Life events that impact your car insurance rates
Life events that impact your car insurance rates
The cost of car insurance is personalized to each individual. The price you’ll pay for car insurance depends on a variety of different factors, like your age, location, and credit score. Additionally, certain life events can impact your car insurance rate. In this article, we’ll look at some of the life events that might cause your car insurance premium to increase or decrease.
What impacts car insurance rates?
When you apply for a car insurance policy, the insurance company uses a variety of rating factors to determine your unique premium.
Personal rating factors include things like:
- Your age
- Credit score
- Vehicle type
- Driving record
- Claim history
Policy-related factors include things like:
- Coverage limits
- Deductibles
- Length of the policy term
Another factor that impacts the cost of car insurance is the insurance company that underwrites your policy. Each insurance company charges different rates for the same types and amounts of coverage. As a result, you might find that one company can offer you a much lower rate than a competitor for the same policy.
How car insurance companies determine your rates
Car insurance companies look at many different factors to determine your premium. These factors are used to gauge the amount of risk you bring to the company before it agrees to cover you.
For example, if you live in a location with a high risk of hurricanes, there’s a bigger chance that your vehicle will be damaged by flooding and you will file a claim. As a result, you will likely pay a higher rate for car insurance than a driver who lives in a lower-risk area.
Additionally, drivers who have been involved in multiple accidents or have gotten several speeding tickets are riskier to insure than drivers with a clean record. Therefore, if you have multiple violations, you can expect to pay a higher rate than a driver with a clean record.
To find the most affordable car insurance rate for your situation, it’s a good idea to get quotes from multiple car insurance companies. You can also take our short quiz to see how much you can expect to pay for car insurance at each of the top companies near you.
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Life events that impact your car insurance rates
There are many personal- and policy-related factors that can affect your car insurance premium. However, certain life events can also impact your rate. Here are some of the biggest life events that may cause your premium to change.
1. Adding a teen driver to your policy
Your car insurance premium will change when you add a young driver to your car insurance policy. For instance, if your child gets their driver’s license and you add them to your policy, your premium will probably increase significantly due to their lack of experience behind the wheel.
Based on our analysis of recent rate data, the average parent with a teen on their policy and one shared vehicle will pay around 60% more than if they didn’t have the teen on their policy. A parent with a teen and two vehicles on their policy can expect to pay around 71% more than they would on their own.
| State | Teen's Policy | Parent's Policy | Combined |
|---|---|---|---|
| Alabama | 8,588 | 1,531 | 4,248 |
| Alaska | 6,722 | 1,524 | 4,062 |
| Arizona | 8,866 | 1,616 | 4,700 |
| Arkansas | 8,459 | 1,702 | 4,101 |
| California | 5,144 | 1,923 | 4,029 |
| Colorado | 10,124 | 1,848 | 4,239 |
| Connecticut | 10,435 | 1,994 | 4,942 |
| Delaware | 14,276 | 2,297 | 5,573 |
| Florida | 11,851 | 2,300 | 6,135 |
| Georgia | 10,961 | 1,781 | 5,109 |
| Hawaii | 1,701 | 1,255 | 1,263 |
| Idaho | 6,314 | 1,072 | 2,959 |
| Illinois | 8,344 | 1,652 | 4,166 |
| Indiana | 5,906 | 1,335 | 3,335 |
| Iowa | 6,025 | 1,390 | 3,300 |
| Kansas | 8,713 | 1,771 | 4,114 |
| Kentucky | 9,611 | 1,861 | 4,942 |
| Louisiana | 12,724 | 2,780 | 7,497 |
| Maine | 5,074 | 1,186 | 2,934 |
| Maryland | 10,951 | 2,159 | 5,581 |
| Massachusetts | 6,079 | 1,647 | 3,627 |
| Michigan | 9,433 | 2,406 | 5,799 |
| Minnesota | 7,199 | 1,796 | 4,551 |
| Mississippi | 7,787 | 1,486 | 3,920 |
| Missouri | 9,264 | 2,004 | 4,950 |
| Montana | 7,143 | 1,384 | 3,008 |
