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SALT LAKE CITY — Americans are confused about what insurers take into account when setting their auto insurance premiums, according to a new study.
There are misconceptions on how some factors can play a big role in your insurance rate.
That a 20-year-old man pays more for car insurance than a man 20 years his senior probably is not surprising. But a new survey from Insurancequotes.com suggests there are several factors we're confused about. For instance, one out of three people don't know their credit history affects their insurance rates.
“They have found a high correlation with credit scores,” said Dave Platt of Platt Insurance.
Platt says this is biggie. Pouring through data, car insurers say they've found a significant correlation between credit and insurance claims. So much so that poor credit can nearly double auto insurance rates.
Even so-so credit can mean rates 25 percent higher than drivers with excellent credit.
“Credit scoring has been modified so much to fit the needs of the insurance industry that credit score is a better predictor on future claims on auto policies than speeding tickets are,” Platt said.
Forty-three percent of those surveyed by Insurancequotes.com wrongly believe income is a factor.
“You can have someone who has a six-figure income, who manages their money poorly and has a poor credit score, which impacts their insurance rates negatively. There’s no direct correlation to income,” Platt said.
There is a direct correlation when it comes to location. Thirty-seven percent are unsure or don't know their address is a factor in premiums. But if you live in an area more prone to crime or extreme weather, expect to pay more. It’s the same if you live along the Wasatch Front.
“In Utah, it’s easy to figure people who drive I-15 every day are more likely to have a wreck than people who live in Vernal, Utah, and drive two or three minutes to get to work,” Platt said.
He said your best bet in getting a good rate hinges on a good driving record, good credit and comparing rates from different insurers.
Another factor going into the auto insurance premium recipe is marital status — insurers say they find married people tend to drive around with their spouse or kids, and that makes them less likely to drive recklessly.
The type of car you're driving can mean a higher rate if it has a less-than-ideal safety record, or if it's a car thieves love to steal.
