Car insurance is a financial safety net that provides protection in the event of accidents, theft, and other unforeseen circumstances. However, the cost of car insurance can vary significantly from one person to another. In this comprehensive guide, we’ll explore the multitude of factors that influence car insurance rates, helping you gain a deeper understanding of how insurance companies calculate the premiums you pay.

Table of Contents

• Understanding Car Insurance Rates
• Personal Factors
• Vehicle-Related Factors
• Location and Geography
• Coverage Levels and Deductibles
• Credit Score and Financial History
• Managing Your Credit for Lower Rates
• Discounts and Incentives
• Demographic Factors
• Life Changes and Adjusting Rates
• Reasons Your Car Insurance Rate Changes
• Special Considerations and Exceptions
• Comparing Car Insurance Quotes

Understanding Car Insurance Rates

When you buy or lease a car, it’s important to protect that investment. Getting auto insurance can offer reassurance in case you’re involved in an accident or the vehicle is stolen, vandalized or damaged by a natural disaster. Instead of paying out-of-pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage.

Car insurance is effectively a contract between yourself and an insurance company in which you agree to pay premiums in exchange for protection against financial losses stemming from an accident or other damage to the vehicle. Auto insurance can offer coverage for:

• Vehicle damages, including your car or another driver’s vehicle
• Property damage or bodily injuries caused by an accident
• Medical bills and/or funeral expenses associated with injuries sustained in an accident

The exact details of what’s covered depend on the minimum coverage requirements for your state and any additional coverage options you choose to include. Every state except New Hampshire requires drivers to have a minimum amount of bodily injury liability coverage and property damage liability coverage.

There are two primary costs associated with purchasing car insurance: premiums and deductibles.

Auto insurance premiums vary depending on age, gender, years of driving experience, accident and moving violation history, and other factors. Again, most states mandate a minimum amount of auto insurance. That minimum varies by state, but many people purchase additional insurance to protect themselves further.

Additionally, if you’re financing a car, the lender may stipulate that you carry certain types of car insurance. For instance, you may need gap insurance if you’re purchasing an expensive vehicle that will likely depreciate very quickly once you drive it off the lot. Gap insurance can help to pay off the difference between the vehicle’s value and what you still owe on it if you’re involved in an accident.

A poor driving record or the desire for complete coverage will lead to higher premiums. However, you can reduce your premiums by agreeing to take on more risk, which means increasing your deductible.

Your deductible is the amount you have to pay when filing a claim before the insurance company will pay out anything to you for damages. So, for example, your policy may have a $500 or $1000 deductible. Agreeing to a higher deductible can result in a lower premium but you’d have to be reasonably sure you could cover the higher amount if you need to file a claim.

Why Do Car Insurance Rates Vary?

In exchange for paying a premium, the insurance company agrees to pay your losses as outlined in your policy. Policies are priced individually to let you customize coverage amounts to suit your exact needs and budget. Policy terms are usually six- or 12-month timeframes and are renewable. An insurer will notify a customer when it’s time to renew the policy and pay another premium.

Regardless of whether they mandate having a minimum amount of auto insurance, nearly every state requires car owners to carry bodily injury liability, which covers costs associated with injuries or death that you or another driver causes while driving your car. They may also require property damage liability, which reimburses others for damage that you or another driver operating your car causes to another vehicle or other property.

A number of states go a step further, mandating car owners carry medical payments or personal injury protection (PIP), which reimburses medical expenses for injuries sustained by you or your passengers. It will also cover lost wages and other related expenses.

Uninsured motorist coverage reimburses you when an accident is caused by a driver who does not have auto insurance. Underinsured motorist coverage is designed to protect you when you’re involved in an accident with a driver who has some insurance but not enough to cover the full cost of a claim.

The Role of Actuaries in Rate Determination

An actuarial rate is an estimate of the expected value of the future losses of an insurance company. Usually, the estimation is predicted based on historical data and consideration of risk involved. Accurate actuarial rates help protect insurance companies against the risk of severe underwriting losses that could lead to insolvency.

Actuarial rates are expressed as a price per unit of insurance for each exposure unit, which is a unit of liability or property with similar characteristics. For instance, in property and casualty insurance markets, the exposure unit is typically equal to $100 of property value, and liability is measured in $1,000 units. Life insurance also has exposure units of $1,000. The insurance premium is the rate multiplied by the number of units of protection that are purchased.

Generally, during a review of a rate, it’s first determined whether the actuarial rates need to be adjusted. A projected loss experience gives the insurance companies the ability to determine the minimum premium required to cover expected losses.

The primary purpose of actuarial ratemaking is to determine the lowest premium that meets all of the required objectives of an insurance company. A successful actuarial rate must cover losses and expenses plus earn a profit. But insurance companies must also offer competitive premiums for a given coverage. In addition, states have laws that regulate what insurance companies can charge, and thus, both business and regulatory pressures are taken into consideration during the ratemaking process.

A major component of the ratemaking process is to consider every factor that might impact future losses and set a premium pricing structure that offers lower premiums to low-risk groups and higher premiums to high-risk groups. By offering lower premiums to low-risk groups, an insurance company can attract those individuals to buy its insurance policies, lowering its own losses and expenses, while increasing the losses and expenses for competing insurance companies (who must then vie for business from higher-risk pools of individuals). Insurance companies spend money on actuarial studies in order to ensure they’re considering every factor that can reliably predict future losses.

Actuaries focus on performing statistical analyses of past losses, based on specific variables of the insured. Variables that yield the best forecasts are used to set premiums. However, in some cases, the historical analysis does not provide sufficient statistical justification for setting a rate, such as for earthquake insurance. In such cases, catastrophe modeling is sometimes used, but with less success.

Personal Factors

Here are five all-about-you factors that can affect your car insurance premium:

• 1. Your driving profile.

Such factors as the number of miles you drive annually and your accident and ticket history are major elements in setting your insurance rate. The less you drive, the less risk of an accident and a claim. Safer driving — meaning a history free of accidents and moving violations — also points to someone who’s less likely to file a claim.

• 2. The car you drive.

Car insurance premiums are based in part on the car’s sticker price, the cost to repair it, its overall safety record and the likelihood of theft, according to the Insurance Information Institute. The cost of fixing a brand-new $225,000 2010 Ferrari 458 Italia is going to be a lot more than the repair costs for a used $17,000 Nissan Altima. The premium will reflect this.

• 3. Your essential personal information, including your age, occupation and where you live.

Each of these things factors into the process of setting your insurance rate because insurance companies base their premiums on actuarial information about drivers. They look for patterns of claims activity among people like you. A teenage boy is likely to have a higher insurance rate than a middle-aged driver, because statistically, teenage boys have more accidents than do 40-year-olds.

Your occupation can play a role if it affects how much driving you do. Work that involves lots of miles on the road, such as an outside sales job, can affect rates. From the insurance company’s point of view, the more miles you drive means more risk of an accident.

