8 Life Events that Impact Your Auto Insurance Rates
Life is all about change, and most Americans experience numerous changes throughout their lives. Some people will marry their soulmates, while others will divorce their spouses or never marry at all. A few individuals will start their dream jobs, and other people will quit their company to launch a new business under their personal brand. Others will leave their hometown to move to a different area to purchase a home and make a fresh start in another area. Whatever significant life events you may personally experience may be reflected in your car insurance rate. Insurance companies raise or lower rates based on the circumstances that their customers currently endure.
Today, we’ll go over 8 life events that can affect your car insurance rates.
How Car Insurance Carriers Determine Your Rates
Car insurance companies develop composites of their customers on data they gather from accident statistics. They determine how much each person will likely cost their companies in the future. Some insurers believe certain groups may cost them more money because they may file a greater number of claims than the average. As a result, the insurance company may charge them higher premiums based on their risk. Insurers generally consider several factors when they calculate rates for their customers. They include: Gender
- Vehicle Model or Type
- Marital Status
- Accident Record
- Your Age
- Driving History
- Annual Mileage
- Geographical Location
- Credit Score
Who Gets the Lowest Car Insurance Rates?
Insurance companies charge the lowest rates to policyholders that statistically present the least amount of risk for accidents. These people typically fall into the following groups:
- People age 25 years and older
- Married couples
- Driving a cheaper, older car
- Owns an automobile model with a great safety record
- Live in a rural community
- Have fewer accident claims
- Have no moving violations
- Meet insurance low mileage standards for your state
- Has a high credit score
Individuals who belong to these categories have caused fewer accidents, and insurers lose less money. So, they pass these savings to their customers by charging them less.
8 Life Events that Can Impact Your Car Insurance Rates
Life events are situations that can create new considerations for additional financial considerations or changes in your insurance coverage. These life events may include getting married, having a child, buying a new home, or getting a new vehicle. Here are some life events that can affect your auto insurance.
1. Changes in Marital Status Can Affect Your Car Insurance Rates
Your marital status is one of the top life events that can affect your car insurance rates. Some changes related to marital status include:
- Divorcing or separating from your spouse
- Becoming a widow
Are you getting married soon? Married people generally see a drop in their auto insurance rates. According to a New Zealand study, single drivers had a higher risk of car accidents than their married counterparts. Additionally, other statistics have shown that spouses have fewer road incidents and serious injuries.
Because of this lower risk, auto insurers offer discounts to married drivers, regardless of the person’s age. Insurance companies also offer this discount to men younger than 25 years old, who usually pay the highest premiums. These companies rate these inexperienced drivers as adults once they get married. Some auto insurers, such as State Farm and Allstate, also offer marriage discounts to same-sex couples (and those who reside in states that recognize domestic partnerships and civil unions). Although getting married should decrease your premiums, only consider asking for this discount when your spouse or partner has a good driving record. Those who have a bad driving record could negatively impact your premium rates.
Divorcing, Separating or Losing a Partner
When you separate from your partner, you can no longer claim the multi-policy discount that you received during your marriage. Unfortunately, the same situation also applies to widows. So, insurance rates will most likely rise when you lose a spouse.
Here are some tips to remember about your auto policy when you are divorcing from your partner:
Make sure that you get your partner’s consent before removing them from your coverage.
Get different addresses for yourself and your ex and use them for each policy. You will share liability if you still live at the same address. Move to another place before you divorce your spouse.
Obtain separate vehicle titles for each spouse. Insurance companies usually require the vehicle's title to list the policyholder. Always list the co-owner (who doesn’t live in the same household) as an additional insured individual.
One spouse will need to buy a new policy. You’ll need a new policy before you can remove your former spouse from your insurance coverage.
Sign a removal request giving consent to be removed from the policy.
2. Your Home Ownership Status Can Affect Your Auto Insurance Rates
Some auto insurance companies may ask you about your homeownership status. They use this information to assess what kind of risk you present to their company. Here are four issues that can lower or raise your premiums.
- Renting a home or apartment
- Buying a new home
- Moving from your home or apartment
- Commute times from your home
Homeowners Get Lower Auto Insurance Rates
Auto insurance companies generally offer discounted rates to homeowners because they believe that these individuals are more stable and less risky than renters. You won’t need to purchase a homeowners policy through their company to get the lower rates. Your insurer, however, will offer tantalizing incentives to encourage you to switch coverage to their company. After you buy your home, tell your insurer that you are a homeowner to save money on your premiums. The insurance company will ask for documentation that you own the property, including tax statements, property deeds, or mortgage documents.
Bundle Your Insurance Coverage to Get Discounted Rates
Buying individual homeowners and auto insurance policies won’t save you much money. Policyholders can save up to 20 percent on their premiums when they bundle this coverage together. Combining these policies will help you to increase your savings in the end.
Increase Liability Coverage to Protect Your Assets
After you purchase a home, you may want to consider increasing your car insurance to protect your home. If you have a car accident and don’t have enough coverage, you could lose your home if the other person decides to sue you directly. You should increase your policy coverage to reflect the value of your home. According to PocketSense and USA Today, they typically recommended coverage is:
$100,000 per person in bodily coverage
$300,000 per accident in bodily coverage
$50,000 in property damage
These amounts are generally not enough coverage for all parties in an accident. Most insurers offer liability coverage amounting to $1,000,000. Moving from your residence can impact auto insurance rates. Your premium rates may increase if you move, especially if your commute time to and from your job increases or decreases. If you move to a rental property, you may pay more compared to a home.
