You’re in the market for car insurance, and of course you want to get the best possible rate. Monthly premiums vary by insurance company, so it’s important to shop around. But insurance is complicated, and how much coverage will cost depends on several things. So, what factors affect car insurance rates the most? Let’s explore major influences...
Believe it or not, insurance premiums vary from city to city and state to state. Think about the process of researching car insurance quotes. Insurers usually ask for your zip code. Why? There are a few reasons. First, if you live in a busy area, the odds of getting into an accident or having your vehicle stolen go way up. Metro areas have significantly more cars on the road and more major highways compared to their rural counterparts, creating more risk. Factoring in your zip code allows insurance companies to do their homework on things like accident frequency, theft, vandalism and more to understand the risk of insuring you in your area.
Driver age is a top consideration for insurance. It makes a lot of sense, too, if you think about it. We usually think of this in terms of insuring teenagers, but older drivers are affected too.
Young drivers—ages 16-25—are the highest risk group of drivers to insure. They engage in risky behavior behind the wheel (speeding, driving under the influence) and frequently get in accidents, and these factors affect car insurance rates by increasing premiums. As a general rule, most insurers will gradually reduce rates after age 25, but it doesn’t hurt to verify with your provider. On the opposite end of the spectrum, senior drivers are often liabilities on the road, too. That’s because their vision has diminished and their reflexes have slowed with age, so accidents become more frequent.
Because of the risks involved, both the youngest and oldest drivers on the road pay the highest insurance rates.
You wouldn’t think a wedding ring would affect care insurance rates, but it does. Married drivers get in fewer accidents than single drivers (perhaps due to more cautious driving to protect their families), which lowers insurance premiums. The National Institute of Health indicates that single drivers are 2X more likely to get into accidents. So if you’re married, expect to secure rates that are 5-15% lower than your single friends.
Another perk of being a married driver? Insurance companies frequently reward loyalty. So, if you also get homeowners insurance or own more than one vehicle as a couple, you might save with multi-car or multi-policy discounts.
Men and women aren’t created equal in the world of car insurance. Actually, men are usually at a disadvantage when it comes to getting the best rates. Insurance companies base the rate difference on accident statistics, which show that men are more likely to wreck than women (especially male teens vs. female teens).
The Insurance Institute for Highway Safety (IIHS) points to both frequency and behavior to explain the rate differences between the sexes. For one, men typically drive more than women, increasing their risk. But they also put themselves in dangerous positions by driving drunk, speeding and not wearing seatbelts. Luckily, by about age 30, these dangerous behaviors decrease, so men and women pay similar rates.
If you want to secure the best auto insurance rates, maintaining a clean driving record is essential. Not only will you get better rates, but you might even be able to get safe driving discounts too.
On the flip side, a stained driving record can have consequences for your auto policy. Accidents, citations, DUIs and previous claims can all make your rates spike, and sometimes even disqualify you from coverage. Insurance companies consider your driving record to learn the likelihood that you’ll make additional claims (adding to liability). A few marks on your driving history aren’t disastrous, and citations and non-injury accidents only affect rates for about three years. DUIs, however, can influence insurance premiums and eligibility for up to 10 years—sometimes resulting in 100% rate increases or a total loss in coverage.
What you drive is just as important as how you drive. Every vehicle is different, and auto insurance companies account for this. Looking at reported data, insurance companies consider how often your vehicle make and model is involved in accidents, the monetary value of the car, average repair costs and safety ratings to help determine appropriate premiums.
As a general rule, large vehicles like trucks, SUVs and vans are better able to withstand the impact of an accident, making them safer than coupes or sedans. Even though these cars are more expensive, the safety factor might get you better insurance rates.
How old your car is affects insurance because of potential repair costs after an accident. Sure, new and older cars are sometimes comparable when it comes to basic repair costs, but major accidents are different.
When insuring an older vehicle, your insurance company weighs the odds that the vehicle will be totaled in the event of an accident (i.e. damaged beyond the overall value of the car). In this case, you’d probably just discard it instead of filing a claim for a repair. New cars, however, are worth more and considered more expensive to replace, so they aren’t totaled in accidents as often. These vehicles can be repaired, so insurance policies carry higher collision overage, resulting in a higher premium.
Controversial for sure, credit scores do indeed influence your auto insurance premium in most states. While it might leave you scratching your head, car insurance companies keep an eye on credit history because lower scores have historically been linked to greater insurance risk.
Drivers with credit scores below 600 are more likely to file claims, commit fraud or default on premium payments, so insurance companies have safeguards in place. If your credit score is within a high-risk range, expect to pay increased premiums and/or pay a six- or 12-month premium upfront to get coverage.
Get the Best Auto Insurance for Your Needs
Age. Location. Sex. While you can’t control what factors affect care insurance rates, there are steps to take to get solid coverage. Engaging in safe driving habits and maintaining a healthy credit history are a few of the things you can actively do to secure affordable car insurance to meet your needs.
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