Insurance companies also look at where you live. They track local trends of accidents, car thefts, lawsuits and the cost of medical care and car repair, according to the Insurance Information Institute.

• 4. The coverage you choose.

The more coverage you elect and the lower the deductible you set, the more you’ll pay.

• 5. Your credit score.

Some insurance companies use credit scores as a factor in setting rates. This practice is coming under attack, however, with seven states in 2010 passing regulations regarding the use of credit information in insurance. In 2011, several other state legislatures introduced bills to regulate the practice.

Actuarial studies show that how a person manages his or her financial affairs is an accurate predictor of the number and size of insurance claims he or she might file, according to the Insurance Information Institute.

Age

Age is a very significant rating factor, especially for young drivers. Between the most expensive insurance premiums — paid by teen drivers — and the most affordable — paid by 50-year-olds — is a cost gap of over $5,500 per year. Insurance companies view teen drivers as very risky and potentially expensive clients to insure. Data show that teen drivers drive more recklessly and get into more accidents than do drivers in any other age group.

Insurance provider	6-month premium — 16-year-old	6-month premium — 50-year-old
Allstate	$4,393	$930
Farmers	$4,013	$755
GEICO	$2,221	$549
Liberty Mutual	$5,268	$693
Nationwide	$2,518	$646
Progressive	$5,047	$712
State Farm	$2,040	$608
USAA	$2,114	$461
Average	$3,452	$669

Gender

Another lesser-known risk factor, gender primarily impacts rates for young drivers. On average, a male teen driver pays $754 more per year in auto insurance premiums than does a female teen driver. Again, this is because car insurance companies see young male drivers as more likely to take risks than their female counterparts. The relatively safe driving habits of young female drivers result in their earning lower rates than teenage male drivers, on average.

Gender and age group	6-Month premium
Female teen driver	$2,446
Male teen driver	$2,823

Vehicle-Related Factors

Your car’s make, model and safety features can all affect your insurance rate because of several factors.

• Cost of the car and repairs

The rate for insuring a luxury car like a Mercedes-Benz will normally be higher than the rate for a more affordable car like a Honda. Why? A higher-priced car typically costs more to repair or replace than a cheaper model does, says John Espenschied, owner of Insurance Brokers Group.

• Potential for injury or damage

Another rate-setting variable is a car make and model’s overall safety record, says Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry-backed nonprofit that helps consumers understand insurance issues.

“Insurers not only look at how safe a particular vehicle is to drive and how well it protects occupants but also how much potential damage it can inflict on another car,” she says.

If the model you drive is more likely to cause damage in an accident, your liability insurance premium may be higher. You can check a car’s safety rating on the Insurance Institute for Highway Safety’s website.

The good news is that if you have a car with safety features, such as antilock brakes, an anti-theft system or blind-spot indicators, you may be able to qualify for an auto insurance discount.

• Likelihood of theft

Auto insurance companies may charge you more if your vehicle’s make is among those that are stolen the most. The National Insurance Crime Bureau reports on the top 10 most stolen vehicle makes each year. In 2019, full-size Ford pickups, the Honda Civic and full-size Chevrolet pickups were the top three types of vehicles targeted by thieves.

Your mileage

Do you have a lengthy commute to and from work each day? If so, you might pay more for car insurance than someone who merely depends on a vehicle to run quick errands. That’s because more miles logged translates into more roadway risks, such as a car crash.

Location and Geography

Geographical Area in car insurance refers to the region or location where the insured vehicle is primarily used or registered. It is an important factor in determining the premium for car insurance as it can affect the likelihood of accidents or theft and the cost of repairs or replacement of the vehicle. Insurance companies often classify geographical areas into different zones based on factors such as population density, traffic congestion, crime rates, and natural disasters. The premium for car insurance can vary depending on the zone in which the vehicle is registered or primarily used.

For example, the average cost of car insurance in India varies significantly depending on multiple factors. Generally, basic third-party liability insurance for a small car can start at around Rs. 2,000 to Rs. 3,000 per year. However, comprehensive insurance, which provides more extensive coverage, for a mid-range car can range from Rs. 7,000 to Rs. 15,000 or more annually.

The exact premium depends on variables such as the type of vehicle, insurance provider, policy coverage, the policyholder’s age, driving history, and location. Luxury cars or high-performance vehicles typically incur higher premiums. Additionally, urban areas often have higher insurance costs due to increased traffic and greater associated risks. To find the most accurate cost, it’s crucial for individuals to compare quotes from different insurers and consider their specific circumstances.

In setting car insurance rates, insurance companies drill down to the ZIP code where your car will be parked the majority of the time.

Because of generally higher rates of accidents, theft and vandalism, car owners who live in urban areas might pay higher auto insurance premiums than their small-town or rural counterparts do, Worters says.

Here are some other location factors that may affect your auto insurance rates.

• How much auto insurance fraud occurs in your area
• Which kinds of severe weather, such as hailstorms and ice storms, hit your region (and how often)
• How much car repairs cost in your area

ZIP Code and Insurance Rates

Yes, ZIP codes do affect how much you pay for coverage. Your location is taken into account by insurance companies when setting your rate. When setting rates, insurers look at the claims history within a certain geographic area, which is why where you live has a pronounced impact on the auto insurance premium you pay.

In your particular ZIP code, factors that can drive rates higher include the number of:

• Vehicles stolen
• Claims for property stolen out of a car
• Fraudulent injury claims
• Reports of vandalism

Even something like damage caused by a tornado — anything that would generate an insurance claim – can drive rates higher.

However, many factors influence your auto insurance rates, in addition to where you live. Other variables that impact rates include:

• The make and model of the vehicle you drive
• How the car performs in collisions
• How and when you use the car
• Whether you have a clean driving record
• Your credit score

State-Specific Factors

Each state sets its own rules for what information insurance companies can or can’t use when pricing auto insurance. Things like your driving record, what car you drive, and other data about you as an individual help them determine how risky you are to insure. The higher the risk of you filing a claim (and costing the insurance company money), the more you’ll have to pay for insurance.

It’s the personal, non-driving factors that draw the most scrutiny from consumer advocates and insurance regulators. Most states allow insurers to consider these personal factors when setting rates because insurers can show statistics linking each factor to a greater risk of claims. However, some states prohibit certain factors they consider to be unfair to use for pricing car insurance. 

In fact, government investigations in two different states recently sparked changes to allowable rating factors. In January 2019, California’s insurance commissioner banned gender in auto insurance rating, and New York banned occupation and education in late 2017. Michigan lawmakers voted to ban six non-driving factors — including gender and education — in May 2019.

Non-driving car insurance rating factors by state

	Gender	Age	Driving Experience	Credit History	Education	Occupation	Employment Status	Marital Status	Residential status	Address/ZIP Code	Insurance History
Alabama	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
Alaska	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
Arizona	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
Arkansas	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
California	✕	✕	✔	✕	✕	✕	✕	✔	✕	✔	✕
Colorado	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
Connecticut	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
Delaware	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔
Florida	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔	✔

Coverage Levels and Deductibles

A car insurance deductible is the amount of money you’re required to pay out of pocket before your insurance company covers the cost of car repairs or medical bills that stem from a car accident. You pay the deductible directly to the repair shop that’s fixing your car or the medical facility handling your treatment.

