The biggest factors that affect car insurance rates are state coverage requirements, age, and the car’s make and model. The more coverage you’re required to buy in your state and the more valuable your vehicle is, the more you’ll pay for car insurance. Teen drivers also tend to pay more in premiums than older, more experienced drivers.
10 Factors That Affect Car Insurance Rates
- State Requirements
- Car Make and Model
- High-Risk Violations
- Yearly Mileage
- Credit History
- Driving Record
- Zip Code
- Marital Status
Some of the factors that affect car insurance rates are within your control, such as your credit history and whether you’ve ever been convicted of drunk driving. Other factors are at least largely out of your control, like your city’s population density and your age.
Factors That Affect Car Insurance Rates the Most
1. State requirements
Your state of residence is one of the factors that affect car insurance rates the most, as premiums for state-minimum coverage vary by up to 318%. Each state has its own laws about car insurance, with different minimums and different categories of required coverage. The more coverage you’re required to buy, the more expensive your policy is likely to be.
Car insurance rates can vary by up to 367% based on age. Young drivers pay more for car insurance, since they are considered to be less experienced and more likely to get into an accident. After age 25, a driver’s insurance rates start to decrease.
On the other end of the spectrum, senior drivers are often charged more after they pass the age of 65. Not only are older drivers more likely to get into a car accident than younger adults, but they’re also more likely to be injured in a collision.
3. Car make and model
Some vehicles are cheaper to insure than others. For example, a truck is 3% cheaper to insure than a sedan, on average.
Car insurance companies prefer to insure safe vehicles, as they’re less likely to lead to expensive claims. So a car with high safety ratings can get you a bit of a discount. On the other hand, some vehicles are statistically more likely to be stolen, including the Honda Accord and any full-size Ford pickup. They tend to be more expensive to insure as a result.
4. High-risk violations
Traffic violations and car accidents are factors that can increase the cost of car insurance coverage by anywhere from 20% to 200%, compared to what you were originally paying. The amount that your costs increase depends on a couple things: the severity of your violation and whether you’ve been convicted in the past. Multiple infractions make you a high-risk customer for your insurance company. Some companies use traffic violations as a factor in car insurance pricing for only three years, while others keep them on your record for longer. It’s worth shopping around again three years after your latest incident, in case you can get a better deal somewhere else.
5. Yearly mileage
Your annual mileage is a factor that can influence your car insurance rates because the more you’re on the road, the more likely it is that you’ll be in an accident. As a result, car insurance companies charge you more if you have a long daily commute. If you only drive for leisure, you’re likely to pay less.
6. Credit history
Your credit history is an important factor insurers use when calculating premiums in most states, considering that drivers with a poor credit score pay an average of 71% more than drivers with good credit. But if you live in California, Massachusetts, or Hawaii, you’re in luck; they don’t allow car insurance companies to take your credit score into account. On the other hand, if you have great credit, you can save a little money on car insurance in the other 47 states.
7. Driving record
Your driving record is a factor that influences your insurance costs, for better or worse. If you have a clean record, you might end up paying 40% less than drivers with a poor record, thanks in part to the availability of safe-driver discounts.
But you’re likely to be charged more if you make a lot of insurance claims, whether or not the accidents are your fault. Even your first accident might raise your rates for the next 3-5 years.
The number of years you’ve been on the road matters, too. For example, new drivers over the age of 25 tend to pay more than their peers who’ve been behind the wheel for years.
8. Zip code
The area you live in is an important factor for insurers to consider because it affects the likelihood of your vehicle being damaged. For example, your zip code can cause your insurance rates to fluctuate by up to 91% in California.
Depending on where you work and park your car at night, you might get a small discount (or upcharge) for your street address. Big cities tend to have higher crime rates as well as crowded roads where accidents are commonplace. Rural roads are less congested, and rural areas have less property crime.
9. Marital status
Your marital status is an important factor when it comes to your car insurance premiums because married drivers are statistically the least risky drivers to insure, with up to 50% fewer accidents compared to all other drivers. Let your car insurance company know if you get married, so your wallet can benefit from the positive statistics.
Gender is a factor that can influence car insurance rates in some states. Men around the age of 45 pay an average of 6% less for car insurance than their female counterparts, for example. On the other hand, teenage male drivers tend to pay the most for car insurance overall. Although, the gender gap evens out for drivers in their 30’s.
How Time Affects Car Insurance Rates
Car insurance rates tend to rise over time, due to factors such as population growth, increasing healthcare costs, and technological advancements that makes vehicles more expensive to repair. For example, the cost of the average car insurance policy has gone up by about 59% from 2009 to 2019.
Source: Insurance Information Institute
Tips For Lowering Your Car Insurance
- Shop around for a new policy
- Lower your coverage
- Raise your deductible
- Check for discounts
- Reduce your mileage
These are some of the quickest and most efficient ways to lower your rate if you’re struggling to afford your coverage. As a long-term solution, you can try to fix other factors like the type of car you drive, your credit score, or your driving record. To learn more, check out WalletHub’s guide on how to lower your car insurance premium.