Will a fast car cost you more in insurance?
Yes, auto insurance companies look at your credit score and a lot of other factors when determining what your insurance premiums will be. It's all about risk, and insurance companies rely on some pretty sound statistical data to determine just how risky you and your driving habits are. It's a common belief that the faster your car can go the more expensive it will be to insure, but that theory is not really true.
What is true is that performance vehicles, which do go faster than the average person's car, are typically more expensive to insure because of their sheer value and cost to repair.
"It's not the speed, but it's the price for keeping the car looking good after an accident that you're paying for," said Lynne McChristian, a representative for the Insurance Information Institute and member of the teaching faculty at Florida State University's Insurance Department.
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Tabetha Hammer, a spokesperson with Hagerty Insurance, which specializes in classic and exotic car policies, said modern high-value, high-performance cars (think Ferrari and Lamborghini) almost always cost more to insure.
"With the modern exotic vehicles, the typical higher premium ... is not necessarily based on it going faster, but the increased overall risk," she said. "It is much easier and more appealing to utilize a vehicle of that nature for 'regular use' than a classic version [would be]."
So what exactly factors into your auto insurance premiums? According to DMV.org, a private company that provides information and resources for drivers across the country, these are the major factors: age, gender, location, vehicle type, marital status, accident history, driving record, annual mileage and credit score. Additionally, the site says people who generally get the lowest insurance rates are those who:
- Are female
- Are older than 25 years old
- Are married
- Drive an older, less expensive car
- Drive a car with a good safety record
- Live in a rural area
- Have no chargeable accidents
- Have no moving violations
- Meet insurance low mileage standards for your state
- Have a high credit score
"Drivers with these characteristics have been shown to — on average — cause fewer accidents, report fewer claims, and cost insurers less money," DMV.org says on it's website. "That's why those who fit into most of these categories pay a cheaper car insurance rate than other drivers."
Getting a Better Policy
There are ways you can lower your premiums and/or keep them low. One involves maintaining a good credit score. (It turns out that bad credit can raise your insurance premiums more than a DWI.) You can check your credit scores for free every month on Credit.com to see where you stand. If your credit is in rough shape, you can improve your score by disputing any inaccuracies in your credit history (go here to learn how to dispute errors on your credit report), identify your credit score killers and create an action plan to address those issues.
You can also comparison shop before accepting an insurance policy offer. And, of course, maintain a good driving record with no tickets or accidents.
"Just because your car can go at a high speed doesn't mean you have to prove it," McChristian said.
This article originally appeared on Credit.com.