To give an example, let’s imagine you have a $500 deductible and you’ve filed a claim that requires $2,500 in car repairs. You’ll need to pay the mechanic $500 before your insurer will cover the remaining $2,000 in repair costs. If your repair costs are lower than your deductible, you’ll have to pay the full amount yourself.

Read Also: In-Depth Guide to Geico Home Insurance Coverage Options

When you sign up for a car insurance policy, your insurer asks you to choose a deductible amount for some insurance coverage types, such as collision coverage. A standard deductible is $500, but options range from $0 to $2,000. If you file a claim requiring the deductible, you must pay the deductible amount out of pocket before your insurer will cover any damage costs.

If accident fault is in dispute, your insurer can attempt to recover payment from the driver responsible for your car’s damage, including any deductible you paid. If you’re partially at fault for an accident, only a portion may be recovered. If your insurer successfully recovers all claim costs and you’re not at fault, the deductible you paid is reimbursed.

Health insurance deductibles require you to spend a certain amount per year before your insurer covers any costs. Car insurance deductibles work differently, as they’re event-based. So, if you have multiple covered claims throughout the year, you’ll pay a deductible each time.

Say you have a $500 deductible on your collision insurance and you rear-end another vehicle at a stop light. After exchanging information with the other driver, you call your insurance company to report the accident and file a claim. Soon after, the insurer approves the claim and asks you to pay the deductible. You pay the $500, and your repairs total $3,500. Your insurer would then cover the remaining $3,000.

But if you didn’t have collision coverage, the incident would not be a covered claim. Your insurer would say you must pay the entire $3,500 cost of repairs out of pocket. If you were not at fault for the accident, the other driver’s insurance would pay for your repairs, and you would not pay the deductible. 

Car insurance deductibles are typically due when you file a claim under one of the following coverage types. 

• Collision Coverage

Collision coverage helps to pay for repairs to your vehicle if you hit another car or a stationary object like a guardrail or pole. Standard collision coverage deductible amounts range from $200 to $1,000, according to the California Department of Insurance.

• Comprehensive Coverage

Comprehensive coverage helps pay for repairs if your vehicle gets damaged by a covered peril such as hail, theft, or burglary. Comprehensive coverage deductible amounts range from $50 to $1,000, according to the National Association of Insurance Commissioners.

• Personal Injury Protection (PIP)

Personal injury protection (PIP) helps cover lost wages and medical expenses for you and your passengers, no matter who is at fault in an accident. This coverage may be required in no-fault states. Unlike other coverage types, you may also be responsible for some medical expense co-pays with PIP, even after paying the deductible.

• Uninsured Motorist Coverage

Uninsured motorist coverage helps pay for vehicle repairs if an uninsured motorist hits you. This coverage may have a lower deductible compared to collision insurance. In some states, the law limits the deductible that you can be charged, such as $150 to $500. 

Imagine you total a vehicle but still owe on the auto loan or lease. The insurer’s settlement doesn’t cover the entire amount due to the lender or car lease company. Guaranteed auto protection (GAP, or gap) insurance helps pay the difference. Depending on your GAP insurance policy, it may also help pay for required deductibles, or it may not.

The right deductible amount will depend on your budget, your likelihood of needing to file claims, and your risk tolerance. 

• Budget

If you need to lower your insurance premium, a higher deductible can help. However, you’ll want to ensure that you can afford the deductible in the event of an accident or even the theft of your car. Remember, your total annual cost depends on your premium and the out-of-pocket deductibles you pay. 

In some states, your insurer can require a higher deductible amount for you if you have a history of claims. 

• Risk

Consider the likelihood of filing claims for anyone on your policy. Review recent years and note any claims filed. Additionally, consider factors like the driving experience of covered drivers, the car theft rate where you park vehicles, and weather event damage.

You might opt for a higher premium if your claim-filing risk is low—for example, if you haven’t filed a claim in years, aren’t at increased risk of theft or vandalism, and don’t frequently drive in heavy traffic. If you don’t file a claim, you’ll save on your overall car insurance costs thanks to the lower premium. However, those more likely to file claims would likely benefit from the lower deductible amount if they had to file a claim. 

• Risk Tolerance

The decision will also depend on the level of risk you’re willing to tolerate. If you would rather be safe than sorry, you may prefer a low deductible and higher premium. If you’re OK with hoping nothing happens, a higher deductible could be right for you.

Credit Score and Financial History

Your credit score can impact many areas of your life–from your ability to borrow money to buying a home and even landing a job. In most states, your credit-based insurance score also impacts the cost of your car insurance. Drivers with excellent credit pay an average of $147 each month for coverage, but those with poor credit pay nearly double that–an average of $290 per month.

It’s not your direct credit score that insurance companies look at, but rather your credit-based insurance score. Insurance companies use information from major credit bureaus to create your score, which helps them determine the risk that you will file claims. Depending on your score, your car insurance premium can be cheaper or significantly more expensive in states that allow the practice.

“When you apply for car insurance, the company checks your credit rating,” explains John Espenschied, owner of Insurance Brokers Group and an insurance expert with over 20 years in the industry. “If your score is low or if there is an indication that you might be living beyond your means, it may affect whether you get coverage at all.”

Like your driving record, your credit rating is a helpful tool for car insurance companies to use when assessing your risk as a driver. “Yes, most car insurance companies use credit scores as one of many factors affecting car insurance premiums,” affirms Adrian Mak, CEO of AdvisorSmith. “Other factors considered include driving history, claims history, ZIP code, vehicle type and many other factors.”

“Analysis of car crash data shows that credit scores can accurately predict the risk that a policyholder will crash or file a claim against a policy,” Mak adds. “Drivers with higher credit scores tend to get into fewer crashes and file fewer claims than those with lower scores.”

Therefore, the drivers who have higher credit scores are generally perceived as lower risk and are offered lower rates than drivers with lower credit scores.

Credit-based Insurance Scores

As we noted, car insurance companies often use your insurance score to quickly and easily identify the level of risk you might present as a policyholder. Auto insurance companies generally use this information to assess your risk and determine how likely you are to make timely payments or to file a claim.

“Credit-based insurance scores are a new way of calculating premiums,” comments Espenschied. “The most common credit score is the FICO score, and companies such as Fair Isaac Corp. use it to help calculate premium costs based on your driving history and risk assessment.”

A credit-based insurance score reviews your credit report to assess your risk in simple numerical form. This is usually a strictly credit-based identifier, so it does not include your current employment, income history or other personal details. Instead, it sticks mostly to your payment history and considers your total debt when assigning a score. An insurance company then translates that score into a metric of its own so that customer service agents cannot see your actual credit score.

