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Factors That Affect Your Car Insurance Rates

View of car in driveway for car insurance
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Understanding the factors that affect your car insurance rates can be puzzling. This is because automotive insurance companies use different factors to determine your risk. The lower your estimated risk, the better your automotive insurance premiums.

Reducing or eliminating certain coverages to minimize your premiums is tempting as a driver. However, even without limited coverage, your insurer will still charge you higher premiums if you are perceived as a risky driver. Shopping around and comparing insurance rates is essential to ensure you get value for your money.

What Factors Affect Your Car Insurance Rates?

Insurers use specific data and information to determine your automotive insurance rates. You can prepare by taking note of these factors as you shop to get the best deal. Some of the factors your insurer might use to determine your premiums include the following:

Credit Score

Although it is commonly overlooked, your credit score plays a major role in determining your insurance rates. Most drivers consider their credit score only when purchasing a vehicle, while it is a major influencing factor in their insurance premiums.

Insurers use your credit score to predict future behavior and assess the risk of a claim. Statistically, drivers with poor credit are more likely to file a claim, and when they do, it is generally more expensive than a claim from a driver with good credit.

Based on research, the difference in premiums between drivers with poor credit and those with good credit can go as high as $1,500 annually. In turn, insurers factor in the added risk by charging higher premiums.


Your location is also key in determining your motor vehicle insurance rates. Car insurance rates can vary by as much as 400% depending on your state, city, and ZIP code. If you live in a state which requires personal injury protection or a no-fault state, your premiums could also be significantly higher. Some states, such as Michigan and California, do not allow insurance companies to use your ZIP code to determine insurance rates.

However, details of your location furnish the insurance company with information such as the population size, cases of thefts, and frequency of accidents. Pricing insurance rates according to location allows insurance companies to adjust their rates for external risk factors. Some states with the highest insurance premiums based on location include Florida, Michigan, and New York, while Iowa and Vermont pay the least.

In addition, your location also provides information about weather conditions. Drivers who live in areas with severe weather conditions are more likely to pay higher premiums. For instance, according to the National Insurance Crime Bureau, Hurricane Harvey damaged over 400,000 insured cars.

Age and Gender

During your lifetime, you will likely see spikes in auto insurance rates based on age and, in some states, gender. According to the IIHS, teen drivers are almost 400% more likely to get into a collision than drivers aged 20 and older. Teen drivers are viewed as inexperienced and more likely to take risks. Older drivers aged 70 and up are also more likely to get into accidents than middle-aged drivers. This is attributed to slower reaction time, poor vision, disease, and other factors.

Gender also plays a significant role in determining your premiums. Men are likely to pay more than women in premiums, especially in the ‘drivers under 25’ bracket. The IIHS estimates that male drivers are more likely not to wear their seatbelts, drive at higher speeds, or drive while impaired. Statistics show that between 1975 and 2020, male drivers caused double the number of car accident fatalities compared to women. While the gap is slowly narrowing, the trend is attributed to car safety features.

Some states do not use gender to determine car insurance premiums, such as Hawaii, California, Michigan, Pennsylvania, and North Carolina.

Your Driving Record

Your driving record is also a major determinant in car insurance rates. Depending on your state, insurers use your driving history over the last three to five years to determine premiums. If you have caused an accident or committed an offense resulting in traffic tickets, you should expect to pay more in car insurance rates.

Drivers with an extensive history of at-fault accidents, DUI convictions, or traffic violations might find it difficult to get coverage. Such drivers who do not get insurance often resort to non-standard coverage or buying car insurance from the state’s assigned risk pool.

Fortunately, there is a reprieve. You can work to improve your driving history by practicing safe driving habits, avoiding traffic transgressions, or taking additional driving courses. While it may take a few years, the longer you drive without violations, the more your chances of getting better insurance rates.

Your Auto Insurance History

First-time drivers pay more in insurance rates because insurers do not have much data or information to evaluate their risk levels. Coverage gaps in your insurance history will likely drive up your premiums. A coverage gap is a duration for which you do not have insurance.

For instance, if your cover was canceled due to non-payment or you did not have a vehicle. Insurance deems a coverage gap as a high-risk indicator and charges higher premiums. To avoid gaps in your coverage, consider taking a non-owner insurance policy to maintain a continuous policy.

Other Factors That Determine Insurance Pricing

  • Homeownership
  • Education
  • Marital status
  • Occupation
  • Your car make and model
  • Car insurance deductible
  • Annual mileage
  • Driving habits
  • How much you drive.

View of a car insurance policy

(Image via Unsplash)

How To Get Cheaper Insurance

To get cheaper insurance rates, keep a clean driving record or buy a vehicle in a lower insurance bracket. Drivers living in safer areas are more likely to get better insurance rates.

We recommend shopping and comparing rates between different insurers. Where you buy your policy can make a significant difference, and tools such as comparison websites make it easier to get the best rates.

You can also ask your insurer about discounts. Some insurers will give you better rates if you insure several vehicles or bundle your insurance by getting homeowners coverage with the same company.

Another way to reduce your premiums is to opt for a higher deductible. Remember that a higher deductible might lead to lower premiums, but you will have to pay more out of pocket in case of an accident. Get in touch with your insurance company to find out how to lower your premiums or use a comparison website to find the cheapest insurance rates.

This article is written by Naphtal. He is the brand manager at Legal Giant and a highly experienced content writer. Legal Giant is a leading lawyer referral site with clients all over the U.S. When Naphtal is not working, he enjoys spending time with his son and exploring nature.
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