Commercials are constantly blaring at you about car insurance.  Famous people act silly, tell you buying from them will be easy, and beg for your business.  You finally make a decision and find comfort in the knowledge that, if you are in an accident, someone will step in and take care of you.

But how did they decide what to charge you? 

While there are truly a variety of factors, at Shine Insurance, we’ve got the inside scoop and we’re ready to share.

 1. Claims

A claim is the act of using your insurance and the reason you have it.  When you’ve just been in an accident, it’s time to ask the insurance company to help solve it.  And truly, they should jump in and offer you quick and easy support.   But a claim definitely can raise your insurance premiums for the next 3-5 years.  How much depends on the kind of claim and the cost of the claim.

TAKE AWAY: Don’t be scared to use your insurance when bad things happen, that’s why you have it.  But make sure you are well advised about the consequences of a small claim.  Your agent should be able to help lay out the future costs associated with your decision.

2. Credit

One thing that most folks don’t realize is that your credit has a significant effect on your insurance costs.  So why?  Well, the bottom line is that insurance companies don’t know you and they need some way to understand your behavior patterns.  Credit is the most accessible solution.

INTERESTING SIDE NOTE: There are other better ways for them to gauge whether you’re a responsible driver or not.  Many companies are offering discounts for attaching a mechanism to your car that monitors a variety of driving behaviors.  This truly is a better test of responsibility than your credit score. However, most people feel it’s too invasive and so credit remains a primary pricing factor.

 3.  Tickets

Whether you think it’s right or not, that speeding ticket doesn’t just cost the $100 you pay to the county.  A single ticket my not affect your premium much but, in combination with an accident or other tickets, it can easily double your insurance price tag.

TAKE AWAY:  Driving safely really does save you money.

 4.  Driving Experience

Insurance companies want to know that you have driving experience.  The industry standard is 5 years.  You’ve heard the old saying “insurance gets cheaper when you turn 21.”  Well it’s not the age but the 5 years experience that really matters.  If you don’t get your license until your 20 then you will experience “youthful prices” until your 25.

TAKE AWAY: Take Driver’s Education classes and work hard to get good grades.  Insurance companies use these as a way to offer discounts to younger drivers.

 5.  Prior Coverage

The most important thing about prior coverage is that you had some.  Companies don’t like to see any “lapse in coverage” even for a couple of days.  If it’s been more than 30 days, it can be tough to get good companies to offer you auto insurance at all.

But there are a lot of other small things about your prior coverage that can get you discounts as well.  Here are some:

• Time you were with your prior company
• Your prior liability limits
• How long until your prior policy expiration date
• Billing experience

TAKE AWAY:  Don’t let your coverage lapse.  In addition, make sure your agent knows you and asks all of the right questions to get you as many discounts as possible.

So what’s driving YOUR pricing?  Pull out your auto policy and consider which of these factors is affecting your premium.  If you think something is missing or improperly set up, call your agent and ask if something can be done.

Need an expert independent agent to take a look?  Give Shine a call.  We’d love to be your insurance advisers!