There are many factors that 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 have a dramatic impact on 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:
- Age
- Address
- Driving history
- Credit score
- State of residence
- Vehicle year, make, and model
- Annual mileage
- Claims history
- Auto insurance coverage level
- Discounts
1. Age
Your age will impact your premium, especially if you are a teenager or are 75 or older. 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, according to the CDC.
To get an idea of how much you can expect to pay, get an estimate of your car insurance costs.
2. Address
Where you live (and park your car) will have a direct impact on your insurance premium. Of all the factors that affect car insurance rates, this is one of the most important 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.
If you live in an area with a high rate of accidents and theft/vandalism – or that is prone to severe weather damage – you will pay more for car insurance. And don’t forget that if you move, your rates could change – see how much they’ll change with this moving calculator.
Learn more about the most and least expensive ZIP codes for car insurance by the state in 2022
3. Driving history
Here’s where your driving experience comes in. Young drivers with limited experience will pay higher rates than people who have been 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.
4. Credit score
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 be likely to file claims. The most important factors for a good credit score (for insurance) are a long credit history, minimal late payments, and open accounts in good standing.
Note that the following states prohibit credit from being used to determine premiums: California, Hawaii, Massachusetts, Michigan and Washington (in effect until three years post-pandemic emergency declarations).
Learn more about what is an auto insurance score and why it matters
5. State of residence
In some states, even the mandated minimum coverage includes uninsured motorist coverage or personal injury protection insurance, which can make insurance pricier than in a state where those aren’t required. Additionally, whether your state is a no-fault state or a tort state will affect how much you pay for car insurance.
6. Vehicle year, make, and model
Insurers will take into account the car model’s claims record, and the type of car you drive will have an impact on 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 to insure.
Read more about car make and model: What do they mean and why do they matter
For your vehicle model, car insurance companies look at:
- 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 price of insurance if the cost to repair or replace the feature is expensive.
7. Annual mileage
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 a lot of miles, you will typically pay more because you are considered to be a higher risk.
Learn more about whether an annual mileage can lower or raise your car insurance rates
8. Claims history
Any claim has the potential to 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 important.
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. A larger number of claims will peg you as a higher-risk driver and raise your premiums for a few years.
9. Auto insurance coverage level
The type and amount of car insurance you buy will play a role in 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 you have 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.
10. Discounts
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.
Check out our detailed guide on what are the best car insurance discounts
Other pricing factors when it comes to car insurance
Other factors that can affect how much you pay for car insurance include:
- Marital status
- Education
- Occupation
- 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 the ways you can save money on a policy.
Compare car insurance quotes from 25+ companies with a rate calculator
– Michelle Megna contributed to this story.
Resources & Methodology
Sources:
- Centers for Disease Control & Prevention. “Teen Drivers.” Accessed August 2022.
- Insurance Information Institute. “Facts + Statistics: Uninsured motorists.” Accessed August 2022.
Methodology:
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 $500 deductible; increases shown are an average from the base rate in 2022.
