What Actually Affects Your Car Insurance Rate In California

Today, auto insurance is essential because it protects your finances and your well-being. However, several factors determine your car insurance rates. Continue reading to learn more about them.

1. Levels of Insurance Coverage
   When calculating auto insurance rates, the level of insurance coverage is the main determining factor. Choosing a higher level of coverage can raise insurance costs. Contrastingly, choosing a lower level of insurance coverage for a lesser cost can increase risk. Insurance coverage includes collision, uninsured motorists, liabilities, or comprehensive coverage. 
2. Amount of Your Deductible
   The price of your deductible also determines your car insurance rates. You can choose between a high-deductible policy or a low-deductible policy. Choosing a high-deductible policy will cost you much less monthly than a low-deductible policy with higher monthly rates.
3. History of Driving and Insurance Claims
   Having a clean driving history can score you the lowest insurance rates. California law entitles a qualifying driver to the Good Driver Discount, which is a substantial statutory reduction rather than a promotional offer. In relation, drivers with recurring insurance claims will most likely file a claim in the future. Thus, drivers with a repeated history of high-risk traffic violations and multiple insurance claims will have higher insurance rates. 
4. Car Make and Model 
   Insurers use the car’s make and model to determine how much it costs, which will help them estimate the money they have to pay if the car is totaled and they have to replace it. Flashy and expensive cars usually have to pay higher rates. Correspondingly, the higher the auto’s mileage and commuting distance are directly proportional to insurance rates. 
5. Demographics
   This is where California departs sharply from national guidance. Proposition 103 requires driving safety record, annual miles driven and years of driving experience to carry the greatest weight, and any other factor has to be approved by the Insurance Commissioner.

   Two factors used freely elsewhere are not available here. Credit history is not a permitted auto rating factor. Gender was removed as well: the Gender Non-Discrimination in Automobile Insurance Rating Regulation took effect on January 1, 2019, and it bars gender both on its own and in combination with any other factor. Insurers had to refile their class plans to strip out its effects entirely.

   Beyond the three mandatory factors, the regulations set out a defined list of optional factors an insurer may use, and each has to be approved and weighted below the mandatory three. Persistency is one of them, which is why a loyalty credit is not something you can carry to a new carrier here. That is covered in what shopping on price alone can cost.

   So national articles telling you that men and women pay different rates, or that building credit will lower your premium, do not describe California.

   Rating regulations are amended from time to time. The current rules are published by the California Department of Insurance.

What can a California driver actually influence?

Auto insurance can save lives. Despite the changing rates and higher risks of car accidents due to the current circumstances, there are ways to protect the driver and the driver’s loved ones and surroundings. 

A rate that climbs while the car ages surprises people, and the reason is that most of what you pay for is liability rather than the vehicle. That is worth understanding before a renewal.

How you pay matters as well as what you pay. We compare paying monthly against paying annually and where the difference shows up over a policy term.

At Schneiderman Insurance Agency, we walk through what drives the rate and what you can actually influence. Learn more about our products and services by calling our agency at (818) 322-4744. You can also contact the agency for a quote. Any coverage discussed is not guaranteed. An article cannot see your declarations page, so what applies to your own policy is a conversation worth having.

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.