Have you ever wondered how insurance companies determine home and auto insurance rates? Naturally, the types of coverage you have and the amount for which you’re covered play a large part, but insurance companies look at more factors than the combined costs of, for example, bodily injury liability and collision insurance. What follows are five factors that affect your home and auto insurance rates.
- Marital status. Whether you’re single or married plays a large part in determining your insurance rates. In general, married customers are perceived to be more stable and less of a financial risk than single people, so they get lower rates.
- Number of dependents. If you have a family that depends on you, you’re more likely to behave responsibly, which results in lower rates. However, you probably also want more coverage to make sure your dependents are taken care of in the event of a major accident, so that can result in higher premiums.
- Property value. No matter whether it’s your car or your home, its replacement value is an important factor in determining your insurance rates.
- Location. Where you live is important for a number of reasons: crime rates, natural disasters, and distance to fire and police stations. Obviously, the safer your location, the lower your insurance rates.
- Your credit score. In all but three states, insurance companies consider your credit score as an indicator of your financial responsibility. A high credit score results in much lower insurance rates.