The national average cost of car insurance is $622 per year for minimum coverage and $2,014 per year for full coverage. However, depending on your credit score and other rating factors, your premium could be much higher or lower.

The average cost of auto insurance also varies based on your gender, although some states do not allow gender to be used as a rating factor. Males often pay more than female drivers, since men are more likely to get into accidents than women. The table below shows the average full coverage premiums for men and women with various credit tiers.

Average annual cost of full coverage car insurance by credit tier

	Poor credit	Average credit	Good credit	Excellent credit
National average	$3,479	$2,176	$2,014	$1,764
Male	$3,477	$2,181	$2,020	$1,771
Female	$3,481	$2,170	$2,008	$1,758

Your credit score is not the only factor that impacts your car insurance rate. Where you live can also be a significant factor.

Not all states use your credit score as a factor to determine car insurance rates, but most do. California, Hawaii, Massachusetts and Michigan have banned or restricted the practice of using credit scores to calculate car insurance rates. Maryland, Oregon and Utah also limit the use of credit as an auto insurance rating factor. In these states, there are regulations limiting how and when insurance companies can use credit as a rating and underwriting factor.

Unless you live in these states, your credit score will likely have an impact on your auto insurance premiums. But because geographic location also plays a role, the state you live in and even your ZIP code will also impact your premium.

“States have varying insurance premiums for a variety of reasons,” Mak explains. “The incidence of crashes in some states is higher than in others. Impacts are due to the mix of the ability of drivers in the state as well as road safety. Each state’s premiums are also affected by the court system and the cost of medical care in each state, with some states’ courts offering more generous awards and higher-cost medical care being drivers of higher premiums.”

Managing Your Credit for Lower Rates

There are a variety of situations that can negatively impact your credit score, from past-due bills to taking out a new loan. But your credit rating is not set in stone. There are ways that you can improve your credit score:

• Check your credit report: You are entitled to one free credit report per year. Checking your credit score may help you to catch potential downturns or issues before they become problematic.
• Make timely payments: Late payments will only work against you, further damaging your credit report. Making payments on time could begin to establish a long-term pattern that benefits your finances.
• Work on your credit utilization rate: When you have multiple credit cards that are all maxed out, it can negatively impact your credit score. An insurance provider could then worry that you are overextended financially and will be unable to make your insurance payments. It may be beneficial to pay down your outstanding debt so your debt-to-income ratio is below 30%.
• Take a break from new accounts: When you apply for a new loan or credit card, lenders often run inquiries that can damage your credit score. Instead, stick to the accounts you have and focus on paying those balances down so you can improve your overall debt-to-income ratio.

For most drivers in the U.S., credit score affects how much you pay for car insurance. If you are trying to lower your auto insurance premium, improving your credit score could result in long-term benefits.

Discounts and Incentives

While each auto insurer offers a slightly different selection of car insurance discounts, there are some that can be found commonly throughout the industry. Most of these standard auto insurance discounts can be grouped into the following categories:

Driver Safety

Most insurers find ways to reward safe drivers. These are a few of the common car insurance discount types for those who maintain good habits behind the wheel:

• Good Driver (Accident-Free) Discounts

Going three to five years without an accident can earn you significant discounts with many top auto insurers. The requirements for a good driver discount vary from one provider to another, so be sure to ask your agent if you qualify.

• Usage-Based Insurance Discounts

This type of discount comes with the use of a telematics program that tracks your driving habits — either through a mobile app or plug-in device. If you avoid sudden stops, rapid acceleration and speeding while enrolled in such a program, you can often save up to 30% upon policy renewal with certain companies.

• Defensive Driving Course Discounts

Completing a defensive driving course typically takes just a few hours, but it can save you 10% to 15% on your car insurance premiums. Before you sign up for any driving class, make sure it’s approved by your provider. Some companies only offer these discounts to younger drivers and senior citizens.

• Low-Mileage Discounts

If you only drive occasionally, you stand to save as much as 20% on your car insurance premiums. The average driver puts about 12,000 miles on the odometer each year. Those who drive less than 7,500 miles annually are often eligible for savings. Some insurers require a telematics device to verify mileage.

Driver Status 

Driver profile often means as much as driving behavior when it comes to car insurance discounts. The following savings opportunities are based on drivers’ personal attributes:

• Student Discounts

Almost every auto insurer offers some type of discount for good students. This is great for customers, as insurance rates are especially high for drivers under 21. Full-time students who maintain at least a “B” average often qualify for good student discounts as high as 25%. 

There are also away-from-home discounts for college students who leave their vehicles at home while attending school 100 or more miles from home. These can also be called distant student discounts.

• Military and Federal Employee Discounts

USAA provides insurance policies exclusively to active military, veterans and their immediate families. Most other providers offer discounts of up to 15% for members of the military and veterans. Discounts for federal employees vary, with Geico offering especially generous savings to drivers in that group.

• Professional and Academic Discounts

Insurance companies have various affiliations with trade organizations and alumni associations. Geico is the industry leader here, partnering with over 500 professional and university organizations to offer discounted rates.

• Senior Discounts

Some insurers offer discounts to drivers 55 and older. You’ll also find incentives for drivers over 55 to keep their skills sharp through online driver improvement programs. 

Policy Details

There are plenty of policy-related discounts to be earned with auto insurance companies. Some of these discounts are automatically applied, while you have to request others. Here are a few common types of policy discounts:

• Bundling/Multi-Policy Discount

These discounts are typically easy to find, as insurers have plenty of incentive to bring you on board for different types of protection. There’s a wide range of savings to be unlocked by bundling your auto policy with home, life, boat or other types of coverage. Some companies offer as much as 25% off your total insurance premium when you bundle policies.

• Multi-Vehicle Discount

Savings potential varies with multi-car discounts. Some insurers like State Farm offer as much as 25% off for adding multiple vehicles to your policy. Many companies offer discounts in the 10% range for insuring multiple cars.

• Payment Discounts

Pay-in-full, autopay and paperless statement discounts fall under this umbrella. Paying your entire premium up front often results in savings of about 10% — whether for a six-month or year-long term. 

Setting up automatic payments from a checking account, debit or credit card can save you 5% to 10%. Going paperless saves insurers some overhead costs, so they often reward doing so with 10% discounts.

Vehicle Attributes

Specifics about your vehicle can also earn you special car insurance discounts. Some companies even offer discounts simply for insuring a new car. Here are a few other common discounts related to vehicle attributes:

• Anti-Theft Discounts

Installing an anti-theft device can save you five to 15% on your comprehensive coverage, although that’s typically the cheapest element of your total protection. If your vehicle is a common target of auto thieves, it’s a good idea to have an anti-theft device installed even if the discount is marginal.

• Anti-Lock Brakes Discounts

Many insurers offer discounts of five to 10% off your collision coverage premium for having an anti-lock braking system (ABS) factory-installed. It’s a good idea to ask your agent to verify this discount, as it should be automatically applied.

