Car insurance can be very confusing. You make a payment every month and you know that you’re covered. However, you probably have no idea how car insurance companies come up with the amount you pay for your premium. Ed Bernstein, a lawyer in Las Vegas, shares 6 things car insurance companies are unlikely to tell you.

1. Gender

You may be surprised by this fact but car insurance rates for women are much lower than those for men. On average, women can pay up to 12% less than men do. What’s the reason behind this substantial difference? First, men tend to file more claims than women. Second, it is assumed that they drive more aggressively, especially if they’re single. Reckless driving attributes to the difference in the number of claims filed.

2. Ages

It turns out that the youngest and the oldest drivers have to pay the most for insurance. Premium rates are the highest for drivers at the age of 18 to 25. They decline when drivers reach “adulthood” and stay flat for around 30 years. They start to increase for people between 55 to 65 and rise abruptly around the age of 75. These differences result from the belief that younger and older drivers often contribute to hazardous situations on the road.

3. Location

Another factor that plays a big role in the amount of your car insurance premium is your location. Car insurance rates can go up if you live in a dangerous neighborhood associated with criminal activity. This, in the eyes of an insurance agent, makes you more likely to file a claim. What’s more, there are differences in car insurance rates not only when it comes to neighborhoods and districts, but also states. So, if you want to save some money on car insurance, you may want to consider moving somewhere else.

4. Education

The level of education you achieved contributes to the calculation of your car insurance rate. Generally speaking, the higher the degree, the better. A person with a high school diploma is going to pay much more than someone with a bachelor’s or master’s degree. Sadly, even though this practice is clearly discriminatory, there hasn’t been a decision in court that could help to rule it out. What’s more, lower education level is believed to be coupled with the location factor – statistics show that people with lower levels of education live in higher crime areas.

5. Credit score

Unsurprisingly, your credit score makes a huge difference – not only when it comes to your car insurance, but also your mortgage, life insurance policy, etc. A strong credit score will result in lower rates. Car insurance companies use this data to determine whether you’ll be able to pay your monthly premium and to predict your level of financial responsibility in the future. People with a checkered credit history are likely to raise some doubts regarding their financial liability. Also, car insurance agents often cite those with lower credit scores to be more reckless while driving. However, some states are actively battling this discriminatory practice.

6. Switching providers

The insurance market is highly competitive. However, most car insurance companies rely on the fact that people tend to stay with them. Your loyalty to one company isn’t rewarded in this case, though. At first, you may secure a decent offer after comparing initial rates, and you’ll keep paying your premium month after month. You won’t even realize when the costs start to grow. Don’t wait too long before you take action. Compare car insurance rates every year to see which company offers the best deal. Consider switching to a new provider or negotiating with the old one. Brand loyalty does not pay off when it comes to car insurance.

In view of the above, now you should have more background knowledge on how car insurance companies come up with their premium rates. Remember to ask questions next time you compare car insurance rates. Your car insurance agent will shed some light on how exactly your annual and monthly rates are determined. This way, you’ll understand where these costs come from, and maybe you’ll find out that you’re eligible for some discounts. Don’t get intimidated and always ask for clarification.