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Renting Your Home Could Mean Paying A Higher Auto Insurance Rate

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Who would think that buying a house could get you lower auto insurance premiums? It may sound a bit crazy, but according to a recent Consumer Federation of America report, renters pay more for auto insurance each year than people who own their homes, particularly on the cost for liability insurance. Even though it may seem unfair, it's important to understand why you may be paying more for auto insurance if you rent your home, as well as what you can do to about it.

Reason for the Difference in Premiums

While it may seem like a form of discrimination to set your insurance rate on whether you own a home or rent, insurance companies base the premiums they charge their customers on risk. Factors that place you in a higher risk group increase the rate you pay.

Analysis of data that insurance companies collect show that people who own their homes are less likely than people who rent to file auto insurance claims. Homeowners, in general, may pay lower rates because insurers reward them with discounts for filing fewer claims. But renters who live on busy streets where there is a lot of traffic or in high-risk neighborhoods where theft and vandalism often occur usually pay higher insurance premiums.

Factors for Predicting Risk

Your driving record alone may not be a sufficient predictor of risk. Auto insurance companies base the rates they charge on risk or how high the likelihood is that you will file a claim. Since insurance companies are in business to make a profit, they also need to assess how much any accidents you have will cost them.

But because states vary in how long a traffic violation remains on your driving record – which often depends on the seriousness of the offense – insurers weigh additional factors. Insurance companies that consider whether you rent when setting premiums typically maintain that homeownership is just one factor they consider when determining rates.

Where You Live Can Make a Difference

Depending on where you live, homeownership may not be a factor in the auto insurance premium you pay. In some states, consumer protection laws don't allow insurance companies to use homeownership as a variable in setting rates. Companies that don't look at non-driving factors generally base rates on the number of miles you drive each year, your driving record, and how many years of driving experience you have.

Ways to Lower the Auto Insurance Rate You Pay

Not all companies charge customers who rent their homes more for auto insurance; therefore, it pays to shop around. Don't be afraid to ask questions when you talk to an agent.

Inquire about renewal discounts, low-mileage discounts, and a discount for working a low-risk occupation. Ask about what defensive-driving courses qualify for a discount, as well as how much of a discount you can get if you buy both your auto insurance and renters insurance from that same company.

Whether you rent or own your home, a good driving record is always a plus in your favor when it comes to getting a lower insurance quote. For more information, contact Insure With U.S. or a similar company.