If you ask the insurance companies how they set the premium rates, they will point the finger of blame at the actuaries. These are people deeply into statistics, collecting as much information as possible about every claim made. This is not just the details of traffic accidents because the bare facts of make and model of vehicles involved never tell the whole story. It may have been the time of day with the sun shining at a difficult angle and making it hard to see. There might have been snow on the ground. It might be a stretch of road that is badly designed or has never been properly maintained, and is an accident hot spot. One of the vehicles may be driven by a thief and there are high rates of theft in that area. And so on. Once you start accumulating data, it's possible to see patterns. Sometimes this works to your advantage but it's impersonal. Insurance should really be about who you are and how well you drive. So, as an experienced driver with no accidents during the last ten years, driving only at off-peak times for short distances, the premiums should be low. But data does not stop at this point. It goes on to consider where you live and what your credit score is. In California, of course, the use of ZIP codes is limited, but in most other states, where you live can be a major factor in deciding the premium rate. In poor areas where there's high crime, the rates will be higher. By coincidence, the credit scores of the people living there will also tend to be poor.

Credit scores do not come with detailed notes explaining why your particular score is low. All the insurer knows is that there's a recession and everyone is suffering. But it's routine to take the score into account. This means you should ensure your score is accurate. A survey carried out a years or so ago found there were mistakes in almost 80% of all credit records. Most errors were not significant but you could be one of the unlucky ones. Remember there are three different credit rating agencies and they all collect their data from slightly different sources. This forces you to check all three.

In this, remember the Fair and Accurate Credit Transactions Act of 2003 (FACTA). In each twelve month period, this gives you the right to a free copy of your records from each of the three bureaus. More importantly, FACTA gives you the right to have any mistakes corrected. So you have the right to free copies and can force corrections. There's only benefit coming from this. If you find mistakes and your credit score improves, the auto insurance companies will all reduce your premium. Check it out by getting auto insurance quotes after correcting mistakes. If you find the premium rates lower, contact your insurer immediately. There's no need to wait for renewal. If there's a mistake, it should be corrected. The honest companies will refund overpaid premiums. There's nothing better than getting a little money back from your insurer!