With all the variables that determine your car insurance premium, you might find it confusing to figure out exactly what factors are responsible for the differences in your monthly bill.
One of the biggest factors in determining your car insurance rate, however, is your household rating.
But what does that mean? How can you know whether or not you have it and how it could be affecting your premium? Here are seven ways to know if you’ve got household rating and how it could affect your premium.
1) Your credit score
Your credit score is one of the biggest factors that insurance providers take into account when you’re applying for a policy.
7 out of 10 people in America have a credit score, and 3 out of 4 Americans have had their credit checked in the last year.
A low credit score will result in a higher premium because you are seen as more of a risk. You can improve your credit by getting a secured card, using it responsibly, paying off the balance each month, and eventually building up your score over time.
The number of vehicles on your policy: Multiple cars will increase your rate because they are seen as being more risky than cars owned by someone with just one vehicle.
One way to get around this problem is having some or all of your vehicles insured through an umbrella liability policy.
2) The type of vehicle you drive
Driving a luxury vehicle can increase your car insurance premium by as much as 25% over the course of a year, so it’s important to know if your insurance company uses household rating.
What is household rating?
Household rating means that all the drivers in your family are considered for deciding the cost of your car insurance premium, regardless of who is driving.
The more vehicles you have on the policy and the more accidents that are on the record, the higher your premiums will be.
It’s also common for parents with teenagers who still live at home to consider adding them onto their auto policies or get an umbrella policy that would cover both parents and their kids.
You might be able to save money if you bundle your auto coverage with another type of insurance such as homeowner’s or renter’s insurance because many companies offer discounts when they’re bought together.
3) Your driving record
A driver’s driving record is the most important factor in determining how much they’ll pay for car insurance. But if you’re part of a family with more than one licensed driver, your household rating can affect your premium, too.
Here are ways you can tell if it does 1) You live in an area where accidents are common
2) You were recently involved in an accident that wasn’t your fault or hit-and-run accident
3) You have poor credit scores
4) Someone else drives your vehicle often (e.g,ride share drivers and friends/family members who borrow vehicles from time to time)
4) The number of miles you drive
The more miles you drive, the higher your risk is of getting into an accident. And the higher your risk is of getting into an accident, the more expensive it will be for you to insure your vehicle.
Many insurance companies offer discounts for low mileage drivers. The number of miles you drive will affect the cost of your premium.
For example, if you only drive 5,000 miles a year and live in an area with high car theft rates, you could qualify for a discount on your annual premium.
Here are some other things that can affect your premium:
How many years you’ve been driving Some insurers look at how long you have had a license when deciding what rate to charge.
If you haven’t had your license very long, they may charge more because they think you’re less experienced than someone who has had their license longer.
5) Where you live
Household rating is a way for insurance companies to segment their market by dividing the population into groups that they think are riskier than others.
This is done by considering factors like zip code, occupation, and credit score among other things.
6) Your age
It’s important to know how much your age affects the cost of your insurance. The older you get, the higher your rates will be. For instance, an 18-year old woman pays $1,060 a year on average for coverage.
A 26-year old woman pays $1,540 a year and a 36-year old woman pays $2,300 annually for car insurance on average.
As your family grows, the likelihood that everyone has cars increases as well. With more cars and drivers in one household, it becomes harder to get affordable coverage.
You can also lower your risk by getting rid of high-risk drivers from your policy and increasing the amount of liability protection. These are two ways you can decrease the risks associated with living in a large house hold. vehicle usage.
One way to reduce costs is to limit the number of people who drive each vehicle or take a new job closer to home if commuting is too expensive.
7) The type of coverage you have
Your car insurance premium is influenced by the type of coverage you have. Remember, the more comprehensive your coverage, the higher your premium will be.
You also want to think about how often you use your car. Some companies offer discounts for drivers who use their cars less than 10,000 miles a year.
There are many different ways that your car insurance company can calculate your premiums so make sure you know what they’re doing and why they’re doing it before assuming that household rating doesn’t affect your rates.
You should always read through an insurance contract thoroughly before signing on the dotted line so make sure to ask questions if anything seems unclear or confusing.