Many factors affect how much you pay for car insurance: Your age, gender, where you live, your credit and driving history, and the type of car you drive – among others. In addition, the types of car insurance you buy and car insurance discounts you qualify for also influence how much you pay.
Top 10 most important factors that affect car insurance rates
Some factors – your location, age, credit and driving history – can dramatically impact how much you pay for car insurance. Others, such as whether you’re married and your gender, aren’t as important. Still, they add up to how much it costs to protect yourself with an auto insurance policy.
Here is the list of the top 10 most important factors that affect car insurance rates:
- Driving history
- Credit score
- State of residence
- Vehicle year, make, and model
- Annual mileage
- Claims history
- Auto insurance coverage level
Your age will impact your premium, especially if you are a teenager or are 75 or older. According to the CDC, car insurance for those younger than 25 is expensive because teenage drivers are almost three times more likely to be involved in a fatal crash than older drivers.
To understand how much you can expect to pay, estimate your car insurance costs.
Where you live (and park your car) will directly impact your insurance premium. Of all the factors that affect car insurance rates, this is one of the most critical factors affecting your insurance rate. Insurers study crime rates, neighborhood densities, the number and severity of claims made annually – even the weather – to assess your risk.
You will pay more for car insurance if you live in an area with a high rate of accidents and theft/vandalism – or prone to severe weather damage. And don’t forget that if you move, your rates could change – see how much they’ll change with this moving calculator.
Here’s where your driving experience comes in. Young drivers with limited experience will pay higher rates than those driving for longer. Additionally, if you have accidents or speeding tickets on your record, your insurance cost will be higher – rates can increase 26-43% for a speeding ticket and an average of 31% after a crash, according to 2022 CarInsurance.com data.
When you apply for an insurance policy, the insurer will check your credit history and use the information on your report to predict whether you’ll likely file claims. The most important factors for a good credit score (for insurance) are long credit history, minimal late payments, and open accounts in good standing.
Note that the following states prohibit credit from determining premiums: California, Hawaii, Massachusetts, Michigan and Washington (in effect until three years post-pandemic emergency declarations).
In some states, even the mandated minimum coverage includes uninsured motorist coverage or personal injury protection insurance, making insurance pricier than in a state where those aren’t required. Additionally, whether your state is a no-fault or tort state will affect how much you pay for car insurance.
Insurers will consider the car model’s claims record, and the type of car you drive will impact how your insurance rate is determined. Smaller, safer cars are cheaper to insure, whereas luxury vehicles with high-end technology and expensive finishes will be expensive.
For your vehicle model, car insurance companies look at the following:
- Purchase price
- Theft rate
- Cost of repairs
- Accident rate
- Safety tests
Car insurance companies also consider the types of safety features your car has. So, if your car has airbags and brake stabilization, you may pay less for insurance. However, cars with high-tech safety features, such as collision-warning systems, may add to the insurance price if the cost to repair or replace the feature is expensive.
The more you drive, the higher your chance of getting into an accident. That’s why insurance companies consider how much you drive when setting insurance rates. If you have a long commute or otherwise log many miles, you will typically pay more because you are considered a higher risk.
Any claim can affect how much you pay for auto insurance. While at-fault claims will result in higher rates, the number of claims you make is also significant.
If you have made several claims on your policy in a certain period of time, such as three claims in three years, you can expect your car insurance rate to increase. More claims will peg you as a higher-risk driver and raise your premiums for a few years.
The type and amount of car insurance you buy will affect how much you pay for a policy. If you opt for more coverage, such as the recommended coverage limits of 100/300/100, you’ll pay more for insurance than if you opt for your state’s minimum coverage – which is not recommended.
Standard car insurance coverages include:
- Liability car insurance: Liability car insurance coverage includes body injury liability (pays for injuries) and property damage liability (pays for damage to others’ property) if you’re at fault in an accident.
- Collision and comprehensive insurance: Adding collision and comprehensive means full coverage. Collision covers damage to your car when it hits another object/vehicle. Comprehensive covers your car for natural disasters, animal strikes, theft and vandalism.
- Underinsured/uninsured motorist coverage: This protects you if you’re hit by an uninsured driver – rates of uninsured drivers vary by state from 29% in Mississippi to 3% in New Jersey. It also covers you if the other driver doesn’t have enough coverage.
- Gap insurance: Gap insurance covers the difference between what you owe on your vehicle and its value if it were to be damaged or totaled.
- Personal injury protection: Personal injury protection coverage might be required depending on your state. It pays for medical expenses and lost wages in a crash, regardless of who’s at fault.
Discounts can significantly reduce how much you pay for auto insurance. The top discounts include good driver/safe driver, accident-free, student-away, good student and discounts for bundling auto insurance with homeowners insurance. Safety features, telematics, professional organizations and autopay can also save you money on your policy.
Other pricing factors when it comes to car insurance
Other factors that can affect how much you pay for car insurance include the following:
- Marital status
- Gender (not in all states)
- Whether you rent or own your home
Like any other major purchase, your auto insurance policy is a big commitment. You can save money on your insurance costs by shopping around when it’s time to renew and being aware of how to save money on a policy.
– Michelle Megna contributed to this story.
Resources & Methodology
- Centers for Disease Control & Prevention. “Teen Drivers.” Accessed August 2022.
- Insurance Information Institute. “Facts + Statistics: Uninsured motorists.” Accessed August 2022.
CarInsurance.com commissioned Quadrant Information Services to field rates from up to six major insurers in 1467 ZIP codes for a 40-year-old male driver of a 2021 Honda Accord LX with good credit and full coverage and a $500 deductible; increases shown are an average from the base rate in 2022.