What impacts auto insurance rates?

Auto insurance rates are calculated by many factors, including your driving record, credit history, and the state you live in. Lower your cost up to 20% by comparing quotes.

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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 Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 16, 2021

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Things to Remember...

  • Your driving history, record of paid out claims, credit report, and where you park an auto may impact insurance company auto rates
  • Your state provides a department that oversees the conduct and licensing of insurance companies
  • Your credit report can impact how much your insurance company charges for auto insurance
  • Many companies offer good driver discounts and accident forgiveness to those with impeccable driving histories
  • To protect against the possibility of purchasing a stolen car, consumers can use NICB VINCheck to learn more about a prospective auto purchase

All drivers are affected by how much insurance companies charge to insure their car, truck, pickup, motorcycle, motor home, or other motorized vehicles. Your driving history, record of paid out claims, credit report, and where you park an auto may impact insurance company auto rates.

Regardless of your driving history, get comparative auto insurance quotes by typing in your home zip code now!

Even drivers with a clean driving history can experience an increase in auto insurance premiums. Sometimes, the driver buys auto insurance from a company that’s over-leveraged or in financial trouble.

The insurance company may attempt to pass along higher premium rates to its customers in order to collect more premium income and revenues. That’s why comparing your insurance rates with those of other competitive insurance companies, on an annual basis, can save you money.

How do state regulations impact the cost of my auto insurance rates?

Each state has a dedicated department of insurance. The name of the department may vary. For example, the Florida Office of Insurance Regulation oversees auto insurance companies in the state.

Regardless of the state in which you live, your state provides a department that oversees the conduct and licensing of insurance companies.

Consumer complaints filed against the company carry great impact. Insurance companies usually want to clear up customer complaints filed against them at the state insurance department level. New customers should check any new insurance company provider’s complaint record with their state insurance department.

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Does my credit report, or previous claims, have an effect on my auto insurance rates?

Your credit report can impact how much your insurance company charges for auto insurance. Before you apply for new auto insurance, check your credit report. Review it for any errors before making a new auto insurance application.

Auto insurance companies must pay claims costs when an insured driver presents a claim.

Depending upon the insurance company and any accident forgiveness provisions, the increased cost of insuring the driver by the insurance company is usually passed on in the form of higher premium costs.

Sometimes, if an insurance company receives a higher number of insurance claims (for example, a hurricane hits an area where many of the company’s insured clients live), higher premium rates may be passed on to all clients of the insurance company.

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How do catastrophic damage claims affect my auto insurance rates?

Floods, fires, hurricanes, tornados, and other catastrophic events can impact your individual auto insurance premium rates, even if you did not file a claim for the event. Insurance companies can’t control when a flood, major fire, hurricane, or tornado occurs.

While homeowners must elect some catastrophic damage to obtain coverage, car drivers are protected against a broad spectrum of damage and catastrophic damage via comprehensive coverage of their auto insurance policy.

This is one reason that car insurance rates tend to vary so dramatically from region to region.

What other claims can cause my auto insurance rates to rise?

If increased medical care costs must be paid to take care of auto accident victims, the insurance company passes along the increased cost of insuring your auto and liability to you.

Medical and lost wage claims filed against the auto policy usually result in rising insurance.

Fraud costs all auto insurance drivers money. When drivers claim additional damage or lie about an accident or health and medical costs, the cost of paying out fraudulent claims must be borne by the insurance company’s policyholders.

Auto insurance fraud rings cost insurance companies and their insured policyholders.

Recognize common auto insurance fraud. Seth W. Seiman, a researcher concerned with auto insurance fraud, says that fraud accounts for $1.05 of every $100 paid out in claims.

Previous damages, overcharges from body shops, staged auto accidents, and crime rings account for almost $10 per $100 paid out in claims.

The National Insurance Crime Bureau reports that 57 percent of all stolen cars are never found. That’s because professional car thieves ship cars out of the U.S. or strip the cars for parts.

To protect against the possibility of purchasing a stolen car, consumers can use NICB VINCheck to learn more about a prospective auto purchase.It’s important to report suspected auto insurance fraud to the policy or to your insurance company.

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How does my own driving record impact my auto insurance rates?

Your own record is where you can really have an impact on your own premium. Angry, aggressive drivers, those with moving violation, or DUIs will receive the highest rates possible.

On the other hand, good drivers will receive the lowest rates.

In fact, many companies offer good driver discounts and accident forgiveness to those with impeccable driving histories.

It is well worth it to keep your record clean. Rising auto insurance rates impact everyone. Everyone wants to save money, and comparing your existing auto insurance rates with those of other insurance companies makes sense.

If you’re worried that comparison shopping will take hours out of your busy schedule, our fast, online, completely free tool helps you get auto insurance quotes today! Make it a habit to compare your auto insurance rates at least once a year.

Don’t pay too much for car insurance. Enter your zip code to compare online auto insurance quotes today!

References:

  1. https://www.forbes.com/sites/jimgorzelany/2012/03/08/states-with-the-highest-and-lowest-auto-insurance-rates/#33c81aca3de9
  2. https://www.thebalance.com/does-car-insurance-cover-a-natural-disaster-527194
  3. https://www.nicb.org//
  4. https://www.consumerreports.org/car-insurance/car-insurance-rates-are-going-up/
  5. https://www.iii.org/article/nine-ways-to-lower-your-auto-insurance-costs

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