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I know that many couples are looking for ways to keep their insurance premiums down without sacrificing good coverage. When I was flipping through Kiplinger’s latest issue to look for articles that may be of interest to Couple Money readers, I read an article that address 5 factors that insurance companies consider when calculating rates. There was plenty of good tips and information in there that I wanted to share here.

I also had the privilege of interviewing Kimberly Lankford, the author of the article to ask some follow up questions and get some tips on how you two can get the best value on insurance. She is a contributing editor/columnist at Kiplinger and author of The Insurance Maze: How You Can Save Money on Insurance – and Still Get the Coverage You Need. She has spent more than 10 years gathering a wealth of knowledge about insurances and taxes.

Factors That Insurance Companies Examine About You

Insurance companies aren’t going to share their exact methods for calculating rates because they don’t want customers to game it. However being aware of what they look at when figuring out premiums helps you to be more savvy about getting a fair deal on your insurance.

Let’s take for example credit scores. Kim pointed out just how big of an impact they can have on your insurance rates. I’ve mentioned before that your credit score can have an impact on the interest rates you pay on mortgages and car loans, but they are also a factor with insurance (with some exceptions, such as states like California).  You can check your own state’s regulations, by visiting the National Association of Insurance Commissioners (NAIC) and using their handy map to get a link.

If you’re haven’t credit score in awhile, it could save you big money if you take some time to review it. If you’re looking for a free option on checking your credit reports, you can use Annual Credit Report. You’re entitled to reviewing all 3 of your reports for free. This is a completely free site, no trial, no membership sign-up. something that you want to double check on is to see whether there are any errors on your report. Depending on what it is, that error could be lowering your credit score and in effect keeping you from getting a better rate on your insurance premiums.

While there isn’t any exact cut off for what is consider a bad score and a great score, you can get an idea based on your score compared to the average. If it’s lower than average, then you may want to go ahead and work on raising your credit score.

Another factor that could be raising your rates is your car’s horse power. Typically a 4 cylinder car will be cheaper to insurance than a 6 or 8 cylinder vehicle, regardless of the make and model. Glad we didn’t go for the V6 version of the Accord when we bought our family car last year 😉

Finding Out More About Insurance Before You Buy

If you two are car hunting this year, take a bit of time to use handy tools, like Kiplinger’s car guide to get information not just on the car itself, but also on the average insurance rates for the model. Should it come down to 2 or three cars that you’re looking at, having the insurance premiums on hand may help you negotiate a better deal or assist you in picking the better car for you.

Of course, getting insurance is more than examining the costs of coverage, but it pays in the long run to look at the value to expect. Kim pointed out that you can use the National Association of Insurance Commissioners’ site  to gather some of that data by accessing their Consumer Information Source.

Thoughts on Saving on Insurance

How many of you regularly check around for your insurance rates? What have you found that has been extremely helpful? Please share them below in the comments. If you want to find out more about keep your insurance premiums low, please check out Kim’s article in Kiplinger’s March issue.

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About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

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  1. We keep our insurance premium low by having it evaluated each year before our renewal is up. It leads to savings if you check around for better rates, too.