Key Factors That Influence Your Car Insurance Rates

Age is considered an important gauge by car insurance companies for two reasons. First, it serves as a simple (if not entirely accurate) barometer of a young person's ability to make good decisions behind the wheel. This is why drivers under the age of 25 tend to pay higher rates than their older counterparts. Second, age is used as a tool for determining potential safety issues as drivers age.

Gender also plays a role, though its importance is declining. While women have traditionally been considered safer drivers than men, this perception seems to be changing. Premiums for men and women converge as they age.

Many insurers use a policyholder's marital status to help determine the likelihood of a future claim. The thought is that a married person is more likely to make decisions that guarantee his or her safety and that of the person's family. The policyholder is therefore less likely to file a claim. As a side note, not all insurers use this factor.

Few things have the potential for sending your car insurance rates through the roof more than traffic violations and past collisions. This is one area in which data from nearly all providers reveals the same trend: past demerit points increase the likelihood of a future claim. As such, a poor driving record will cause your premiums to climb. It is a slippery slope once you've lost demerit points or had accidents, because insurance companies can lable you 'high risk' and choose not to insure you. Often times its best to fight traffic tickets in order to keep your insurance rates from jumping. The number of points on your record and their recency will influence your rates. As time progresses without infractions, their effect will decline.

Some auto insurers will use your credit history as part of their formula for identifying the risk class into which you're placed. The higher your credit score, the safer you're presumed to be behind the wheel. Black marks on your credit history can cause your premiums to rise, depending on how important your insurer considers this factor within their formula.

An important side note is useful regarding your credit score and auto insurance rates. While some companies will raise your premiums due to black marks on your credit history, they may not proactively update your policy as your history improves. As black marks fall off, notify your carrier to update your standing. That can result in a reduction in your premiums.

Geography is considered important because the roads in some areas are more congested than those in others. More cars on the road implies a greater likelihood of a collision - and that, in turn, suggests a potential claim. Moreover, some provinces and territories may experience a higher rate of auto theft than others. That too, raise the prospects of future claims from those who live in such areas.

With regard to factors you can influence, age and gender are obviously off the table. While your driving record and credit history are within your control, both are long-term factors that can only be improved over time. Your location is likewise difficult to change. Fortunately, there are several criteria used in calculating your car insurance rates that you can directly affect.

For example, raise your deductibles and ask your insurer for any discounts that might apply to your circumstances. Review your current coverage limits to identify those you can reduce (for example, collision and comprehensive on a 20-year-old clunker). Most importantly, never assume your current insurer is giving you the best deal. Research and compare auto insurance rates online between several companies.

Some factors are difficult, if not impossible, to influence. Others are directly under your control. The first step to lowering your premiums is to request car insurance quotes from your current insurer's competitors.