11 Factors that Determine Your Auto Insurance Rates

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Things to Remember...
  • If you’ve done any shopping around at all for auto insurance, you probably know by now that there are a number of different things that can factor into the rate quotes you receive
  • There are factors you can change that will make your auto insurance cheaper such as what car you drive, driving history, and credit score
  • Some factors like your age, marital status, and gender, are things you can’t change that will affect your rates
  • Make sure to shop around to compare the best rates

If you’ve done any shopping around at all for auto insurance, you probably know by now that there are a number of different things that can factor into the rate quotes you receive.

While some of these factors aren’t really anything you can do something about, some of them are ones you can make changes to improve. Read on to discover how what you can (and can’t) control determines your car insurance rates!

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3 Unchangeable Factors that Determine Car Insurance Rates


Some things are just set in stone. Here are a few of the unchangeable factors that go into determining your auto insurance rates:

#1 – Your Age

Much of the information insurance companies use to determine rates is based on statistics, and one of the most influential statistics is age.

By compiling data collected over a period of several years, insurance companies have calculated which age groups are more likely to be involved in auto accidents.

This isn’t a factor you have any control over, so just be prepared for higher rates if you fall into a high-risk age group.

Younger drivers are generally considered to be at higher risk for accidents, especially those between the ages of 16 and 23.

Statistics show that 16-year-olds driving with passengers are two times as likely to be involved in fatal crashes, and have the highest rate of driver fatalities in the United States. For male drivers within this group, the rate of fatality is even higher — four times the national average.

If you’re under the age of 25, you’re simply more likely to get into an accident than folks over the age of 25.

Until you turn 24, you can expect to pay higher premiums, but you won’t get the lowest rates until you reach the 40 to 50 age group. Drivers in that age range have proved to be the safest drivers, or at least to be in the fewest accidents. Statistically, people between the ages of 50 and 65 get into the fewest accidents.

Obviously, you can’t do anything about your age as a factor in your auto insurance, apart from living long enough to get a lower rate.

While age is an important factor in determining rates, other factors like whether or not you’re married, or how many tickets you’ve received can give you a different rate from others in your age group.

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#2 – Your Gender

It may not seem fair, but gender also plays a role in determining your auto insurance rates. This factor was not created arbitrarily, though.

Just like the rest of the factors that affect auto insurance rates, it’s based on statistics. Before you get all bent out of shape over this, remember that insurance companies are all about their statistics.

After compiling many years’ worth of data, it’s been proved that males generally take more chances while driving, and drive more recklessly.

Males also drive more often, and the more you’re on the road, the more chances you have of being involved in an accident. 

Statistics have also shown that men are ticketed for speeding more often than women are and that men drive more miles annually.

All of these statistics influence insurance companies to charge men higher rates for insurance.

Sorry, guys — women are safer drivers than men. There are some studies coming out now, however, that suggest this idea of the “safer” female driver may have something to do with the dearth of female drivers on the road in the mid-20th century. It will be interesting to see as time goes on whether gender continues to be a factor in auto insurance.

#3 – Marital Status

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If you have two people with identical driving records, the married individual will have a lower premium than the single individual.

You may argue that this is indeed a changeable factor, but we’d argue that auto insurance rates aren’t a good reason for divorce (or marriage, for that matter).

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5 Changeable Factors that Determine Car Insurance Rates

There are some decisions you can make that can positively affect your auto insurance rates, and it’s about much more than your driving history and the car you choose!

#1 – Where You Live

Basically, because insurance rates are determined by the insurance company making a prediction of how likely you will be to file a claim, and because where you live often impacts that likelihood, choosing your home and workplace also factors into how much you will end up paying in auto insurance premiums.

If you live in a rural area with little or no traffic, you’re likely to face lower auto insurance costs than folks living in a crowded city or even the suburbs.

In addition, certain neighborhoods whose crime rate surpasses a certain threshold may also face higher premiums.

Living or working in a large city can increase your insurance rates. Larger cities have denser populations than smaller ones, which means more vehicles and more congestion on the roadways. The more cars on the road, the more potential there is for accidents.

By the same token, if you live in a suburb and rarely have occasion to drive into the city, and you mainly drive on surface streets rather than freeways, your rates can be lower. Sometimes working in a city but living in a suburb can help to reduce your insurance rates.

This is important to point out when requesting a quote, especially if you have two vehicles — one that is driven more in the city, and one that remains in the suburbs.

Some places are just more expensive to live in than others. Cities usually have a higher cost of living than suburbs and larger cities higher costs than smaller ones. Car insurance, just like goods, costs more in cities like New York and Washington, D.C. than it does in places like Lincoln, Nebraska.

Insurance companies will often calculate rates based on where the insured vehicle is stored or parked most of the time. In some cases, you can even get a lower rate if you keep your vehicle in a locked garage at night rather than parked on the street where it is more vulnerable to damage and theft.

