Things That Do and Don't Affect Car Insurance

Car insurance is one of those things in life where the rules sometimes make little sense. No matter what commercials tell you, it's never going to be something you can figure out in 15 minutes. There are many factors that go into how much you pay for premiums, but most of them come down to how responsible you are -- and not just on the road.

How Much Does Credit Affect the Amount Paid for Car Insurance?

A good credit score can lower your premiums by as much as 20 to 50 percent. Insurers don't usually look at your credit report itself; they just access your score from a well-established credit agency. It matters to them because they think if you pay bills on time, you're less likely to make a claim. They can get your money on a timely basis and not worry too much about having to pay it out again.

How Will a Reckless Driving Charge Affect Car Insurance?

Naturally, an insurance company will see red flags if your driving record has a moving vehicle charge. If it's reckless driving, a credible insurance company can increase your rate by 22 percent or more. If that doesn't sound fair, look at it from the point of view of the insurer. Someone willing to drive recklessly before is more likely to do it again than someone with a perfect record. That person will get the price break; you will not.

Does Being Self Employed Affect Car Insurance?

It's not what you do for a living that affects your cost, but how your job impacts your driving patterns. Self-employment won't increase your insurance in and of itself. If you work from home, that means you figure to drive less than if you had someplace to go every work day. This could actually make your premiums go down since you're not as much of an accident risk. By the same token, if your business requires you to drive from one end of the state to the other, your premiums may well go up.

Does Owning a Home Affect Your Car Insurance?

Some companies will give you discounts if you own or buy a home, especially if you also use them for your home insurance. Homeownership can shave some dollars off your payments after your premium is established. This enables you to increase your coverage because the more assets you own, the more you have to lose if someone sues you.

Does Cancelling Car Insurance Affect Your Credit Score?

As a consumer, you have the right to shop around to get the best rates possible. If you find a company willing to insure you for less, the credit agencies won't penalize you for making a change. This will only hurt your score if you cancel before you pay off the company you're leaving. That insurer can report the delinquent account to the credit agencies, and that will cripple your credit score.


About the Author

Beverly Bird has been writing professionally since 1983. She is the author of several novels including the bestselling "Comes the Rain" and "With Every Breath." Bird also has extensive experience as a paralegal, primarily in the areas of divorce and family law, bankruptcy and estate law. She covers many legal topics in her articles.