• Passive Restraint Discounts

This type of discount applies to seat belts and front airbags. You can save up to 30% on your personal injury protection (PIP) or medical payments (MedPay) premiums simply by having factory-installed seat belts and front airbags.

Incentives for Good Driving Habits

First, clearly define what your incentive program should achieve. Here are five suggestions to help you prioritize as you plan a driver incentive program.

• 1. Set strategic goals 

Before taking the first step, know the intended outcomes. If reducing collisions is the goal, you could build incentives to increase following distance, eliminate cell phone use, or practice safe speeds. Whichever behaviors you focus on, driver incentives should support the fleet’s overall safety mission and align with corporate goals.

In a recent blog post, American Family Insurance reports that before launching an incentive program, “management must ensure that the organization has the proper equipment, hiring procedures, training programs, supervision techniques, and record-keeping in place – the basic components of a well-managed fleet safety program.”

• 2. Keep it simple 

As with any new initiative, the easier a driver incentive program is to understand and act upon, the greater the chances of success. “Keep incentive programs simple, be straightforward with ground rules, and communicate those rules to all employees,” Safety + Health Magazine advises. When fleet safety incentive programs are too complicated, they fail before even making an impact. Start with the big picture and build goals around it. Simplifying the incentive program makes it easy for managers to administer and drivers to follow.

• 3. Use data from safety technology to decide which behaviors to incentivize

The Motive AI Dashcam captures video of unsafe driving behaviors, then automatically uploads them to a fleet’s Safety Hub for follow-up. In designing an incentive program, look for videos in the Safety Hub marked “high severity” or “critical.” Let the unsafe behaviors in those videos direct your focus. 

If texting and driving is a problem in your fleet, consider an incentive that gives drivers points for each day they don’t reach for their phone. Drivers could use those points to buy gear and electronics from the company store. Short-term goals are more likely than annual awards to inspire a change in behavior. When designing a driver incentive program, aim for short-term incentives that are easy to track.

• 4. Gain buy-in from top brass so drivers buy in too 

When the message about a new driver incentive program comes from the CEO, managers and drivers will take the program seriously. Executive support bolsters the program’s credibility.

• 5. Communicate expectations 

Launching a driver incentive program is similar to rolling out new safety technology. Transparency is the key to obtaining driver acceptance. When launching an incentive program, explain to drivers why you chose to incentivize safety. Have there been too many near misses lately? Too many accidents? Share those details with the team. Make sure drivers can see how their performance compares to their peers. Also educate them on how their performance is measured. A little friendly competition can motivate drivers even more.

Demographic Factors

Insurance companies utilize demographic information such as your age, gender, marital status, and ZIP code to help decide your premiums.

1. Age

This is something most people are familiar with because of the extraordinarily high insurance rates for teenage drivers. A lack of experience behind the wheel means insurance companies charge much more for younger drivers (drivers under 25) than their adult counterparts. It isn’t just teens who are paying based on their age, though—adults see their rates go down slowly over time until they become senior citizens, at which point some insurance companies start raising rates for older drivers.

2. Gender

It isn’t just age you have to worry about; gender can also impact your insurance rates in almost every state. Some states have passed laws preventing insurance companies from rating based on gender, including:

• California
• Hawaii
• Massachusetts
• Michigan
• North Carolina
• Pennsylvania

3. Marital status

Insurance companies typically offer a discount or lower rate to married drivers. Their reasoning is that married drivers are likely to be more responsible behind the wheel. This may seem strange, but insurance companies have found that, statistically, married drivers have fewer accidents and tickets, which is why they pay lower rates than their single counterparts.

4. ZIP code

Where you live can have a surprising impact on your rates. Insurance companies track accidents, car thefts, and other claims by ZIP code, which means your insurance rates are partially based on the things that happen in your neighborhood. If your part of town has more stolen cars or an intersection that is well known for causing accidents, expect to pay more for your car insurance.

While moving out-of-state will obviously impact your insurance rates, moving just a block or two in one direction or the other could also change your rates if it puts you in a new ZIP code. 

Life Changes and Adjusting Rates

Everyone would like to see their auto insurance premiums decreased, and happily, there are ways to do it. A few small modifications — some easy to implement, others that may occur on their own — can save you a lot of money. The trick is to understand what they are and how to make them happen in order to receive the greatest insurance rates.

1. Change your deductible

The deductible you choose can make a difference to the car insurance premium you pay. However, many people avoid increasing their deductible because they don’t want to pay it should they need to submit an insurance claim. The truth is that carrying a higher deductible can save you a fair bit of money over time. A change in deductible from $500 to $1,000, for example, could save you 5% to 10% off your premium.

A driver can go for years without having to pay a deductible — if they ever have to at all. That means every year you go claim-free, the savings had by increasing your deductible is money in your bank.

2. Buy a new (or new to you) car

New or used, what you drive factors into your car insurance rate. Avoid buying a vehicle that is more likely to be stolen or costs more to repair or replace, for example, to keep your insurance rates as low as possible. When shopping for a new car, keep in mind to shop for auto insurance too.

3. Shop around for your best rate

Changing to a new insurance company could be the change that brings your auto insurance rates down the most, but unless you take the time to shop around, you will never know how much you could save.

Put your insurer’s rates to the test when:

• Your policy comes up for renewal. There’s no better time than renewal time to see if you can find a cheaper car insurance premium.
• You get married. Depending on your spouse’s driving history, you may find the company that provided you the best rate as a single person may not be the same company that gives you the best rate as a couple.
• Your teen gets their driver’s license. Some insurers are more teen-friendly than others.
• Your commute changes. Whether it’s because you’ve retired, switched jobs, or now work mostly from home due to the COVID-19 pandemic, when your daily commute changes, your insurance premium could change as well.

4. Your driving record clears up

In general, tickets will stay with you for three years, and at-fault collisions will follow you for six years. Set up a reminder to follow up with your insurance provider when the ticket or collision is a distant memory and clears off your driving record. While most insurance companies are on top of this and will take that charge off at renewal, it’s good to be aware of when you should no longer be charged. If you don’t see a reduction, give your insurance company a call and find out what’s going on.

5. Move to a new home

Moving is a major change in your life, and relocating will likely change your car insurance rates; for the lucky, it might mean paying less for car insurance. For others, it might mean paying more. Too often, though, when it comes to moving, people figure they’ll tell their car insurance company of their address change which will then adjust their rate, and whatever the rate ends up being, it is what it is. After all, they’ll still give you the best car insurance rate just like they did last time you shopped around, right?

That isn’t always the case. Every insurance company has a different claims experience with your new neighborhood, and this will be reflected in the new rate you’re offered. If you’re planning to move, it’s wise to compare quotes for your cheapest rate to make sure you’re getting the best deal at your new address.

Reasons Your Car Insurance Rate Changes

Car insurance prices can fluctuate depending on a variety of factors, including claims, driving history, adding new drivers to your policy, and even your credit score. They can, however, change for a variety of causes that are mostly beyond your control.

