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Reasons your car insurance rates rise

January 5, 2015

You don't have to be in an accident for your auto insurance rates to rise. Many factors play a role when it comes to affecting your auto insurance. In fact, some of them may surprise you. For a better understanding of what causes increases in your auto insurance, check out the list below:

Many factors affect your auto insurance costs.
  • Location:  Believe it or not, location weighs a great deal in setting your insurance costs. This has to do with the economic and demographic conditions where you live. For instance, if you live in a densely populated area, then rates will be higher because more cars are on the road, and therefore, there is increased opportunity of an accident. According to Rhode Island CBS affiliate WPRI, different areas in the state have significantly higher rates than others. If you live in Middletown, your rates would be 13 percent under the state's average, which would be about $1,500 a year. However, if you live in North Providence, your costs would be about 26 percent higher than the average of the rest of the state. These costs aren't considering other factors, such as driving records, age or type of car. This is based on location alone.
  • Credit score:  Insurance companies consider your credit score as a valid way of measuring your financial stability and accountability. Your credit score is more than a number. It demonstrates your history of bill payments, available credit and current debt. For insurance companies, this is a great tool to measure whether you are a financial risk. Will you be able to make your payments on time? Insurance companies take that question very seriously.
  • Occupation:  When you think about it, the fact that insurers take your job into account when setting a price for your auto insurance policy is really not that surprising. For instance, if you are a delivery driver and on the road all day, your chances of having an accident or something going wrong are greater than someone who walks to work. Additionally, consumers who have jobs that tend to cause a great deal of stress, such as doctors and lawyers, are subject to higher rates. Stress is usually associated with working overtime and a lack of sleep, which could lead to increased accident potential.

When choosing a new auto insurance policy or modifying your current policy, make sure you are aware of all factors being considered to get your optimal rate.