5 Surprising Factors That Can Raise Your Insurance Premiums


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Actuaries at insurance companies spend their entire careers looking for tiny statistical nuances that can predict the likelihood that someone will file a claim -- and that can justify charging higher premiums. Some of the criteria are obvious, such as your driving record for car insurance or your medical history for life and health insurance. But some are surprising. Each insurer has its own rules, so it's important to shop around before buying.

SEE ALSO: 10 Cheapest 2013 Car Models to Insure

1. Your credit score. Auto-insurance companies have found that people with low credit scores are more likely than those with high scores to get into accidents, so they charge them more when they can. That's another good reason to pay close attention to your credit score. (A few states, such as California, don't permit insurers to use credit scores when setting rates.)

2. Your home's claims history. Insurers share information on homeowners claims for up to seven years through the Comprehensive Loss Underwriting Exchange (CLUE). When you apply for insurance, the company looks at the claims history for your home, even for the time before you lived there. If the house has a history of water-damage claims, for example, it may be more likely to have future problems--and insurers will boost your rate. You can check a house's CLUE report either before or after you buy it.

3. Your car's horsepower. You'd expect a Porsche Carrera to cost more to insure than a Toyota Camry. But if you buy a six-cylinder Camry instead of the four-cylinder model, it is usually more expensive to insure. In general, a four-cylinder car with moderate horsepower is less costly to insure than a six- or eight-cylinder car. You can get a rough esti­mate of annual insurance costs for more than a thousand vehicles with our new car rankings tool.

4. Your driving record. Your record of moving violations can affect your rates for life and health insurance in addition to car insurance. Life insurers are worried about a higher risk of auto fatalities. More than two moving violations in the past three years is a fairly typical cutoff for the best rates, says Byron Udell, CEO of AccuQuote.com. Some insurers permit three moving violations, but others allow only one. And some health insurers will reject you if you've had a DUI within the past three or five years, says Keith Mendonsa, of eHealthInsurance.com.

5. Your colleagues. If you have health insurance through work, the rates are based on the average risk of the group of employees. And the group's health and age can make a big difference, especially for small companies (this will change in 2014 because of the new health care law). If your colleagues tend to be older and prone to illness -- and submit a lot of claims -- your health insurance premiums will generally be higher than they'd be if you worked for a start-up filled with twentysomethings. If you're a healthy young person surrounded by preretirees with health ailments, you may be able to find a better deal on your own with an individual policy, whose rates are based on your own age and health. You can get price quotes for individual policies at eHealthInsurance.com and a list of all policies in your area at HealthCare.gov.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Insurance
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