3. Insurance Costs Can Change Based on Your Age
As a person gets older, insurance companies will charge you different rates based on your age category.
Teenagers Pay Higher Rates Than Adult Drivers
Do you have a teenager who is old enough to get their driver’s license soon? Your rates may increase if you buy your teen a new vehicle or add them as a driver to your insurance. Younger people tend to pay higher car insurance rates. Insurers presume that most teens have less driving experience compared to their older counterparts. Auto insurance statistics also show that teenage drivers, ages 16 to 19, are three times more likely to be in a car accident compared to people ages 30 to 40. Although they make up only seven percent of all licensed drivers, they account for 10 percent of all fatal accidents.
Insurers Charge Older Drivers Higher Rates
People older than 75 can also pay more money compared to people in their 30s and 40s because of health issues. Insurers believe this demographic sometimes have slower reflexes and poorer eyesight that can affect their driving ability. They often charge older adults the same rates as drivers under 25 years old.
4. Having Children May Lower Your Rates
Having children is another life event that can lower your auto insurance premiums. Couples that have children tend to drive more cautiously compared to childless couples.
New Parents Switch Cars to Keep Children Safe on the Road
Typically, parents switch their car to a safer, low mileage vehicle that can protect their children. These vehicles are cheaper to repair than more expensive models. They also provide enough room to carry child seats, strollers, toys and other items. Other parents (either the mother or the father) decide to quit their jobs to stay home with their children, which can also reduce auto insurance rates. Additionally, parents will keep these vehicles for a longer time to carry their children as they grow and attend extracurricular activities after school.
Parents Drive More Cautiously
Many first-time parents tend to adopt new behaviors, including driving more cautiously than people that don’t have kids. Insurance companies recognize that they become more responsible and, in return, lower their car insurance rates. Not all insurers will provide these discounts to first-time parents, but it doesn’t hurt to ask. This discount typically lasts until the children turn six years old when car insurers raise rates once more.
5. Employment-related changes can impact your insurance rates
People are surprised when they learn their employment status can also have an impact on their auto insurance rates. Depending on the circumstances, job-related changes can raise or lower your premiums.
Getting a New Job Can Lower Your Rates
Did you know that getting a new job can significantly affect your car insurance rates? These changes occur because of the differences in your commute time to and from work. For instance, you may pay higher rates if you have a longer drive to work. When you spend more time on the road, you’re at a greater risk of getting into an accident, like a fender bender. Does your new job bring you closer to home? Your insurance company may drop your rates because you spend fewer hours driving.
Your Insurance Premiums Can Change with a Raise
Have you’ve recently received a raise? Congratulations. Most people use the extra money they receive when their salary increases to additional perks like purchasing a new home or car. During this time, you should consider increasing your coverage to make sure that your family, home, and car are protected if an accident happens. Speak with your local agent to find out how to get enough insurance protection.
Your Profession Can Affect Your Insurance Rates
Insurers will also charge people more based on their professions. For instance, they may charge delivery drivers who spend more time on the road more money. Individuals who are perceived to be careful, like first responders, may receive a lower rate.
6. Buying, Selling, or Owning a Vehicle
The car model you own can affect how much you pay in premiums. If you insure several vehicles with the same company, you’ll generally receive a discount for having multiple automobiles on the same policy, but pay more altogether.
Older Car Models Cost Less to Insure
Insurers may charge lower rates for older model vehicles than newer ones because cars depreciate as they age. Older automobiles have lower coverage limits. Some drivers can drop their comprehensive or collision coverage if they have paid off their vehicles, but once you get into an accident, your repairs won’t be covered if the accident was your fault.
You May Get a Lower Rate Based on Your Vehicle Model
The automobile model you own will impact the price of your rates. For instance, high-performance vehicles, luxury cars, and SUVs cost more to repair, so their owners get charged more expensive rates. You can get discounted premiums if your model has certain safety features or equipment, such as passenger-side airbags. Cars with a proven safety record may cost less to insure.
7. Moving to a Different Area
Another life event that can change your auto insurance rates is moving to a new area. If you move to an area with a lower population, it can affect your car coverage. Your insurer will also take into consideration the crime and accident statistics in your new location. If you’re moving from a rural town to an urban, metropolitan area, your rates will increase. The opposite will happen if you’re moving from a crowded city to a country town.
8. Your Credit Score
People with a lower credit score typically have more expensive car insurance rates compared to those individuals who have a better one and pay their bills on time. Has an unexpected life event affected your auto insurance rates? You can search for better insurance coverage using SmartFinancial’s transparent insurance technology. We help insurance shoppers save money one policy at a time. You’ll only need to fill out a simple application, and we’ll connect you with a team of trained insurance concierges. Our company will provide you quotes from local insurance agents within your area within minutes. SmartFinancial is the quick, easy, and intelligent way to buy insurance.
Get a Free Auto Insurance Quote Online Now.
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