Last week I posted 6 Non-Driving Factors That Impact Your Car Insurance Rate, and thought I’d follow up with the 3 driving related factors that impact your car insurance rate. These are:
- Vehicle type
- Tickets & violations
- Accidents & claims
Vehicle Type: What you drive impacts how much you pay for car insurance. Sports cars such as the Camaro, Corvette, Porsche (almost any model), and the Nissan Z all cost more to insure than an Accord, Camry, or Taurus. Even sports sedans such as the Maxima, Acura TSX, and BMW M series cost more to insure than non-sports sedans. Most people buying a sports car aren’t surprised they’ll pay more for insurance than someone buying a non-sports car. Sporty cars are designed to go fast and because most of their owners do exceed the speed limit, they represent a higher risk factor to most insurance companies.
The underlying question is what kinds of car and truck factors shape any vehicle’s premium? Here are a few that do:
- Number of Doors: In the quotes I’ve prepared, 4 door vehicles cost less to insure than their 2 door counterparts. The probable reason is perception of sportiness whether they are or are not.
- Vehicle Cost: Does it cost more to insure a high end Mercedes Benz versus a Toyota Corolla? Generally speaking, the more expensive the vehicle, the more cost to insure. This does not always hold true as I’ve written policies where it cost the same or less to insure a $95,000 car than a $25,000 car.
- Safety Equipment: If your car has daytime running lights, side curtain airbags and manufacturer installed 4 wheel anti-lock brakes you’ll pay less with some companies than if your car doesn’t have these safety features.
- Crash Worthiness: Cars with a higher crash rating tend to cost less to insure than those with poor ratings. With some carriers, smaller cars cost less to insure than bigger ones while the opposite is true for other carriers. It ultimately depends on the insurance company and how they define risk.
These vehicle factors are helpful, but they really can’t be utilized to predict which car will cost more or less to insure than another when looking at any two cars side by side. The reason for this is every insurance company weighs these factors differently. The best thing to do when evaluating a new or “new to you” car purchase is to have your agent quote them for you. The difference in cost of insurance could be one factor in your overall financial comparison.
One factor that does not impact your car rate is vehicle color. If you like the red one, get it. You won’t pay more to insure it.
Tickets and Violations: Almost everyone knows that a traffic ticket or violation will increase the cost of their car insurance. What most people don’t realize is there are tiers assigned to tickets and violations. For instance:
- Moving violations such as speeding, running a stop sign, improper turns and lane violations are evaluated and weighed differently than non-moving violations such as a parking ticket.
- Speeding tickets are weighted based on how fast over the speed limit the driver was ticketed for. If the speed was less than 10% over the speed limit it will be factored much differently than someone driving 20 miles per hour over the speed limit or in an active school zone.
- Violations for reckless driving (in some States this is 20mph over the speed limit), aggressive driving, running a red light and a DWI or DUI can have a huge impact on your car insurance rate.
- Frequency of violations can also bite your wallet. I have one carrier that won’t underwrite a driver with two speeding tickets within a six month period.
Insurance companies in Texas differ on how long a ticket or violation counts against you:
- Most look back over 5 years, a few only 3 years.
- All surcharge the rate until the 3 year anniversary date or renewal date is reached, whichever comes last.
- For those companies that look back 5 years, your rate is assigned a worse tier for years 4 and 5 which still costs you more for car insurance.
- All carriers run new Motor Vehicle Reports (MVR) for their clients every 1 to 2 years (frequency varies by company). If you got a ticket and think they won’t find out, well, they will and your rate will increase.
My suggestion is take defensive driving, slow down, and drive more carefully. Your wallet will thank you!
Accidents and Claims: Like tickets and violations, it’s no surprise that accidents and claims impact your car insurance rate. Here are some general guidelines:
- At fault accidents with bodily injury are weighted more heavily than at fault accidents with no bodily injury.
- At fault accidents are weighted more heavily than not at fault accidents.
- Not a fault accidents are weighted more heavily than if you’re struck by an uninsured motorist.
- Comprehensive claims such as hail, a tree falls on the car, or a rock hits the windshield are less heavily weighted than any type of accident.
- Claim severity will impact your rate. A claim that paid out $25,000 will have a greater impact than one that paid out $1,500.
- Claim frequency is a major factor. Many insurance companies limit the number of claims they will accept. I have two companies that will not write anyone with more than two claims and there are others that will drop a client if they have too many claims within a 12 month period.
Depending on the insurance company, accidents and claims can cost you more for 3 to 5 years. It’s best to avoid them if at all possible, so drive safe out there. What have you experienced? Share your experiences, comments, and questions with me on our Google + and Facebook pages or in the comments section of our blog. I’d love to hear from you!
