It’s mandatory for drivers to have car insurance, but that doesn’t mean it’s easy to figure out how much you should pay for it. Many factors determine your car insurance premium, not least of which are your insurance provider and your vehicle, but it’s important to know what really affects how much you’ll pay and what doesn’t matter at all.
One of the most common myths about auto insurance pricing is that the color of your car affects how much you’ll pay. It doesn’t, but 44% of Americans think it does, according to a recent survey from insuranceQuotes.com. The responses were gathered Aug. 20 to 23 from phone interviews of 1,003 adults living in the continental U.S. The sample was weighted to represent the adult population and has a margin of error of plus or minus 3.6 percentage points.
That idea that you’ll get charged more if you drive a red car, because it’s more likely to be spotted by a cop or whatever it is people say — it’s not true. Tell your young friends and family, because 53% of millennial respondents to the survey believe this myth.
Also, 37% didn’t know insurance covers you when you’re at fault in an accident (52% of people ages 18 to 29 got this wrong).
One of the things many people don’t realize affects how much you pay for auto insurance is your credit-based insurance score. It’s a consumer score that allows insurers to use your credit report to assess how much you likely you are to file a claim in the future, and it’s a controversial practice, because many people and consumer groups think credit information should have no bearing on what you pay to insure your vehicle. (It’s smart for consumers to check their credit reports regularly anyway — you can get free copies once a year at AnnualCreditReport.com. But if inaccuracies on your credit report could drive up your insurance, it’s especially critical to find and dispute them.)
As it is, insurers can use credit-based insurance scores everywhere but for drivers in California, Hawaii and Massachusetts, where the practice has been banned. How much your credit affects your premium depends on where you live and who provides your insurance, which is why it’s a good idea to shop around for the best offer. To minimize how much you pay in insurance premiums, you obviously want to work toward a clean driving record, but it can help to try and improve your credit score, as well. You can get your credit scores for free on Credit.com and track your progress as you work on your credit standing.
More on Credit Reports & Credit Scores:
- The Credit.com Credit Reports Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report