The 3 Most Important Factors Affecting Auto Insurance Premium Quotes

Your driving record, where you live, and how much you drive can all affect an auto insurance quote. Compare quotes from the top auto insurance companies and save up to $859.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 24, 2020

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Things to Remember...

  • Knowing how your auto insurance premium is quoted can help you get the best rates
  • Blemishes on your driving record can follow you for years
  • New drivers usually pay higher rates than someone with an extensive driving history

One of life’s remaining mysteries seems to be the methods used to calculate auto insurance payments.

For the major auto insurance companies, the three most important factors affecting your premium quote are your driving history, your location and how many miles you drive on average each day.

They say that knowledge is power. In order to take control of your finances, you need to know where each dollar is being spent, down to the last penny.

Therefore, knowing how your auto insurance premium is quoted can help you get the best rates.

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#1 – Your Driving Record

We all make mistakes. When you are trying to get the lowest car insurance premium, the things you have done in the past factor into the equation.

Just like financial mistakes, blemishes on your driving record can follow you for years. Auto insurance companies take this information into consideration and use it to decide how high or low your quote should be.

You might be stuck paying a higher rate if you have a history of accidents, numerous claims, and even a pattern of late car insurance payments.

New drivers can have the opposite problem. In this situation, insurance companies opt for a higher quote, taking a wait-and-see approach rather than giving the benefit of a doubt as you work to create and build your driving reputation.

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#2 – Where You Live

Another aspect that weighs heavily on the quote you receive is the perceived safety of the vehicle you wish to insure. For the auto insurance companies, chance takers are accident makers, and carelessness makes them nervous.

If you have ever requested a quote, you will notice that one of the first questions on the form is where you live.

Those people who live in areas that have a higher than normal accident or theft rate will receive a higher quote for car insurance.

Sometimes, just the fact that you live in a large city, as opposed to a small town, will result in a higher auto insurance quote.

The rationale for this is when there are more cars on the road; there are more cars that could collide with yours.

You can find information about the most and least expensive cities for car insurance on the National Association of Securities Dealers Automated Quotation (NASDAQ) website.

#3 – How Much You Drive

You may have heard the term “safety does not happen by accident.” For the auto insurance industry, this means that the less time you spend on the road, then the less likely you are to have an accident.

If you drive a lot, typically more than 20 miles a day, you can expect to pay higher insurance premiums than someone who drives less.

This also results in more wear and tear on your car, which can lead to breakdowns, flat tires and other automobile problems.

Other issues related to many miles and long hours behind the wheel include distracted and tired driving and stress. These factors combine to make you a more likely candidate for a car accident.

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It’s Never Too Late to Change

Although the factors that affect your auto insurance premiums are set in stone, this does not mean you are doomed to higher rates forever. There are steps you can take now to improve your status that may get you lower quotes in the near future.

The auto insurance company just wants to see some demonstrable effort that you are doing everything possible on your end to ensure that your vehicle is protected from accidents, theft, or damage.

For example, just because your home is in a less desirable ZIP code, it doesn’t necessarily require that pack up your family and move.

Keeping your car safe could be as simple as finding a nearby garage to store it in at night instead of parking it on the street.

Another safety measure you can perform is to install a good quality alarm system. Most automobiles built today come with some kind of anti-theft protection but if yours did not, you don’t have to worry as this work can be done on just about any car.

You can also endeavor to drive less. Consider alternatives like carpooling, public transportation, biking, and walking whenever possible.

The New York Times recently discussed the growing trend of sharing vehicles with other drivers that is becoming an issue for insurance companies.

This increases the time the vehicle is on the road and pushes the envelope as to whether this usage should be considered as commercial and not personal.

Perhaps the biggest adjustment you can make is to your permanent record. Start to rebuild it by becoming a better driver and paying bills on time.

You can take a defensive driving course or set up an electronic bill pay arrangement with your bank. These minor changes could make a major dent in your car insurance premiums.

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Other Factors That Affect Your Car Insurance Quote

Auto insurance companies use a variety of other factors to determine your complete quote.

In addition to your history, location, and driving habits, they also consider age to be a vital aspect in deciding on the amount of your premium.

Teenaged drivers typically have to pay more than middle-aged customers. It is reasoned, and history has shown, that younger people tend to be more reckless and distracted.

On the other hand, a driver over 30 years old is likely to be a stable professional and possibly a parent with children in the car, so they may have safer driving habits.

Gender is also an influence on insurance premiums. 

If you are a male under 30 years of age, you will probably receive a higher quote than a 30-year-old woman.

Having an uninterrupted record of car insurance is another part of the picture. Any time you drop coverage for any reason, it is looked upon with suspicion by the insurance industry.

When you go back to re-establish auto insurance, you are practically back at square one, subject to the same scrutiny as a new driver.

The type of car you drive is very important as well. A super turbo convertible sports car is probably going to cost more to insure than a fuel-efficient family-sized minivan.

Again, the insurance company is looking at risk factors and the likelihood of damage and dangerous driving.

Quotes Are Just the Beginning

When you receive an auto insurance quote, you should look at is as just a starting point, an indication of what your bill will look like.

It is important to remember that your actual payments may vary from the original quote once all the information has been received and calculated.

MSN Money offers advice on other questions you should be asking when seeking a quote.

In order to offer you a lower quote and obtain your business, an agent may begin detailing the various special offers and discounts they have available.

You could then discover that you are not eligible to receive these incentives.

In addition, they might give you a low quote initially and then find out you have several accidents on your driving record.

The True Value of Auto Insurance

It is said that safety is first aid for the uninjured. The auto insurance industry tends to play by that same mantra. The more you can prove that you don’t need insurance, the less expensive your quote will be.

Since it is not something you think about on a daily basis, some people consider car insurance unnecessary and might consider dropping it altogether.

However, like clean drinking water, car insurance is one of those things that seem trivial until you don’t have it.

Car insurance is more than just the proof you hand to a policeman if you are ever pulled over.

If you are involved in an accident where damage has occurred, you could be forced to pay hundreds, or even hundreds of thousands of dollars to make things right again.

Therefore, car insurance is essential to our daily lives. Make sure you are aware of the important factors affecting your auto insurance quote and use them to get the best possible deal.

Get FREE auto insurance quotes by entering your ZIP code into the box above!



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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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