If a car is bought with cash (paid for in full) or if it is financed could be a rating factor that is applied to insurance carrier's rating algorithm, but we do not know of any carrier that uses that question for that purpose. It is used to determined the type of coverage to purchase.
The rating factors that insurers normally consider include your age, the kind of vehicle you drive, your claims history, your driving record and in some states your credit history. Here is also a more comprehensive list of factors that various insurance companies may take into account when determining rates.
General factors:
- Your age
- Marital Status
- Gender
Factors you CAN change that impact your auto insurance rates:
- Accident claims
- Geography
- Driving violations
- Your vehicle
- Credit rating
- Occupation
Other potential factors that go into determining premiums:
- Years of driving experience
- Miles driven per year
- Distance to work
- Business use of the vehicle
- Whether or not you currently have auto insurance
- Theft protection devices (often results in discounts and doesn't affect rating, but it affects the price)
- Multiple cars and drivers (another opportunity for discounts and doesn't affect rating, but it affects the price)
The question of if a vehicle is owned fully or financed may be asked by an insurance company when quoting you a rate because some insurance providers have filed with the state that Physical Damage coverage is required on a financed or leased car. Typically, it is the lien holder that requires physical damage, but some carriers have filed rates with the state that required physical damage on financed or leased vehicles. Esurance is one example of an insurance company that has this requirement.
Many insurance companies thus ask if you have a lien holder on the car or have paid for it in full due to how they have filed their rates and/or to make sure that if the car is financed you carry Physical Damage since it is most likely required by your lien holder. It typically is not a rating factor that will increase your rates but just information an insurer needs to properly quote you rates on the type of coverage you will need on the vehicle.
Collision and Comprehensive are the type of physical damage coverage that is usually required if your vehicle is financed or leased. Lien holders normally require these coverages on a vehicle to protect their interest or collateral, the vehicle.
You can get affordable auto insurance quotes here with us for a car with a loan or lease or one that you own in the free and clear.
|