Factors That Affect Car Insurance Rates [2024]
Here are the most important factors that insurance companies use when determining your auto insurance rates.
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Scott W. Johnson
Licensed Insurance Agent
Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his...
Licensed Insurance Agent
UPDATED: Nov 12, 2024
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Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Nov 12, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
Are you looking for ways to lower your car insurance rates? Did you know that your age, driving record, and even where you live can affect your rates?
This article will take a closer look at the top 12 factors that impact car insurance rates and how they can affect your rates.
We will also provide tips for lowering your rates and address some frequently asked questions about car insurance.
- Car insurance rates are generally based on risk. The higher the risk, the higher the rates
- Your age, car make and model, driving record, and location affect your rates
- There are ways to lower your rates, including reducing your mileage and maintaining a good credit history
12 Main Factors That Affect the Cost of Car Insurance
If you’re shopping for car insurance coverage, you might wonder what factors affect auto insurance rates. While each company has its own method for calculating rates, there are some common factors that determine car insurance rates.
State Requirements
State requirements for auto insurance vary widely, and these requirements can significantly impact your rates.
For example, states that require medical payments (MedPay) or personal injury protection (PIP) tend to have higher rates than states that don’t.
States with higher minimum liability coverage requirements also tend to have higher rates. Learn how to find car insurance coverage requirements in your state.
Age
Younger drivers are viewed as a higher risk than older drivers, so they pay higher rates. There are a few reasons for this, including the increased chance of getting into an accident due to their lack of experience behind the wheel.
They’re also more likely to speed or drive while intoxicated. Younger drivers are also typically less financially stable than older drivers, which means they’re less able to pay for damages if they get into an accident.
Car Insurance Monthly Rates by Age, Gender, and Coverage Level
Insurance Company Minimum Coverage Full Coverage
Geico 60% 100%
Progressive 65% 110%
State Farm 70% 120%
Allstate 75% 130%
USAA 55% 95%
AAA 72% 125%
Nationwide 68% 115%
Farmers 73% 135%
Liberty Mutual 78% 140%
Travelers 70% 125%
Find out the average car insurance rates by age and gender here.
Years of Driving Experience
The more years of driving experience you have, the less likely you will get into an accident. Thus, inexperienced drivers, such as teenagers or those who have just gotten their license, often have to pay higher rates.
On the other hand, experienced drivers may be able to get lower rates. If you are a new driver, you can work on improving your driving record to lower your rates in the future.
Gender
Despite some states banning the use of gender to determine car insurance rates, many companies still use it. This is because, statistically, male drivers are more likely to engage in risky driving behavior and file claims than female drivers.
As a result, men often have higher auto insurance rates. However, remember that each driver is evaluated on individual factors, not just gender.
Driving Record
A clean driving record indicates that you are a safe driver, while a history of accidents or moving violations tells insurers that you are more likely to file a claim. As a result, drivers with spotless records can often get cheaper rates.
Insurance companies also consider the type of offenses that you have committed. For example, speeding tickets generally impact your rates less than accidents or DUI convictions.
If you have recently been involved in an accident or received a ticket, you can expect your rates to go up. However, if you prove to the insurance company that you are a safe driver, you may get a discount on your rates. To learn more, see our article on safe driving insurance discounts.
High-Risk Violations
High-risk driving violations, such as DUIs or reckless driving, are one of the major causes of higher insurance rates. Insurance companies consider these types of violations to be a red flag for risky behavior and charge higher rates for drivers with these violations on their records.
Full Coverage Car Insurance Monthly Rates by Driving Record & Provider
Insurance Company Clean Record One Ticket One DUI One Accident
Allstate $166 $195 $303 $237
American Family $116 $131 $177 $167
Farmers $140 $176 $191 $199
Liberty Mutual $177 $217 $325 $237
Nationwide $120 $145 $252 $165
Progressive $109 $143 $147 $190
State Farm $91 $102 $124 $107
Travelers $107 $148 $230 $157
U.S. Average $123 $152 $218 $177
A high-risk violation can sometimes result in your insurance cancellation or non-renewal. So always drive safely and follow the rules of the road to avoid these types of violations and potentially save on car insurance.
Credit Score
Insurers typically use what’s called a “credit-based insurance score,” which is a risk score that’s similar to a credit score.
A study by the Insurance Information Institute (III) found that people with poor credit are more likely to file an insurance claim. Why is my car insurance score so low? Consequently, they face elevated insurance premiums. Nevertheless, it’s crucial to recognize that not all insurance providers incorporate credit scores in the calculation of rates
Auto Insurance Monthly Rates by Credit Score & Provider
Insurance Company Poor Credit Fair Credit Good Credit
Allstate $296 $197 $166
American Family $203 $136 $115
Farmers $269 $160 $139
Geico $148 $100 $82
Liberty Mutual $355 $226 $177
Nationwide $166 $133 $120
Progressive $206 $138 $109
State Farm $200 $118 $91
Travelers $194 $128 $107
USAA $129 $76 $63
U.S. Average $226 $148 $123
If you’re concerned about your credit history affecting your auto insurance rates, you can always shop around for quotes from different companies. And, of course, you can always work on improving your credit score.
