Hello. I'm Dan Lyles with Lyles Insurance. And in this video we're going to go over the major factors used to calculate auto insurance rates. Now, before I begin, I just want to kind of go over something real quick. The ten factors we're going to be talking about, I'm putting in no specific order. They’re just at random. I would like to prioritize them by level of importance. But that's impossible because auto insurance companies weigh each factor differently. So let's just get started. These are all at random. And I hope you learn something.
Number 1, is age. And of course, the age group that gets picked on the most here are the newly licensed teen drivers. They pay the highest rate. But the good news is, from that point all the way up to your late 60's…. As you get older, your auto insurance rate will slowly decrease over time. And then somewhere between age 70 and 75, depending on the company, your rates will start increasing again.
Number 2, is location. Now, there are several variables that go into that. But generally speaking, people who live in larger cities pay a higher auto insurance rate than people living in small towns, and vice versa.
Number 3 is residential status. If you own your own home, you're going to pay a lower auto insurance rate than those who rent their home, live with their parents, or otherwise. The reason is homeowners get a big discount on their auto insurance.
Number 4, is marital status. Married people always pay a lower auto insurance rate than people who are single, divorced or separated.
Number 5, credit rating. The better your credit, the less you're going to pay in auto insurance. 92% of all auto insurance companies use credit at least to some degree. However, that degree varies greatly between one company to a next. So don't get hung up if you've got some dings on your credit score. The more you shop around the less that's going to be an issue.
Number 6, driving record and claims history. Just about every auto insurance company will check two things before they sell you a policy. Number one is your motor vehicle report (MVR). And number two is your insurance history report, which is known as CLUE. And any dings on either of those records will raise your premium up a little bit. They'll stay on your record for a period of three to five years. After that, although they still stay on your record, they won't count against you as far as your insurance rate is concerned. Some companies only go back three years. Some go back as far as five. But once you’ve hit that anniversary of no longer counting against you, then you should start to see a decrease in your rate at your next renewal.
Number 7, having current auto insurance. Almost all auto insurance companies award discounts to new customers who have a current liability auto insurance policy that's been active for at least six months. And some companies will give you higher discounts if you have higher levels of liability coverage. And others will award even more of a discount if you've had current auto insurance longer than six months.
Number 8, gender. Female drivers pay less for auto insurance than male drivers do. Sorry fellas, that's just how it goes!
Number nine is billing options. Auto insurance companies usually offer three major options as far as how to pay for your auto insurance policy. The first is just making monthly manual payments each month as you go. This usually costs more than any other option. The second option, having payments automatically withdrawn from your checking account. That's a little cheaper than actually making monthly payments. But to save the most money, the third option paying the entire policy in full is going to give you the most savings in the long run. I know it's a big chunk to come up with at one time. But if you do the math, you're saving a lot of money that way.
Number 10, the vehicles you have insured. This comes down to several factors such as size of your vehicles, the type of vehicle, any safety features it may have, and of course the big one, the types of coverage you choose. Whether or not you put full coverage on the vehicle makes a big difference. So I hope you've learned something from these ten factors. Thank you for watching. And have a great day!
Dan Lyles is an Independent Insurance Agent serving Ohio, Indiana, Michigan, Pennsylvania, Virginia and West Virginia..