What Is A Rating Plan

While having lunch with a friend or neighbor, you might find that you're paying much more in car insurance than that person, despite the fact that you both carry the same policy from the same insurance company. The reason for this comes down to your rating plan, a term that Carinsurance.com defines as the "rules" that change the "base rate" of your car insurance. These rules can include both discounts and surcharges. What determines these discounts and surcharges includes demographic information, driving history, the kind of car you drive, how you drive, your credit and other personal information.

According to MSN money, your car insurance rate is correlated to your credit score. Although car insurance policies do not provide you with a line of credit, a credit score can give a good reflection of a person's ability to pay on time, also indicating their responsibility level. Before you get car insurance quotes, MSN money recommends that you wait about a month after you've had an "unusual credit activity," such as making a large purchase on credit.

Another reason that you might find your car insurance quote is higher than your neighbor's is your car model. Cars that are unsafe to drive and are likely to be stolen cost more to insure than safer and less flashy models. Before you buy a new car, you can do research to determine how much it will cost you to insure certain vehicle models. Sometimes, the potential car insurance premium can be enough to convince you to choose a different vehicle. But it isn't just what you drive that affects car insurance quotes, but it's also how you drive. Having only one accident in which you are at fault can raise your insurance amount by 40 percent. While some insurance companies have a policy that offers to forgive your first accident, these policies may not cover all accidents. Repeated driving errors, such as accidents, tickets or citations, can end up significantly impacting your car insurance rates.

While these negative characteristics can significantly raise your rate, some factors can lower or discount your payments. For instance, if you choose to pay your premiums annually rather than monthly, you'll save money. Being a good driver, being a good student and waiting to add a teenager to your policy until he/she is licensed are all ways that you can lower your insurance rates.

The best way to save money on your car insurance rating plan is to understand it and the actions you can take to save money on your insurance, as well as what you can do to make sure your rates do not go up.

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