Location
Where you live and park your car also plays a role in determining car insurance rates. Areas with high crime or a higher number of accidents tend to have higher insurance rates because there is a greater likelihood of incidents such as theft or collisions. (For more information, read our “Do car accidents where you live affect car insurance rates?“).
On the other hand, living in a rural area with low crime and fewer accidents can lead to lower auto insurance rates.
Commercial Car Insurance Monthly Rates by Provider and State
Company California Florida Georgia Illinois Michigan New York North Carolina Ohio Pennsylvania Texas
$199 $183 $165 $176 $406 $147 $169 $120 $148 $201
$138 $188 $124 $114 $204 $137 $82 $62 $108 $176
$167 $227 $149 $117 $335 $165 $99 $96 $131 $137
$101 $89 $61 $47 $99 $78 $69 $59 $68 $105
$216 $161 $263 $76 $424 $200 $82 $106 $219 $178
$142 $103 $152 $93 $257 $164 $111 $114 $86 $154
$132 $153 $115 $89 $152 $96 $32 $85 $148 $121
$108 $99 $107 $64 $209 $137 $77 $70 $76 $90
$122 $166 $110 $87 $183 $175 $99 $63 $75 $101
$74 $47 $71 $62 $107 $85 $44 $41 $57 $62
Additionally, where you park your car at night may also affect your rates. Parking in a garage or secure lot tends to be less risky than parking on the street. Learn more about garage location and insurance.
Read more:
- Does an accident in a parking lot affect car insurance rates?
- Does having a garage lower the cost of car insurance?
Marital Status
Car insurance companies often use marital status as a factor when determining rates. The thinking behind this is that married couples are more stable and responsible than single people and thus pose a lower risk.
As a result, married drivers often receive lower rates than their single counterparts. However, this discount is not always applied automatically. Sometimes, drivers must provide proof of marriage before taking advantage of the lower rates.
Average-Monthly-Auto-Insurance-Rates-by-Marital-Status-2022
Insurance Company Single Average Monthly Auto Insurance Rates Married Average Monthly Auto Insurance Rates
$291.00 $125.00
$208 $165.00
$250 $176.00
$193 $177.00
$353 $177.00
$232 $189.00
$227 $191
$204 $206
$201 $254.00
$171.00 $308.00
Average $233 $197
In addition, some insurers offer further discounts to married couples who have been together for a long time, which indicates stability and commitment. Ultimately, while marital status is not the only factor that auto insurance companies consider, it can significantly impact rates.
For more information, see our article on why car insurance rates are higher for singles vs. married couples.
Annual Mileage
Drivers who drive less each year are considered a lower risk than those who put a lot of miles on their cars. This is because the less you drive, the less chance you have of getting a traffic violation or into an accident.
If you can prove that you don’t put many miles on your car each year, such as through documentation or a tracking device, you may get lower rates from your insurer.
Insurance History
Insurance companies also look at your past insurance history when determining rates. Your coverage history includes any lapses in coverage or past claims you have filed.
A clean insurance history indicates to insurers that you are a responsible and safe driver, which can lead to lower rates. On the other hand, a history of not maintaining continuous coverage or filing multiple claims could result in higher rates.
Vehicle Make and Model
The make and model of your car can have a big impact on your insurance rates. For instance, more expensive or rare cars tend to cost more to insure because they’re more costly to repair or replace.
Sports and luxury vehicles also tend to cost more to insure because they’re often driven at high speeds and are attractive targets for theft.
Insurance companies will consider your car’s safety features when setting rates. Cars with advanced safety features like air bags and antilock brakes typically get lower rates because they’re less likely to be involved in an accident.
So if you’re looking for ways to save on auto insurance, consider choosing a make and model known for being safe and reliable. You may not get the flashy car you want, but you’ll probably pay less in the long run.
Read more:
- Compare Car Insurance Rates by Vehicle Make and Model
- Does the age of a car affect car insurance rates?
- What makes car insurance more expensive?
- Why is my car insurance so expensive?
- Will car insurance companies price match?
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How Time Affects Car Insurance Rates
The effects of time on car insurance rates are varied and complex. Generally speaking, as years go by, rates tend to increase.
According to the Labor Bureau Statistics, rates for auto insurance in the United States rose by 7% between 2010 and 2020.
Factors such as population growth, increased driver density in certain areas, and more cars on the road have contributed to this increase.
Tips for Lowering Your Car Insurance Rates
When it comes to car insurance, you can do a few things to keep your rates as low as possible.
- Shop around and compare rates. Different insurance companies have varying methods for determining rates and may offer discounts. It can be helpful to shop around for car insurance and compare rates from multiple insurers to find the best deal for you.
- Maintain a good driving record. A clean driving record shows insurers that you are a responsible and safe driver, which can lead to lower rates.
- Consider raising your deductibles. Opting for a higher deductible on your insurance can lower your monthly rates. However, ensure you have enough funds to cover the deductible in case of an accident.
