How Your Car Insurance History Affects Your Premiums
Insurance companies use your insurance history to calculate your premiums. With a few exceptions, some insurance history is better than no history. For example, teenagers without any insurance history might pay more than their counterparts who have been on their parent's insurance policies.
Below are some aspects of your insurance history that interest insurance companies.
Denied or Cancelled Coverage
Your insurance company wants to know whether other companies have canceled or denied you coverage in the past. You get good rates if you have a solid history without denial or coverage. Denials or cancellations make carriers doubt your risk profile.
For example, insurance companies can deny your coverage if:
- You have too many traffic violations
- You cause too many accidents
Similarly, your insurance company might cancel your coverage if
- They discover a lie in your application
- You fail to pay your premiums
All the above negatively affect your premiums, so their absence has the opposite effect.
You should always maintain car insurance from the moment you learn how to drive. Maintaining car insurance signals that:
- You can afford to pay insurances premiums
- You can settle your bills on time
- You have never given an insurances company a reason to cancel your coverage
On the other hand, gaps in coverage give insurance companies reason to doubt your reliability, irresponsibleness, and driving safety. Therefore, insurance companies will scour your insurance history to look for gaps in coverage.
Your insurance history also contains your claims history. Insurance companies will use your claims history to understand:
- How frequently you file insurance claims
- The type of insurance claims you frequently file
The companies use the information to predict your future behavior. For example, you may get a low-risk designation if you have relatively few claims, especially at-fault claims, in your insurance history.
Some insurance companies may also want to know how long you have stayed with each of your past carriers. Loyalty to the same insurance company can affect your insurance application in two ways, depending on the insurance carrier. Some carriers view loyalty as an advantage and reward you with lower premiums. Other carriers may raise your rates if you are loyal to them.
Multiple factors can affect your insurance premiums. Insurance companies also place different emphasis on different factors. Thus, you should get and compare quotes from different insurance companies. An insurance agent can also help you shop for affordable coverage.
For more information, reach out to auto insurance companies near you.