Factors That Affect Car Insurance Rates: An Expert Guide (2024)

Figuring out how car insurance rates are determined can be confusing. However, while each car insurance company uses a different formula to calculate rates, the factors they look at are typically the same.

Some factors that affect car insurance rates, such as your age, are out of your control. However, fine-tuning other factors, like your driving record and vehicle, can significantly help lower rates.

If your car insurance is too expensive, there’s probably a reason. We’ll dive into the factors that impact auto insurance rates to give you a better understanding of how insurers calculate your monthly or annual premium. So keep reading to learn more about the factors determining car insurance rates and how to get cheap car insurance.

What factors affect car insurance rates?

Many factors affect the cost of car insurance, such as age, driving record, credit score, and vehicle. Each of these factors plays a role in your rates, some more than others.  (For more information, read our “How does your credit score affect Car Insurance rates?“).

Since each driver is different, rates vary widely. In addition, each insurer weighs the auto insurance rating factors differently. So, unfortunately, there isn’t a one-size-fits-all solution to car insurance. For example, the best car insurance company for good drivers may not be the best company if you have infractions on your driving record.

However, understanding how these factors affect your rates helps you find the cheapest car insurance available.

Read more: Best Car Insurance Company That Rate Drivers Individually

Age and Car Insurance Rates

Young drivers have the highest car insurance rates since they haven’t been driving for long. However, fortunately, rates decrease as drivers age and gain experience behind the wheel. Senior drivers see rates rise due to increased health concerns that may make filing a claim more likely.

This table shows the top insurance companies average monthly car insurance rates for different ages.

Average Full Coverage Monthly Car Insurance Rates by Age, Gender and Marital Status

As you can see, even the best auto insurance for young adults is still expensive. Most insurers begin to lower rates significantly around age 25. While car insurance rates typically decrease as age increases, other factors can also raise your rates.

Read more:

• Average Car Insurance Cost by Age 
• Average Car Insurance Rates by Age and Gender

How Driving Experience Affects Car Insurance Rates

Similar to age, how long you’ve been driving affects your rates. Inexperienced drivers are significantly more likely to be in an accident. So, as you gain experience, rates decrease.

While driving experience is typically associated with age, that’s not necessarily the case. Older drivers who get a driver’s license for the first time also see increased rates. So, for example, if you wait until age 25 to get a license, you probably won’t receive the lower rates generally associated with that age.

How Your Driving Record Impacts Your Car Insurance Rates

Your driving record indicates whether or not you’re a risky driver and likely to cost an insurance company money. Insurers charge higher rates for drivers who are likely to cause accidents. Therefore, a bad driving record is one of the major causes of higher insurance rates.

This table shows the average monthly car insurance rates for drivers with infractions vs. a clean driving record.

Average Monthly Car Insurance Rates by Company and Driving Record

Drivers with a clean driving record see much lower rates than those with one accident or speeding ticket. However, each car insurance company weighs your driving record differently. So, you’ll need to shop around to find the best car insurance company for drivers with a bad driving record.

Fortunately, accidents and tickets don’t affect your car insurance rates forever. In most states, infractions only raise your rates for three to five years. Once infractions are removed, avoid adding more violations to get the lowest rates possible.

How High-Risk Infractions Affect Car Insurance Rates

Although accidents and tickets raise your rates, other high-risk violations, such as a DUI, cause rates to skyrocket. In addition, your state determines if high-risk drivers need an SR-22, a certificate that shows you have at least the minimum amount of required car insurance.

A DUI is one of the major causes for higher insurance rates and can cost you thousands of dollars in fines and higher car insurance rates. Additionally, affordable bad driving record car insurance can be hard to find since some insurers won’t want to take the risk. However, most states only allow a DUI to affect car insurance rates for 10 years or less.

Mileage and Car Insurance Rates

How much you drive also affects your car insurance rates. Simply put, more time on the road means a greater chance of being in an accident. As a result, drivers with long commutes typically pay more for car insurance.

Low-mileage drivers, on the other hand, save money on insurance. Additionally, low-mileage drivers may consider usage-based car insurance, which typically charges a small base fee and per-mile rates, as a cheaper alternative to traditional insurance.

How Car Make and Model Impact Car Insurance

The more expensive the car, the higher the insurance. Insurance companies charge higher rates for cars that are more costly to repair. So, new or expensive vehicles see the highest rates since they have expensive technology that increases repair costs.

In addition, some vehicles are more likely to be stolen, which also raises rates. For example, full-size pickups and Honda Civics are the most stolen vehicles in the country. So, if you own one of those, expect your comprehensive rates to be higher than average.

However, most insurance companies provide discounts for numerous safety features on newer vehicles, such as adaptive cruise control and anti-theft devices.

Is insurance more expensive for trucks? Yes, auto insurance is typically more costly for trucks because they cost more than the average car. However, insurance for specific models, such as sports cars, may be more expensive than insurance for trucks.

State Requirements Can Affect Car Insurance Rates

Most states require that drivers carry at least a minimum amount of car insurance, and each state decides the coverages and limits necessary. As a result, states with the most required coverage and strict insurance laws tend to see the highest rates.

This table shows each state’s average monthly minimum and full coverage car insurance rates.

Average Monthly Car Insurance Rates by Coverage Type

Louisiana and Michigan have the highest full coverage rates, and New Hampshire and Maine have the lowest rates. While minimum coverage is the cheapest in each state, full coverage includes collision and comprehensive coverage, which pay for damages to your vehicle.

Read More: Best Louisiana Car Insurance

Credit Score and Car Insurance Rates

Many drivers don’t know that their credit history impacts car insurance rates. But, statistically, drivers with a higher credit score are more likely to pay for repairs out of pocket and avoid filing a claim for vehicle damage.

