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Choosing the right insurance plan — and getting the best rate — can feel daunting. But just because you’re content with your current insurance rate doesn’t mean you can’t do anything to improve it, especially as an entrepreneur for whom every cent counts.
If you’re new to the insurance game, it’s particularly important to do your homework before signing up. A little preparation and proactivity can go a long way toward improving your rates. And for business owners looking to establish a solid business credit score, that’s essential — especially if their personal credit has started to bleed into their business’s.
Don’t Be Fooled: The Sneaky Areas That Might Impact Your Insurance Rate
Think you have a handle on your insurance? Be sure these areas aren’t secretly affecting your rates:
1. Your insurance (and credit) score
Your insurance score — and by extent, your credit score — can be a major predictor of your insurance rate. But why do your insurance and credit scores impact your auto insurance rates? Insurers utilize your insurance score as a predictor of risk, and a big part of your insurance score is looking at your credit history. According to an article in ReadWrite, “your auto insurance score is less concerned with what’s in your financial accounts and more interested in how you interact with them. Your insurance score looks at metrics like age of financial accounts, payment history, and credit utilization.” The higher your score, the more likely it is that providers will see you as responsible — and that you’ll see lower rates as a result.
A study by insuranceQuotes found that consumers with a poor credit score paid for it in their premiums, with their rates nearly doubling. That’s why it pays to keep tabs on your credit and auto insurance scores. One place to start is by requesting your credit report annually and reviewing it for errors. Make sure if you’re being penalized, it’s actually for mistakes you made. You can access your insurance score on personal finance sites like Credit Karma, and some providers like Say Insurance will allow anyone to check their insurance score for free.
2. Where you live
With a majority of accidents happening close to home, where you live can actually impact your insurance rates. Some cities and neighborhoods that are known to have higher rates of theft, accidents, and uninsured drivers will also often have higher insurance rates. Plus, cities tend to boast more accidents than rural areas, which means your rates will reflect that increase in accidents. It’s also common for areas with higher unemployment rates to have higher insurance rates because it’s more likely that you may be uninsured. Even a lengthy commute can cause an increase in your rates.
In contrast, home ownership can sometimes factor positively into your rate assessment. Some companies, like Travelers Insurance, give homeowners a discount on their auto insurance. You might not even have to buy your homeowners insurance through the same company, although it can certainly help your rates if you bundle.
3. What you drive
You might not have thought about it when you were shopping for a new car, but the type (and age) of car you drive directly affects how much you pay in insurance. When assessing your risk, providers often assign a higher rate to cars that go faster. That fancy sports car, while it might up your cool factor, will also increase your premium.
That doesn’t always mean your older car is saving you money. In fact, if you have an older car and are still carrying collision coverage, you could be losing money. Even though significant repair costs can often be the same, it’s more common for older cars to be considered totaled in an accident because the cost of the repairs can often exceed the value of the car itself. It’s why having collision coverage on your new car is so important; the cost to replace it will be much higher. But if your car is worth less than several thousand dollars, you could actually end up paying more than it’s worth in collision coverage.
4. Your marital status, age, and gender
Young men, particularly those in their teens and early twenties, have some of the highest insurance rates (and some of the highest accident rates, creating the correlation). If your teen recently hit the road, it might be in your benefit to make sure that their grades stay up. Some insurance companies offer a rate discount to young drivers that make the honor roll or dean’s list, or who have a high grade point average or standardized testing scores.
Similarly, marriage is another factor that can lower insurance rates for customers, particularly if they’re in their twenties. Insurance companies have found that married people often have fewer accidents and file fewer claims than single individuals, in part because merging households often means merging vehicles, too.
5. Your work
You read that right — your insurance rate might actually be influenced by your work. The logic is as follows: The more your job requires you to drive, the more likely it is that you might be in an accident. It’s also important to take into account the time of day that you’re most likely to be behind the wheel.
A new study has shown that entertainers are most likely to have a higher insurance rate. This includes actors, musicians, athletes and — with the highest rate — circus workers. On the other end of the spectrum, people who regularly deal with numbers as part of their profession are less likely to pay a costly insurance premium.
Entrepreneurs trying to wrap their heads around insurance would do well to consider how the details of their lives — and work — impact their insurance score. Finding ways to pay as little as possible — for damages or upfront rates — can truly help business owners stay financially healthy.
June 6, 2019 at 05:03AM
Forbes – Entrepreneurs