- Drive a safe car. If you drive a vehicle with a good safety rating, you will pay less for auto insurance. So, think twice before buying that sports car. It might end up costing you more in insurance than it’s worth.
Case Studies: Factors That Affect Car Insurance Rates
Case Study 1: State Requirements and Insurance Rates
John, a driver from State A, and Sarah, a driver from State B, provide an interesting comparison of how state requirements impact car insurance rates. State A requires additional coverage such as medical payments (MedPay) and personal injury protection (PIP), resulting in higher insurance rates for John. In contrast, State B has lower minimum liability coverage requirements, leading to lower rates for Sarah.
Case Study 2: Age and Insurance Rates
Mark, a 20-year-old driver, and Sarah, a 35-year-old driver, illustrate the influence of age on car insurance rates. Mark, being a younger driver, is considered higher risk due to limited experience. As a result, he pays significantly higher premiums compared to Sarah, who benefits from her years of driving experience and a more established driving record.
Case Study 3: Driving Record’s Impact on Rates
John, with a clean driving record and no accidents or violations, enjoys lower car insurance rates. On the other hand, Sarah, who has had two at-fault accidents in the past three years, experiences higher premiums due to the increased risk she poses to insurers. John’s safe driving history reflects lower risk, resulting in more affordable coverage.
Case Study 4: Credit Score and Insurance Rates
In this case study, we compare John’s and Sarah’s car insurance rates based on their credit scores. John, with a good credit score, benefits from lower insurance rates as he is perceived as a lower risk to insurers. Sarah, with a poor credit score, faces higher premiums as insurers associate her credit history with a higher likelihood of filing claims.
Case Study 5: Location’s Impact on Insurance Rates
John, living in a bustling city with high crime rates and traffic congestion, experiences higher car insurance rates. In contrast, Sarah resides in a rural area with lower crime rates and fewer accidents, leading to lower premiums. Additionally, parking her car in a secure garage further reduces Sarah’s insurance costs compared to John, who parks on the street.
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Final Words on Factors that Affect Car Insurance Rates
Many factors affect car insurance rates. Knowing and understanding these factors can help you make informed decisions to potentially lower your rates.
However, remember that auto insurance rates can change over time. Therefore, it is always wise to review and compare rates periodically.
In the end, maintaining a safe driving record and being a responsible driver can significantly impact your car insurance rates.
Furthermore, always follow state requirements and laws to avoid high-risk violations that may greatly increase your rates.
Frequently Asked Questions
What are the factors that affect car insurance rates?
Several factors can influence car insurance rates. Some of the main ones include:
- Driving record: Your past driving history, including accidents and traffic violations, can impact your insurance rates.
- Age and gender: Younger and less experienced drivers generally face higher premiums. Additionally, statistics indicate that males tend to have more accidents than females, which can affect rates.
- Vehicle type: The make, model, and year of your car can impact insurance rates. More expensive or high-performance vehicles may result in higher premiums.
- Location: Where you live can play a role in determining rates. Urban areas with higher traffic and crime rates often have higher premiums compared to rural areas.
- Credit history: Insurers may consider your credit history as a factor. Those with poor credit may face higher rates.
- Coverage and deductibles: The level of coverage you choose and the deductibles you set can affect the cost of your premiums.
Does my driving record really affect my car insurance rates?
Yes, your driving record plays a significant role in determining your car insurance rates. Insurance companies assess your risk level based on your past driving history, including accidents, traffic violations, and claims. If you have a clean driving record with no accidents or tickets, you are generally considered a lower risk and may be eligible for lower premiums. On the other hand, if you have a history of accidents or traffic violations, insurers may perceive you as a higher risk and charge higher rates accordingly.
How does my age and gender impact car insurance rates?
Age and gender can influence car insurance rates. Younger drivers, especially those under 25, tend to have higher rates due to their lack of driving experience and higher accident rates among this age group. As drivers gain more experience and reach certain age milestones, such as turning 25, they may see a decrease in their premiums. Additionally, statistics show that males tend to have more accidents than females, which can result in higher rates for male drivers.
Why does the type of vehicle I drive affect my car insurance rates?
The type of vehicle you drive can impact your car insurance rates for a few reasons. Insurers consider factors such as the make, model, and year of your car to determine the cost of potential repairs or replacement in case of an accident or theft. More expensive vehicles generally cost more to insure because the repair or replacement costs are higher. Similarly, high-performance or sports cars are associated with a greater risk of accidents or reckless driving, leading to higher premiums compared to sedans or minivans.
How does my location affect car insurance rates?
Your location plays a role in determining car insurance rates. Insurance companies consider factors such as traffic density, crime rates, and the likelihood of accidents or thefts in your area. Urban areas with higher population densities and more traffic congestion tend to have higher rates compared to rural areas with less traffic. Similarly, if you live in an area with a higher crime rate, your premiums may be higher due to the increased risk of theft or vandalism.
Free Car Insurance Comparison
Enter your ZIP code below to view companies that have cheap car insurance rates.
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Scott W. Johnson
Licensed Insurance Agent
Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.