Insurance companies look at your credit score, payment history, and other credit-related items to determine your insurance score. This score helps determine your car insurance rates.

However, some states, including California, Hawaii, Michigan, and Massachusetts, don’t allow insurers to use your credit history to calculate car insurance rates.

How Your ZIP Code Affects Car Insurance Rates

Not only does your state determine car insurance rates, but insurers also consider your ZIP code. Drivers who live in cities see more expensive car insurance than drivers in rural areas. Since cities tend to see more theft, vandalism, and traffic, insurance companies charge higher rates to offset possible claims.

In addition, areas prone to extreme weather have higher insurance rates. So, expect increased rates if you live in an area likely to see tornados, floods, hurricanes, or hail.

How Marital Status Impacts Insurance Rates

Married drivers see slightly lower car insurance rates because they are statically less likely to take risks. While some insurers offer lower rates or car insurance discounts for married drivers, savings are generally small.

However, marital status may lead to other discounts if you combine policies, such as a multi-car or multi-policy discount.

Gender and Car Insurance Rates

Gender also affects car insurance rates in some states. Young male drivers tend to be riskier and statistically more likely to be in an accident. However, rates even out as age increases, and women may pay more than men in some age groups.

Not all states allow insurers to use gender to determine rates. For example, California, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania don’t allow gender to be used to calculate rates.

Insurers Use Your Insurance History to Determine Car Insurance Rates

Most states require that drivers carry at least a minimum amount of car insurance, typically liability coverage. Yet, according to the Insurance Information Institute, around 13% of drivers are uninsured, which can lead to fines, a driver’s license suspension, and possible jail time.

So, insurance companies see a lapse in coverage as a red flag. Continuous coverage shows the insurance company that you’re reliable and consistent, and that you follow the law.

In addition, an insurance history with an abnormal amount of claims can increase rates. So expect higher rates if you have a history of costing an insurance company money.

A lack of insurance history is also what makes car insurance high for young and new drivers.

Read more: Best Car Insurance for a New Driver

What causes car insurance to go up over time?

It may surprise you that your car insurance rates increase over time, even if other factors stay the same. However, there are several reasons your insurance may increase through no fault of your own.

First, labor and material costs are rising mainly due to cars using more technology. For example, a side mirror may now cost much more to replace if it comes with a lane warning system. As the costs to repair vehicles increase, insurance companies charge policyholders higher rates to offset them.

Next, the general population and number of drivers on the roads are increasing. With more drivers on the road, there’s a greater chance of being in an accident, leading to increased claims.

Finally, health care costs are increasing along with the rise in repair costs. In a serious accident, car insurance companies may have to cover doctor visits, medications, and other medical expenses.

While these factors are out of your control, you’ll still see your insurance rates increase.

How can you lower car insurance rates?

Fortunately, no matter your personal factors, there are ways how to lower your car insurance.

First, look at your policy. You can lower rates by reducing coverage and limits and raising deductibles. However, the less coverage you have, the more out-of-pocket repair costs you may have. The same is true for raising your deductible.

In addition, think carefully before filing a claim. Since a claim can raise your car insurance rates for years, it may be cheaper to pay for repairs yourself.

Next, take advantage of car insurance discounts. Insurers provide numerous car insurance discounts, based on the policy, driver, and vehicle, such as good student, safe driver, and multi-car discounts. You can bundle discounts for the most significant savings.

Finally, shop around for car insurance. Since each insurer weighs these factors differently, each offers different rates. It’s also a good idea to shop for coverage if there are changes to your factors. For example, if you’ve gotten married or had infractions come off your driving record, you may find much lower rates if you shop around.

Case Studies: Understanding Factors That Affect Car Insurance Rates

Case Study 1: Age and Rates

Emily, a 23-year-old driver with a clean driving record, was surprised to find that her car insurance rates were significantly higher compared to her older friends. After researching, she learned that age is a major factor affecting insurance rates for young drivers.

Emily decided to be added as an occasional driver on her parents’ policy, which resulted in a significant decrease in her premiums.

Case Study 2: Driving Record Impact

Mike had a history of speeding tickets and an accident on his driving record. When he started shopping for car insurance, he received quotes with much higher rates compared to his friend Mark, who had a clean driving record.

Mike decided to take a defensive driving course and improve his driving habits. After a few years of maintaining a clean record, he was able to secure lower rates and save on his car insurance.

Case Study 3: Vehicle Type Matters

Sarah wanted to purchase a sports car she had always dreamed of. However, when she requested insurance quotes for the sports car, she was shocked by the high rates.

Sarah realized that insurance companies consider sports cars as high-risk vehicles due to their higher chance of accidents and theft. She decided to opt for a more practical and affordable car that resulted in lower insurance rates.

Read more: What information do I need to provide to get a car insurance quote?

Case Study 4: Location Impact

John recently moved from a rural area to a city with higher crime rates. When he updated his insurance policy with his new address, he noticed a significant increase in his rates. John realized that his new location posed higher risks for car theft and accidents.

To mitigate the cost, he installed anti-theft devices in his car and shopped around for insurance companies offering lower rates for urban areas. He was able to find a policy that better suited his budget.

Final Thoughts on the Factors that Affect Car Insurance Rates

Your personal and driving characteristics can determine your car insurance rates. For example, insurers use your age, driving record, vehicle, and ZIP code to calculate rates.

Experienced drivers with a clean record who drive inexpensive vehicles and live in areas with low theft, less traffic, and no extreme weather see the lowest rates. On the other hand, younger drivers with bad driving records, expensive vehicles, and poor credit scores see higher rates.

Regardless of your insurance factors, you can save money on car insurance by reducing coverage, asking for discounts, and shopping around. Compare rates and discounts from multiple companies to find the cheapest car insurance.