What Factors Determine Car Insurance Rates in Missouri?
What Factors Determine Car Insurance Rates in Missouri?
Every driver is unique.
And every car insurance policy is tailored to a unique set of circumstances.
How much you pay also depends on many things. This leads many people to worry whether they’re paying too much, or whether their monthly premium is fair. In this article, we help you simplify things a bit.
First things first: Insurance rates are based on how risky you are to insure. Basically, that means the statistical likelihood that you’ll file a claim.
Second, each individual state regulates what criteria insurance companies may use to set your rates. So where you live makes a difference.
Let’s take a closer look at the factors that determine your auto insurance premium according to the Missouri Department of Insurance.1 Knowng about these will help you choose the best policy at a premium you can afford.
#1: Amount of Coverage You Purchase & Your Deductible
There are several different types of auto coverage. For each category, your insurance agent will help you determine the appropriate amount of coverage:
- Liability
- Medical
- Collision
- Comprehensive
- Uninsured and underinsured motorist
- Towing and rental car
- Multiple car discounts
Along with selecting the types of coverage you need, you’ll also need to set your deductible. That’s the amount you’re willing to pay for auto repairs, medical bills and other expenses in the event of an accident.
The higher your deductible, the lower your premium will be. If you have a healthy emergency fund built up, you may be able to raise your deductible and enjoy a lower monthly premium.2
#2: Where You Keep Your Car
The Missouri Department of Insurance refers to this as “where your car is garaged.”
Insurers study the likelihood of a claim based on your city, state, zip code and even your specific neighborhood. Here are some location-based criteria that affect your premium:3
- Population density
- The number and severity of auto claims per year
- The rate of crime, including theft and vandalism
- Frequency of severe weather events
Where you park your car also makes a difference, such as whether you keep it in a closed garage, outside in your driveway or on the side of the street.
#3: How You Use Your Car & Your Annual Mileage
The more miles you drive per year, the greater your risk of an accident.
Someone with a 10-minute commute, or who only drives on weekends, may pay less than someone who drives an hour to work.
Using your vehicle for business purposes also affects your rate. This could include sales calls, providing ride share services or delivering food. Those who drive to work at night may pay more than those who commute during daylight hours.
#4: Model & Age of Your Car
If you’re shopping for a car, research safety records and insurance rates when comparing different models.
Insurers look at claims data based on the model, production year and other characteristics of the car you drive:
- Purchase price
- Cost of repairs
- Accident rate
- Theft rate
- Safety test performance
The presence of car safety features like air bags, anti-lock brakes and blind spot alerts can help to lower your premium.
#5: Your Driving & Claims Record
Your driving record indicates how risky you are on the road and includes accidents and traffic violations.
Having an accident can cause your premiums to rise even if you weren’t at fault. A history of filing claims in the past is correlated with filing more claims in the future.
A traffic violation such as speeding will increase your premiums depending on how fast you were going, state laws and the individual insurer. Serious convictions such as a DUI will also make your insurance more expensive.
It’s a good idea to periodically check your driving record and fix any errors. That helps to ensure a rate that more accurately reflects your level of risk.
#6: Your Age & Gender
For most parents, it’s no secret that adding a teen driver to your auto policy causes your rates to go up. Did you know it costs more to insure a teen boy than a teen girl?
The reality is that experience counts when it comes to driving risk. Fatal crash rates are highest for drivers aged 16-19. The rate for males in that age range is twice as high as for females. Crash rates decline starting at age 20, and go back up for people 70 and older. The lowest fatal crash rates appear in those aged 30-69.4
Men tend to pay higher rates than women until about age 25, when gender differences become less pronounced.5
#7: Your Credit History
Auto insurers use what is called a credit-based insurance score when setting your rates. It is different from the credit score most people are familiar with, although it includes similar criteria.
Why is this a factor? It’s because insurers have actual data that proves a correlation between credit history and the likelihood of filing an auto insurance claim.
Here are the aspects of your credit history that may influence your auto insurance:6
- Length of your credit history
- The types of credit you use
- Payment history
- Current debt level
- Opening new lines of credit
Regulation of Auto Insurance Criteria
While most people agree that your driving record is fair game, some question the use of non-driving factors to set car insurance rates.
Some states, including California, Michigan and New York, have passed laws restricting the use of non-driving criteria such as gender or credit history.7 Congress is considering similar legislation at the federal level.8
Insurers point to statistics showing that these factors are, indeed, related to filing more claims. They also explain that these criteria result in more accurate rates, so low-risk drivers can pay less than those at higher risk.7
At The Resource Center, we have always believed in treating every client with fairness and respect by providing personal, dependable service.
Our independent insurance professionals are here to listen to your concerns and answer all of your questions. We simplify the process and help you choose the best auto policy for your needs at a price you can afford.
Give us a call at 417-882-1800 or reach out to us online today.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center are not affiliated companies. Past performance is not indicative of future results. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. 00615354
Sources:
1: https://insurance.mo.gov/consumers/auto/autobuy/howdeterm.php.
2: https://www.valuepenguin.com/how-do-deductibles-affect-car-insurance-premiums.
3: https://www.carinsurance.com/Articles/10-factors-that-affect-your-car-insurance-rates.aspx.
4: https://www.iihs.org/topics/fatality-statistics/detail/gender.
5: https://www.bankrate.com/insurance/car/rate-factors/.
6: https://www.forbes.com/advisor/car-insurance/auto-insurance-score/.
7: https://www.thezebra.com/resources/research/car-insurance-rating-factors-by-state/.
8: https://www.ky3.com/content/news/Congress-takes-up-insurance-rate-discrimination-568527431.html
