Virginia, drivers can opt out of buying auto insurance for a fee of $500 a year. Now, the vehicle won’t be covered for liability or property damage, which doesn’t make it practical for working-class drivers. This option is typically available to those who are financially responsible.
Factors That Influence Annual Insurance Premiums
There are many factors that go into determining the cost of an annual insurance premium. Knowing the variables that contribute to an insurance premium can help you get a better deal. Here are some facts that may be helpful when it comes to understanding auto insurance quotes:
- Driving habits – Those who regularly drive fewer miles and avoid driving during peak rush hour traffic or in severe weather conditions, such as rain and snow, will pay less for premiums.
- Driving safety record – Those with a clean driving safety record, such as drivers with an extended period of time without a traffic violation or an accident, will pay less for insurance.
- Vehicle type – Vehicles that are commonly purchased by insurance companies, such as economy models of popular car brands, will cost less to insure than luxury vehicles.
- Age – Annual premiums are typically lower for mature and older drivers because they tend to have fewer accidents than younger people.
- Gender – Males typically pay higher premiums than females because they engage in more reckless driving behaviors, such as speeding and talking on cell phones while at the wheel.
- Location – Those who reside in cities or urban areas may pay more for insurance than those who live in rural areas and small towns.
- Credit history – Those with sterling credit scores get the best rates, while those who have declared bankruptcy or owe money on a loan may have to pay higher premiums.
While you can’t do much about your age, you can improve your credit score.
How to Improve Your Credit Score
Your credit score is a big deal. Credit scoring is a way of determining the likelihood that you will repay what you owe to lenders. Insurance and credit companies use your credit score to determine whether you get approved for loans, whether you’ll pay more or less for insurance, and how much interest you pay on credit cards and mortgages.
A good credit score can save you thousands. Three major categories will affect your credit score: payment history, debt-to-income ratio, and length of credit history. Here are some easy ways to boost your credit score.
Pay bills on time. Even if you can’t pay your full monthly bill, make sure to pay at least the minimum amount due on time. Late payments are one of the biggest factors that can negatively affect your credit score.
- Reduce debt-to-income ratio. The lower your debt, the more likely you are to get a high credit score. Try to keep your monthly debt — such as loans and credit card bills — below 35 percent of your monthly income.
- Keep your credit card balances low. The less you owe on your credit cards, the more likely you will have a good credit score.
- Don’t open too many credit cards at once. You should also be careful about opening too many new lines of credit within a short period of time, as this can also negatively affect your score.
Conclusion
There are many factors that go into determining what your insurance will cost. If you want to lower your insurance premiums, you’ll need to consider saving more for future installments, improve your driving habits, and boost your income. Good credit should help lower your insurance premiums.
Sources:
https://www.thebalance.com/states-with-no-car-insurance-requirements-4121731
https://www.marketwatch.com/story/why-the-rich-pay-less-for-car-insurance-2013-02-15
https://business.time.com/2013/01/30/bad-driver-thats-ok-if-youre-rich/
https://www.washingtonpost.com/news/get-there/wp/2016/10/04/why-low-income-drivers-with-clean-records-could-pay-more-for-car-insurance-than-wealthy-drivers-with-duis/
https://www.usagencies.com/blog/car-insurance/youre-wealthy-will-pay-car-insurance/