#2 – The Type of Vehicle You Own/Purchase

If you’re thinking about buying a car, one of the main factors you typically consider is the monthly payment. You look for a vehicle in a certain price range and shop around for loans with low-interest rates.

Something you may forget when calculating how much you can afford every month is auto insurance. Whether the car is new or used has bearing on what your insurance rates will be. A less expensive car is, generally, less expensive to insure — so is a car that’s less prone to accidents, or that has safety features.

New cars are more valuable than used, so they are considered higher risk vehicles as newer cars are stolen more often than older ones.

Also, if you’re in an accident, it will most likely cost more to repair a new car than it will an older one.

The cost of repairs can greatly increase if the vehicle is an import. Many luxury cars can only be repaired or serviced by dealerships, and the parts must often be ordered from the factories overseas.

Even domestic luxury cars will usually cost more to repair than moderately priced vehicles. Because of this, and because of the increased risk of theft, insurance rates are generally higher for new cars than for used.

Buying a used car rather than a new one can save you money not only in the purchase price but in years of insurance premiums.

You might never think of it, but these are the kinds of factors that will be considered when getting your premium determined. If lower rates are important to you, think about these things when purchasing your car!

#3 – Your Credit Score

While some states have made this illegal (by changing their state’s auto insurance laws), some states do allow an auto insurance company to factor in your credit rating when it comes to figuring out your insurance premiums.

You already know you need good credit in order to buy a car or house, and in some cases, to secure employment. But did you know your credit history influences your auto insurance rates?

Watch below for a 60-second breakdown of how your credit score can impact your car insurance premiums:

Before an insurance company gets to the questions about driving habits and history, they will ask you for your social security number when you call for a quote.

As they are collecting other pertinent information from you, they are already checking your credit. Your credit history and your credit score are significant factors in determining what rate the insurance company will offer you for coverage.

It’s important to note that not all insurance companies will check your credit before giving you a quote. Some of them only check driving records.

But in today’s economy, and with so many people losing their jobs, a credit check can be a more important factor in determining insurance rates than ever.

When researching car insurance companies, check to see what each company’s policy is regarding the information they collect to calculate coverage rates.

If your credit isn’t sterling, you may consider going with a company that doesn’t require a credit check. If you’ve maintained a high credit score, you still need to be concerned about whether an insurance company will request your credit report.

Inquiries, even if they don’t result in insurance coverage, a loan, or whatever the reason behind the request is, can still have a negative effect on your credit rating. Do as much research on insurance companies as you can before requesting a quote to keep inquiries to a minimum.

#4 – Driving Practices

The number of miles you drive each year, the distance you have to drive to get to work, whether you use the vehicle for business purposes, and whether you have a single car on the policy, multiple cars, or multiple drivers will all go into your auto insurance premiums calculation.

Before you start talking to agents or requesting quotes for auto insurance, it’s a good idea to know where you stand. Insurance companies take several factors into account when calculating rates.

  • Age
  • Driving History
  • Auto Theft
  • Location
  • New or Used Vehicle
  • Coverage Gaps
  • Accidents

Knowing what those factors are, and being ready with the information before you request a quote, will help you to get the best rate possible.

#5 – Your Driving History and Record


Regardless of your age, your driving record helps auto insurance companies determine what rates to charge you, or whether they want to insure you at all.

If your driving record shows numerous tickets, accidents, or more serious violations, the insurance company will consider you a high-risk driver. This can have a negative affect on your auto insurance rates.

There are a few important things to keep in mind.

Moving violations are viewed as more serious offenses than, say, parking violations. Being ticketed for speeding or other reckless driving behavior carries a higher penalty than forgetting to feed the parking meter, and increases the insurance company’s risk in providing you with coverage.

If you are ticketed for more serious violations, like driving under the influence (DUI), also called driving while intoxicated (DWI), your insurance premiums will go through the roof.

Moving violation and accident citations may stop affecting your premiums in as few as three to five years, but DUIs typically stay on your record for ten years or longer.

In fact, your insurance carrier may even refuse to renew your policy after a DUI, and you may have a difficult time getting another carrier to take you on as a customer.

Accidents can also cause auto insurance premiums to skyrocket. Conversely, if you’ve not been involved in accidents — or at least not involved in accidents you have caused — you’ll have lower auto insurance premiums. For more on how accidents impact your rates, click here.

But be aware that the insurance company does maintain a record of your entire driving history. Should you incur another violation, either during that three-year period or anytime thereafter, it can have an even worse effect on your rates.

Moving violations, accidents, and DUIs tend to mean you’re more likely to have accidents or be issued citations in the future. As you improve your record over time, however, your premium will go down.

3 Additional Factors that Can Affect Your Rates

There are additional factors that can affect your auto insurance rates. Your auto insurance coverage needs can change from year to year so make sure you are shopping for the best rates at least once a year.

Keep reading below to see additional factors that can affect your rates.

