8 Surprising Factors That Can Affect Your Insurance Rate



A Higher Risk Means Higher Premiums

When it comes down to it, how much you pay for your insurance each month is ultimately determined by how much of a risk you are. The higher the chance there is that you’ll file a claim, the higher you’ll have to pay for your insurance. This is because insurers want compensation for any potential loss that would occur if you do file a claim. But what exactly determines how risky you are? There are some given factors you’re probably aware of, like age, gender, and income. But, there are other aspects about you that can influence your insurance rate that may surprise you. SEE ALSO: How Your Lifestyle Affects Your Insurance Premiums

1. Where You Live

When it comes to health insurance, insurers will look at the statistical data of health trends in any given area and base their rates on that. If you live in an area with a lot of healthy people, your rate will probably be lower than if you lived in a higher risk area. Data has also shown that urban and city areas are more of a risk than rural areas, which is why auto insurance tends to be lower in the country. Since most accidents occur close to home, cities with a denser population carry a higher risk for accidents because there are more people driving around. Auto insurers will also factor in an area’s weather conditions, crime rate, unemployment levels, and even the number of practicing lawyers in the area when calculating someone’s rate. Homeowner’s insurance is also affected by where you live. Areas prone to natural disasters, harsh weather, wildfire, or mudslides tend to have a higher premium. High crime rate and the general building and repair costs in the area can also raise your premiums. The distance from a fire station and fire hydrant can also play a role in determining how much you pay monthly.

2. Body Mass Index

Your body mass index (BMI), which is basically your height-to-weight ratio, has a significant effect on both life and health insurance rates. A person with a BMI of 30 or more (which is considered obese) can pay up to 22% more for their insurance than someone with a BMI of 25 (which is slightly overweight). This is because obesity can lead to a whole host of diseases and medical conditions that can threaten and/or shorten your life, including:
  • Diabetes
  • Heart disease
  • Stroke
  • High cholesterol
  • Sleep apnea
  • High blood pressure
  • Cancer

3. Profession

What you do for a living can affect several types of insurance in different ways. For example, your health and life insurance will be affected if you work a high risk job. An office worker doing the nine-to-five grind behind a desk, for instance, will have a lower premium than a laboratory assistant who works with hazardous materials on a daily basis. Also, if you get your medical insurance through your work, your premium is based on the average health and age of everyone using the plan. So, even if you are young and healthy, if all your co-workers are older and suffer from age-related problems, you’re probably paying more than you should. When it comes to auto insurance, what you do and where you work can affect how much you pay. According to the DMV, certain occupations that require more travel and come with higher stress levels, overtime, and lack of sleep, carry a higher risk of causing an accident. These occupations include:
  • Doctors
  • Lawyers
  • Real estate brokers
  • Architects
  • Salespeople
On the other hand, those in a more constant profession that requires a detail-oriented personality are considered more careful drivers. Since they pose a lower risk of filing a claim, their insurance rates tend to be lower. These low-risk professions include:
  • Scientists
  • Nurses and first responders
  • Pilots
  • Accountants
  • Teachers
  • Artists
There’s also your homeowners insurance, which can be greatly affected if you happen to work from home. If you run a home business, a standard home insurance policy only covers a limited amount of damage ($250 to $2,500), if any. Also, your liability coverage won’t include clients, business visitors or employees. Because of this, you’ll either have to buy added coverage on you homeowner’s insurance, or purchase a separate home-business policy.

4. Relationship Status

According to insurers, people who are married live longer and are less likely to get into accidents. So, getting married will lower your monthly premium for health, life, and car insurance, especially for men.

5. Driving Record

It’s no surprise that your driving record will affect your auto insurance premium, but you might not know that it can also affect your health and life insurance. The more of a risk you are for being involved in an accident or auto fatality, the more your health and life insurance providers will charge you per month. If you have a history of numerous moving violations and DUIs, an insurance company may even reject or drop your coverage all together.

6. Hobbies

It makes sense that dangerous hobbies like sky diving and mountain climbing can raise your life, health, and even auto insurance rates, but seemingly inane hobbies, like posting on social media, can also have an effect. According to insurance.com, insurance companies have been known to check a person’s social media accounts to determine their risk profile, or, when it comes to insurance claims, look for evidence of fraud. They search posts for any indications of higher risk, including bad habits, medical history, and overall lifestyle. Say, for example, you told your insurer you only drink on occasion, but there are several pictures of you on Facebook with drinks in your hand, and you follow the twitter accounts of several bars in your area. Your insurance company can see that and adjust your rates.

7. Credit Score

In some states, your credit score and credit history can affect your life, home, and auto insurance rates. Insurance companies connect a lower credit score with riskier behavior, especially those who have filed for bankruptcy. Also, statistically, those with a lower credit score are more likely to get into an accident and have a higher chance on not keeping up with their monthly payments, which raises their premiums. SEE ALSO: 3 Ways Your Insurance Bundle Isn’t As Cost Effective As You Think

8. Lack Of Research

Lastly, a big factor that can affect how much you pay for insurance each month is lack of research. The best way to save on any type of insurance is to do your research and shop around; failure to do so can cost you a lot of money. Insurance companies are always offering promotions and discounts, so without researching what discounts you’re eligible for, you’ll be missing out on significant savings. Even if you fall under all the above mentioned factors that can raise your insurance rates, you may qualify for some discounts that can help balance out the difference.
Date of original publication:
Updated on: November 10, 2015

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