4 Non-Driving Factors That Affect Your Auto Insurance

Fact-checked with HomeInsurance.com

Everyone knows that risky driving behaviors that result in tickets and accidents affect insurance rates, but did you know that a great deal of an insurance premium is calculated based on non-driving factors? In fact, the Consumer Federation of America stated this week that there was a difference of approximately 70% when comparing non-driving factors to similar driving factors.

Auto insurance premiums are ‘scientifically’ calculated based on the risk that the customer poses to the insurance company–the more likely the consumer will experience a claim within a short period of time the higher premiums will be.

It’s not rocket science to understand that a twenty-year-old with three speeding tickets is a higher risk for a large claim than a twenty-year-old with a clean driving record. But what’s the correlation between two twenty-year-olds with perfect driving records when the one who is single pays $2,500 a year but the one who is married pays $2,100 a year, everything else being practically identical?

It’s always been about statistics, and it’s still about statistics. Except modern day insurance is full of more statistics than ever.

Even though some of the factors may seem like they have nothing to do with driving, the statistics in claims for married twenty year olds and the statistics in claims for single twenty year olds show that married twenty year olds have fewer accidents.

Actuaries who make six digits a year for being so ‘scientifically and mathematically gifted’ who assign formulas to help calculate the costs for each factor are the ones to look to for answers. If you want to know how to judge if you’re going to pay more or less each time you switch insurance companies or get insurance quotes, here are four of the biggest non-driving factors that will affect your rates, and depending on the company, you’ll see that some will be weighed heavier than others when you start getting insurance quotes that greatly vary.

4 Factors that Affect Auto Insurance

1. Credit

For some auto insurance companies this is a biggie. If credit data on a report is slow and there isn’t much being posted on the report, the correlating formula for insurance rating will provide for a better rate.

On the other hand, someone who has opened up a few credit accounts, bought a car, had a couple late utility payments, and checked on some mortgage rates will have many entries on their credit report. Even though most of them are just entries and not necessarily bad or good either way, just the fact that more information is being funneled onto the report will cause the insurance credit score to be higher and more costly on insurance quotes.

2. Education

Here’s one more reason to stay in college and get a degree–your insurance premiums will likely be lower. Not only will you have longer than just four years of high school to present verification of a 3.0 GPA for a good student discount–which often provides substantial decreases in premium costs–but when you are finally finished, the rest of your life you’ll be able to say you have a degree or completed some college. This will often provide discounts on your auto insurance in varying ways depending on the company. One way this can result in a life long discount is through what are called ‘affinity’ discounts—these are discounts for being a member of an organization, an employee of certain companies, or even for being a customer of various businesses, like having a checking account with a certain credit union.

The collegiate part of affinity discounts can come from a couple different ways—one, you could get a discount for being a student at a certain school, and for the rest of your life, you could possibly get a discount for being alumni of certain colleges or universities. Greek life may even make up for all those miserable early mornings after late nights and embarrassing costume parties–some insurers provide discounts for members of certain fraternities, sororities, organizations, or clubs at colleges and universities—often for life.

The list of schools you can get discounts for varies from insurer to insurer, and this is one of those things you’ll need to bring up when getting insurance quotes—although some think insurance agents are telepathic, we’re not, and we don’t know if you went to Fordham University unless you tell us. Unfortunately it’s also not something you’ll be prompted for even after you buy a policy—when you get your policy in the mail there won’t be a list of eligible organizations or schools in bold print.

If you’re getting insurance quotes online, there will typically be a scroll-through list of schools the insurer has affiliations with, and if you’re confirming insurance quotes with a person, tell them where you went to school, any professional or personal memberships you have (such as being a member of the local Lions Club), or the name of your bank. Often you can score a discount between one of those, but you need to ask and inform.

Besides all the other benefits of a higher education, paying thousands less over a lifetime in auto insurance alone is worth it. It might even balance out the cost of going to school. Between the four years worth of additional discounts for good grades, your better job that you can get with a degree as opposed to without a degree will provide you with a better income in which to pay for your lower costs of insurance. See how that goes around in a perfect circle?

3. Marital Status

As noted in the beginning, a single person and a married person of the same auto insurance rating factors in other areas will see a difference in premium simply for being married. Apparently, actuaries find that with research, married people tend to be a little more responsible than their single counterparts and therefore are less likely to engage in risky behavior that might cause a claim. Therefore, the premiums are higher for single people, especially younger ones.

4. Homeownership

People who own a home often will get a homeowner discount that drivers can’t get by simply renting a house. It’s kind of a double discount in some ways because not only is there a homeowner discount, there is a home/car discount, aka multi-policy discounts, that can be significant in many cases when a customer has both auto and home insurance with the same company.

However, there is a little bit of difference that a driver can make when it comes to insurance discounts when they are renters is to purchase a bundled policy option with renter’s insurance. The discount might not be as large, but the cost for renter’s insurance compared to a homeowner policy is often lower, making up the difference.

Just because these things are large factors in your premiums doesn’t mean you have a free pass to speed or crash your car into a brick wall when you want a new one. Instead, it’s just more incentive to lead a productive, healthy, and happy life and to never stop trying to ‘have it all—‘ insurers are basing your premiums on ‘all of it’ so that must mean you can come pretty close to doing just that—if not definitely doing so.

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