1. Driving record

Incidents such as accidents (even if you weren’t at fault), speeding violations, reckless driving, and driving while intoxicated can increase premiums.

If you’ve filed a claim in the past few years, this might also result in an increase to your premium. You’ve heard it before but do your best to remain on your guard and maintain good driving habits. As time goes on, past claims on your record will decrease if you keep losses to a minimum.

2. Credit score

Your personal insurance score, based partially on your credit score, is used in combination with other factors to help determine your home and auto rates. This practice lets insurance companies cover more people and promotes equitable rates for all customers. If you think there is incorrect information in your credit score, contact Equifax. Your insurance company may reevaluate your premium based on corrected credit information.

3. How much you drive

It’s pretty simple: the more you drive, the more opportunity there is to get in an accident. Let your car insurance company know if your lifestyle changes and you’re driving less, because you may be eligible for lower rates.

4. The car you drive

Generally, a new car costs more to repair after an accident. New cars are also at a higher risk of break-ins or theft. So, if you’re thinking about buying that dream car you’ve always wanted, talk to your insurance company about how your rates will be affected. Keep in mind luxury cars aren’t the only ones that are at a high-risk of theft. Thieves also target cars with high-demand parts.

5. Adding a driver to your policy

All the factors above as they pertain to an additional driver on your policy can ultimately impact your rate. As you might guess, adding a teenage driver can generally bump up your rate due to the high-risk associated with new drivers.

Worried about insuring your teen driver? If they have a GPA of B or better, they may qualify for a Good Student Discount. Start your auto insurance quote to see how much you could save.

6. Statistics where you live

Insurance companies take factors beyond your car and personal driving habits into account when determining your rate. For instance, the following factors can cause your insurance bill to go up for seemingly no reason at all:

• Crime rate
• Increased accidents—often from distracted drivers
• More uninsured and underinsured drivers on the road
• Insurance fraud
• Increased natural disasters

7. Inflation

Auto repair costs have increased due to supply chain issues and labor shortages. Insurance companies need to account for these increases when determining premiums. Learn more about how inflation is affecting insurance costs.

8. Your discounts changed

Car insurance companies may offer an introductory discount when you buy your first policy with them. Or maybe they started charging a fee to keep receiving a paper bill. Check your statement and contact your insurance company if you have questions.

It’s important to shop around to make sure you’re getting the best value. Liberty Mutual offers an extensive list of car insurance discounts—from going paperless to signing up for a new policy before your old one ends. In addition to discounts, you can customize your insurance, so you only pay for what you need.

Special Considerations and Exceptions

There are certain types of insurance most people need to have. For example, if you own a home then homeowner’s insurance may be standard. Auto insurance covers your vehicle while life insurance protects you and your loved ones in a worst-case scenario.

When your insurer gives you the policy document, it’s important to read through it carefully to make sure you understand it. Your insurance advisor is always there for you to help you with the tricky terms in the insurance forms, but you should also know for yourself what your contract says. In this article, we’ll make reading your insurance contract easy, so you understand their basic principles and how they are put to use in daily life.

When reviewing an insurance contract, there are certain things included that are typically universal.

• Offer and Acceptance. When applying for insurance, the first thing you do is get the proposal form of a particular insurance company. After filling in the requested details, you send the form to the company (sometimes with a premium check). This is your offer. If the insurance company agrees to insure you, this is called acceptance. In some cases, your insurer may agree to accept your offer after making some changes to your proposed terms.
• Consideration. This is the premium or the future premiums that you have to pay to your insurance company. For insurers, consideration also refers to the money paid out to you should you file an insurance claim. This means that each party to the contract must provide some value to the relationship.
• Legal Capacity. You need to be legally competent to enter into an agreement with your insurer. If you are a minor or are mentally ill, for example, then you may not be qualified to make contracts. Similarly, insurers are considered to be competent if they are licensed under the prevailing regulations that govern them.
• Legal Purpose. If the purpose of your contract is to encourage illegal activities, it is invalid.

SR-22 Insurance

If you earn too many driver’s license points for moving violations or you’re convicted of a major driving infraction, your license could be suspended temporarily or revoked. While states have processes for reinstating a driver’s license following a suspension or revocation, getting car insurance can prove difficult. You may be required to obtain an SR-22 certificate as proof of insurance coverage before you can get back on the road. 

An SR-22 is a document that shows proof of financial responsibility in case you’re involved in a car accident. It’s technically not a form of insurance, though it is sometimes referred to as such. Instead, it simply indicates that you have purchased liability insurance coverage that meets the minimum requirements in your state. In Virginia, a similar form is called an FR-44.

Every state, except for New Hampshire, requires drivers to have liability coverage. That includes bodily injury liability coverage, which pays for injuries you cause to someone else if you’re at fault in an accident. It also includes property damage liability coverage, which pays for repairs to someone else’s vehicle or other property if you’re at fault in an accident. The minimum coverage limits for bodily injury liability and property damage liability vary by state.

An SR-22 certificate is posted to your driving record once you obtain it. It will stay on your record for as long as you’re required to have the certificate in place. You may be required to submit an SR-22 certificate to your state’s insurance or motor vehicle department as a condition of having a suspended or revoked driver’s license reinstated. You’ll also have to pay any applicable fees to your state. 

You can’t get an SR-22 certificate without first having a regular car insurance policy. That policy has to include the at least minimum amount of liability coverage required in your state. For example, you may need to have at least $25,000 in bodily injury liability coverage per person, $50,000 in bodily injury liability coverage per accident, and $25,000 in property damage liability coverage.

Other types of coverage, such as collision coverage, comprehensive coverage, or underinsured/uninsured motorist coverage, may be optional, again depending on your state. But purchasing additional coverage can offer more financial protection if you’re involved in an accident.

Many insurers offer SR-22 certificates. The cost of the certificate itself is nominal, possibly no more than a filing fee of $25 or so. However, your car insurance policy is likely to be considerably more expensive than you were paying before you were required to get the SR-22. That’s because the insurance company considers you a higher risk.

If you’re buying a new car insurance policy, you may be able to save money by shopping around. Tell the insurer upfront that you need an SR-22, just to be sure the company offers them.

Once you have an SR-22 certificate, the insurance company will file it with the state on your behalf. At this point, you should be able to get a suspended or revoked license reinstated, assuming you’ve met any other conditions set by your state. 

Classic and Collector Cars

Classic car owners usually need an agreed value car insurance policy. This means you’ll work with the insurance company to decide how much your car is worth. Because classic and collector cars increase in value over time, a regular car insurance policy won’t give you enough coverage.

In addition to the liability coverage needed to drive legally, a classic auto policy includes collision and comprehensive coverage. This will protect your car from nearly any damage on the road or when parked.

The best car insurance companies for classic and collector cars are American Modern, Safeco and Hagerty.

You won’t have as many choices for insurance companies for a classic car. Few of the big national brands directly insure classic cars. A few like Geico, Progressive and USAA work with classic auto experts to underwrite policies, but we recommend you get insurance directly from a company that specializes in classic cars.