#1 – Auto Theft


It seems even more unfair than the gender factor, but having your car stolen can increase your insurance rates. Auto theft is the most commonly committed crime in the country.

According to the FBI, a vehicle is stolen in the United States every 28.8 seconds! The thing is, your car doesn’t even have to actually be stolen for auto theft to increase your rates.

It’s not just expensive or luxury cars that are stolen. In fact, sometimes the entire car isn’t stolen at all, just certain parts of it are taken — like the airbags. Many cars are stolen, then taken to “chop shops” to be dismantled so the parts can be sold off.

Most of the time, the parts are more valuable than the entire car. It’s more difficult to trace parts than it is to identify a stolen car. In addition, some locations are more prone to auto theft than others.

Areas that see a high incidence of auto theft are broken down by city and state. Insurance companies keep databases of the vehicles stolen most often, and where the highest number of thefts occur.

If you choose to buy a frequently stolen car, live in a high-risk area, or worse, both, then you will pay more for auto insurance. Doing some research before you purchase a car can help you to avoid buying a vehicle that has a higher possibility of being stolen, thereby keeping your rates down.

#2 – Coverage Gaps


A gap in coverage will occur if you allow your auto insurance to lapse. There are a couple of ways this can happen. The most common way to lose your insurance coverage is if you stop paying on your policy.

Another way you can lose coverage is if you fail to meet any renewal requirements, such as paying an increased premium, or if you are convicted of a serious moving violation, like driving under the influence.

Some companies will just increase your premium in response to such a violation, while others will drop you altogether. It’s still your responsibility to ensure you have at least the minimum coverage required by your state.

If your insurance lapses, a gap in coverage will appear on your record. This is undesirable for a few reasons.

Driving without insurance leaves you open to financial hardship.

If you’re in an accident and you don’t have insurance, the cost of repairs will have to come out of your pocket. If you’re at fault, you will also be responsible for the damage to the other party’s vehicle, not to mention the medical bills that can result from an auto accident. You also may be subject to litigation by the other accident victims.

Liability insurance protects you from having to pay all these expenses yourself, and will also provide you with legal representation should it become necessary.

Even if an accident doesn’t occur, and you’re just pulled over for a broken taillight, you will be required to show proof of insurance to the police officer.

In states that require you to carry auto insurance, if you are shown to be without coverage, you will incur fines and possibly other penalties in addition to the ticket, up to and including jail time.

As far as insurance companies are concerned, if you’ve let an auto insurance policy lapse, either through nonpayment or by simply not replacing insurance lost as a result of a moving violation, you are a poor risk.

When you try to reinstate your coverage, you may have a difficult time finding an insurer that will issue a policy to you, and when you do, you will be required to pay much higher premiums than if you had kept your insurance current.

#3 – Accidents

If you’re like most people, you buy auto insurance with accidents in mind more than a stray rock cracking the windshield or needing to rent a vehicle if your is in the shop.

If you’re involved in an accident, this is when you will need insurance the most.

Ironically, having been involved in an accident is also one of the factors that can have the biggest effect on your insurance rates.

If you are in an accident, the insurance company will look at several things before they decide whether or not to increase your premiums. First, was the accident your fault? If so, what caused it? Was it speeding?

If so, how many speeding tickets have you received during your driving career? If you are at fault, and if the insurance company determines a pattern of reckless driving, they will undoubtedly increase your rates.

The increased rates will usually remain in effect for three years from the date your premiums increased — not from the date of the accident.

As long as you avoid getting any tickets, and are not involved in any other accidents during those three years, your rates should decrease at the end of that period.

Chances are, it won’t happen automatically, though. Watch the calendar, and call your carrier when the time comes to request that your rates be reviewed.

But What if You Weren’t at Fault?


Most of the time, insurance companies won’t penalize you for an accident that was not your fault, but there are some that will. Whether the accident was your fault or not, some insurance companies will see you as an increased risk and will raise your insurance rates accordingly.

This may not seem fair, and if this happens, you may consider switching carriers. Just bear in mind that the company you switch to may charge you just as much as, if not more than, your previous company because of that same accident that wasn’t your fault.

Get a firm quote before switching and possibly costing yourself even more money. There are some factors you will be unable to control, such as your gender, your age, and possibly your location.

Be aware of all the factors that can affect your auto insurance rates, and work to improve the ones that you can control.

Keep your policy current. Consider the type of car you buy, and whether to purchase new or used. Take steps to protect your vehicle from damage and theft. Above all, drive responsibly, and not just to keep your rates low, but to keep you and your loved ones safe.

Save Money on Your Auto Insurance!

Not everyone is going to qualify for cheap auto insurance, but knowing what factors are considered when determining auto insurance rates can help you avoid needless increases.

Companies generally don’t have your best interests in mind! Either way, you should make sure that you’re not already paying more than you have to!  Enter your zip code in on this page to get started comparing free auto insurance rates and start saving some money!

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