To find the best classic car insurance for you, consider the kind of classic car you have, the coverage you need, and ways to save. A vintage Fiat you’re restoring from your garage might need higher spare parts coverage. A rare Porsche you drive to local car shows every week might benefit from higher annual mileage limits and an inflation guard. Some common features to look for include:

• Discounts. Look for a company that offers discounts to help you save, such as for bundling policies, insuring multiple cars or having a car collection, having an expensive car, securing your car in a garage, adding safety features, being a member of a car club and being an experienced driver.
• Flexible deductible. Some companies like American Modern offer deductibles as high as $10,000, which could help you save on your rates for a car you want to mostly self-insure. You can also find no-deductible policies from companies like Grundy, which means you won’t pay any out-of-pocket costs for repairs.
• Inflation guard. This feature increases your protection limits for no extra cost as your car appreciates in value, typically by 4% to 6% of its value. American Collectors, American Modern and Grundy all offer this benefit.
• Spare parts coverage. This perk protects you from theft or damage of replacement parts and is ideal for rare car models with hard-to-find parts. Most companies offer $500 or less, while a few offer as much as Hagerty’s $750 or American Modern’s generous $2,000 benefit.

Yes, classic car insurance is typically cheaper than standard car insurance, largely due to lower risks. Most people keep classic cars in a garage, which means they’re better protected from storms and theft. And since most classic cars aren’t your daily commuter ride, you’re less likely to get in an accident.

However, if you have a very rare or expensive classic model, you might have slightly more expensive rates, since you’ll need a higher amount of coverage on your agreed value policy. To find the best cheap car insurance, get multiple quotes from different car insurers, and make sure your coverage factors in how much you drive and how much your car is worth.

Comparing Car Insurance Quotes

Car insurance prices are up for drivers nationwide. And many of the reasons why are out of your control, like the increasing number of fatal car accidents on the road or the frequency of natural disasters and their impact on auto insurance claims. But you can minimize the impact on your bank account if you compare car insurance rates to find a policy that fits your budget.

Comparing car insurance rates is the best way to ensure you’re getting the best price on something you’re probably required to have. But while most insurers look at the same factors to determine pricing, each one has their own “secret sauce” when it comes to setting rates. That’s why two companies can charge wildly different rates for the same driver.

It’s hard to determine which factors have the most impact on your car insurance rate. As we mentioned earlier, the formulation of rates is a lot like the “secret sauce” that most restaurants put on burgers and sandwiches — the ingredients may be the same, but the mixtures are always a little different. We can tell you what most of those ingredients are, but we can’t tell you which one is most important with a particular insurer.

Each insurance company evaluates personal factors in its own way and keeps its methods as hidden as possible. But to help you find the best price for the insurance you want, we can show you average annual rates for minimum and full coverage car insurance. To help narrow it down even further, we’ve shared average rates for drivers with various driving experiences and credit histories in every state and for every major auto insurance company.

Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our rates analysis due to a lack of publicly available information.

Compare car insurance rates by age

Your age can have a big effect on your car insurance rate. For example, you might already know teen drivers have some of the highest car insurance rates on average, but they aren’t the only ones. Although your rates will likely decrease once you hit your thirties, most drivers tend to see higher rates once they reach their 70s.

Below are the average costs of full and minimum coverage, by age, for drivers with good credit and a clean driving history.

Age	Average cost of full coverage	Average cost of minimum coverage
20	$4,196	$1,450
30	$2,220	$704
35	$2,148	$685
40	$2,090	$672
50	$1,940	$634
60	$1,867	$621
70	$2,052	$709

Compare auto insurance rates for drivers with poor credit

Your credit history is one of the largest factors affecting your car insurance rate. (California, Hawaii and Massachusetts don’t allow insurers to use credit when determining car insurance rates.) Carriers use credit history to determine how likely you are to file a claim.

Average annual rate for drivers with poor credit, by company

While rates may double for some drivers with poor credit, know that every company considers credit differently. In fact, an insurance company may evaluate your credit differently depending on which state you live in.

Drivers with poor credit insured by Allstate and Nationwide could pay an average of 42% more a year in our analysis compared with similar drivers with good credit. Meanwhile, State Farm’s average price for full coverage more than doubles for drivers with poor credit compared with those with good credit.

Below you can compare average full coverage rates for 35-year-old drivers with poor credit by company.

Company	Drivers with good credit	Drivers with poor credit
Allstate	$3,110	$4,408
American Family	$1,547	$2,570
Farmers	$2,807	$4,407
Geico	$2,009	$2,938
Nationwide	$2,016	$2,866
Progressive	$2,075	$3,590
State Farm	$1,431	$3,484
Travelers	$1,751	$3,152
USAA*	$1,120	$2,013
*USAA is only available to military, veterans and their families.

Compare car insurance rates for drivers with an accident

Your driving history can affect auto insurance rates in different ways from one company to another. It’s a good idea to compare how each insurer’s car insurance rates stack up against the rest if you have a recent accident.

Comparing car insurance rates after a crash shows how differently insurers treat accidents. For example, rates for American Family and State Farm are less than 30% higher on average for drivers with an at-fault accident compared with a driver with a clean record. Meanwhile, our data shows Geico increases rates by 60% on average for drivers with a recent crash compared with our base profile.

Below you can compare average full coverage rates for 35-year-old drivers with a recent at-fault accident by company.

Company	Drivers with a clean record	Drivers with a recent at-fault accident
Allstate	$3,110	$4,405
American Family	$1,547	$1,972
Farmers	$2,807	$3,953
Geico	$2,009	$3,216
Nationwide	$2,016	$3,171
Progressive	$2,075	$3,029
State Farm	$1,431	$1,833
Travelers	$1,751	$2,403
USAA	$1,120	$1,590
*USAA is only available to military, veterans and their families.

How to choose an insurance company

Let’s assume you’ve compared rates and found the cheapest car insurance companies for you. But before you buy a policy, you’ll want to consider a few other factors besides price.

The best insurance companies offer more than just affordable rates. They also provide reliable and helpful customer service as well as a simple way to update your policy or file a claim.

Here are a few things to check before buying an auto insurance policy:

• Confirm your insurer has any extras you’re looking for, like a mobile app or accident forgiveness.
• Check a company’s financial strength to ensure it can pay out your claim if you need to file one. You can find a carrier’s financial strength using a rating firm like A.M. Best.
• Look at customer complaint records on the National Association Of Insurance Commissioners’ site.

Conclusion

So you’ve discovered your ideal car and need insurance. Perhaps you simply adore old Bessie and want to see if you can reduce your insurance costs, which always seem to rise. You pick up the phone and call around to see what offers you can find so you can spend your savings on that crazy new fangled gizmo. The agent runs your information and informs you of the cost of your coverage. After someone scoops you up from the floor, you wonder, “How on earth is my insurance rate that high?” I can’t afford to pay that much! Is that individual insane?”

While that person may indeed be crazy, those rates are real. Insurance companies take many factors into consideration when figuring out how much you’ll pay for insurance.

1. Low Liability/Coverage Limits
How low can you go? Maybe too low when it comes to your insurance liability limits. Liability limits are the maximum amount that an insurance company agrees to pay as a result of a single accident or injury to a single person. Often times this is defined in three numbers, for example, 20/40/10.

This means if you are rocking out to tunes in the car and rear-end five people in the BMW in front of you causing them all whiplash, and totaling the BMW, the insurance will payout $20,000 per person and even worse, only $40,000 for the entire incident for injuries. What happens if it costs more than $20,000 for personal injury liability you ask? Sorry to say, you are on the hook for the balance of that bill. Oh and the BMW that was totaled? Hopefully, it won’t cost more than $10,000 to fix!!!

Contrary to common sense, you will pay more for insurance in the long run for carrying lower liability limits. Why? Because insurance companies see low limits as not being responsible and many don’t want to insure you at all taking good and affordable companies out of possibility for you. Responsibility is definitely a real thing! In many instances, it may be cheaper to carry the higher limits, which in the long run will help you save on insurance because insurance companies will consider you more responsible. The word of the day might be – responsibility!

2. Zip Code
So, your friend Jerry who lives in the next town over got an amazing car insurance rate. He’s super excited so you decide to call and see what kind of deal you can get since your driving records and age are the same. You find out that amazing deal you thought you were going to get isn’t going to happen. What the heck, right? The town you live in helps determine how high or low your rate is.

The more populated the area, the more likely you are to make a claim, or get into an accident or have your car stolen. Premiums reflect this, which is why you will see a significant change if you were to insure your vehicle in a city. Get multiple quotes and keep reading so you can influence the factors directly under your control.

3. Type of Vehicle
The type of vehicle you purchase will definitely affect your insurance rate. Buying a brand new sports car with all the bells and whistles and setting your sights on being in the next Fast and Furious movie is going to up your insurance premium. Why? Because if you lose the race to Vin Diesel by crashing, it’s going to cost a lot more to replace your brand-new beauty. The older the car, the less the replacement value and less money for the insurance companies to shell out if something happens to it. This equals lower insurance rates on older and/or safer cars.

4. Age
A lot of milestones happen between the ages of 16-25. You get your driver’s license, graduate high school, turn 21 (party!), graduate from college, and get your first job. You’re young and excited about the world. Statistically teens and young adults have some of the highest crash rates of any age group. That young and excited phase comes at a cost and that’s higher insurance rates.

The best rates are going to be from the ages of 35-75, or as I like to call it the settled down and responsible phase. Don’t get me wrong we’re still young and full of excitement! Once you hit 75 and up, well your insurance rates are going to go up as well! This is all based on statistics and actuaries. Different insurance carriers will have varying rates for all age groups, so again get multiple quotes and control the factors you can.

5. Credit
Have you ever answered the question “How’s your credit?” with “Ummm… I don’t know. Sketchy.” If you have, then your insurance rates probably reflect it. Your credit history can have a large impact on your insurance rates with some insurance carriers, but not all. Some companies figure that if your credit is good, you are a responsible (there’s that responsible word again) individual who won’t be likely to file many claims.

If your score is high enough, some companies may even forgive issues on your driving record or might not even look at your record at all. If your credit is too low, some companies will not offer you a reasonable rate even if there aren’t any accidents or violations on your record. Credit can be a big factor and in your control so check your credit score and clean up any issues you may have. It may take some time but your insurance rates may depend on it!

6. Education
Paying all that money to get a degree pays off in more than one way. There are discounts for having some college education (Associates Degrees, Bachelor, and so on) regardless of age. That’s right! Get yourself out there and get some smarts! As you glide across the stage to pick up your degree, your future looks bright and so do your car insurance rates.

Paying a boatload of money for your child to go away to college? Good news mom and dad! You can receive a discount for that, too. Good student discounts typically apply for 3.0 GPAs or higher and will apply to students who are up to 25 years old and are on your car insurance. Any little bit helps when making those tuition payments, right?

7. Marital Status
Most companies will give a discount for being married. Why? Well, statistically couples that are married tend to be more responsible (are you seeing a trend yet) than non-married couples. If you are separated or divorced be sure to let your insurance agent know when they ask about your marital status. You may still fall under the responsible rule above and some insurance carriers will still provide you the same or similar discounts.

8. Deductible Amount
Insurance companies reward customers who are willing to shoulder more of the responsibility when it comes to paying for accidents. The higher your deductible, the amount you are willing to shell out in case of an accident, the less your insurance rate will be. Why? Simply put, the insurance companies will be on the hook for less money and they love that. And they love you for being the big “R” word – responsible. If you can afford to have a higher deductible, you will save more money in the long run. So weigh your options and start putting some extra money back in your pocket.

9. Prior Insurance / Lapse in Coverage
Your prior insurance has a significant effect when looking for a new policy. Drivers who carry lower liability rates can certainly be penalized. However, the big whammy is having no previous insurance or having a lapse in coverage. That’s a, for sure, one-way ticket to higher premiums. You may not have insurance being a first-time driver/car owner or maybe you had a car but got rid of it and have been car-free for a year. Once you’re ready for insurance, be prepared for higher rates. Generally, you’ll pay higher rates for the first six months and if you work with a good agency they will re-shop you to help you start dropping those rates.

What about people who have seasonal cars or multiple cars? If you think ditching insurance on your vehicle because it’s being garaged for the winter will save you money, think again. You would be better off keeping your comprehensive insurance coverage, even if you aren’t driving that car for 6 months. Drop your collision, drop the liability, basically anything that isn’t needed for those months. You will actually save more money in the long run keeping insurance for the months while you and your car are taking a little break.

10. Accidents / Violations
Accidents, tickets, and speeding, oh my! All of those issues factor into your increased insurance rate. The more incidents you have on your record, the more insurance companies get the heebie jebbies about insuring you and will let you know by sending your rate through the roof. What are the biggest offenders when it comes to incidents on your record? Reckless driving is a big no-no, driving with a suspended license, and of course the mother of all no-no’s – the DUI just to name just a few. All these things equal insurance rates from hell.

So what do you do about it? First off, drive like there is always a cop behind you. No, seriously! The better a driver you are, the better driving record you have, and the more insurance companies will reward you for this. Secondly, if you have an issue on your record already, you will need to patiently wait until it drops from your record. Major violations take 5 years and minor violations take 3 years. I know it’s like watching paint dry but it will pay off in the end as long as no other violations pop in the meantime. While you’re waiting for these issues to fade away, be a cautious driver and control the factors you can.

Now you know the major factors potentially keeping your insurance rates high. Now you can take responsibility and control! If you need help and would like a quote, we can help! We treat our customers like family and offer insurance counseling to our customers to help them break the cycle of high insurance rates. It takes some time and discipline but the payoff is big, we have many success stories to share.