| Nebraska | 6,894 | 1,693 | 3,885 |
| Nevada | 12,800 | 2,136 | 6,701 |
| New Hampshire | 6,315 | 1,280 | 3,259 |
| New Jersey | 12,246 | 2,087 | 5,676 |
| New Mexico | 7,604 | 1,450 | 3,591 |
| New York | 10,545 | 3,334 | 6,903 |
| North Carolina | 4,918 | 1,525 | 3,172 |
| North Dakota | 7,281 | 1,431 | 3,427 |
| Ohio | 5,703 | 1,184 | 2,991 |
| Oklahoma | 11,037 | 1,974 | 4,412 |
| Oregon | 7,873 | 1,417 | 3,892 |
| Pennsylvania | 7,192 | 1,863 | 4,821 |
| Rhode Island | 11,605 | 1,908 | 5,718 |
| South Carolina | 6,972 | 1,579 | 4,791 |
| South Dakota | 8,051 | 1,916 | 4,093 |
| Tennessee | 7,514 | 1,522 | 4,285 |
| Texas | 9,313 | 2,068 | 5,204 |
| Utah | 10,063 | 1,582 | 3,885 |
| Vermont | 4,647 | 1,114 | 2,958 |
| Virginia | 8,420 | 1,517 | 4,678 |
| Washington | 7,774 | 1,467 | 3,735 |
| Washington DC | 9,225 | 1,940 | 4,399 |
| West Virginia | 7,725 | 1,450 | 4,402 |
| Wisconsin | 6,646 | 1,364 | 3,427 |
| Wyoming | 4,450 | 1,178 | 3,270 |
2. Adding or removing a spouse from your policy
Getting married or divorced often has an impact on your car insurance rate. For example, our data shows that married couples who share a vehicle and one insurance policy can save up to 53% on their insurance costs while married couples who have two vehicles will save up to 23% on average.
If you get divorced and remove your spouse from your car insurance policy, it’s possible that your rate could increase. The national average cost of car insurance for one individual is $1,824 per year, which is slightly higher than the average rate for married couples.
3. Moving to a new city or state
Your location is one of the biggest factors that can affect your car insurance premium. Factors like weather risks, vehicle theft rates, accident rates, and uninsured driver rates can all impact the amount you pay for auto insurance in your area. If you move to a new city or state, your car insurance premium might change.
Our average rate data shows that Vermont is the cheapest state for car insurance, with Vermont drivers paying almost 41% less than the national average. We found that Idaho, Maine, Ohio, and Wyoming have the next lowest average premiums.
Using the same data, we determined that the most expensive state for car insurance is New York, with an average rate of $3,061 per year (67.8% more than the national average). The other states with the most expensive rates include Louisiana, Florida, New Jersey, and Delaware.
4. Buying a house
If you recently purchased a home, you might qualify for a lower car insurance premium. Homeowners often pay slightly less for auto insurance than people who rent. Depending on your insurer, homeowner status might be used as a rating factor or a discount opportunity. Either way, you should see your premium decrease after buying a home, assuming you have good credit, no recent claims, and a clean driving record.
5. Buying a second car
When you insure multiple vehicles on the same insurance policy, your insurance company takes on additional risk. If you purchase a second vehicle, you will most likely see your car insurance premium go up. This is especially true if the second vehicle is brand-new or has a very high value.
However, there are ways to minimize your rate increase after purchasing a second car. Many insurance companies offer a multi-car discount, which can help you save some money on your total premium. If you plan to drive the second vehicle less often than your main car, you could also get a usage-based car insurance policy to lower your insurance costs.
6. Changes to your credit score
In almost every state, car insurance companies use credit-based insurance scores to calculate your premium. Drivers with good credit usually pay lower rates than drivers with poor credit. If there have been recent changes to your credit score, it will probably impact your premium when your policy renews.
For example, if you had fair credit but you were able to boost your score into the good credit category, your insurance company may reduce your premium. Conversely, if you had excellent credit but it dropped into the fair credit category, you might see your premium increase.
According to our rate data, here are the average annual rates for drivers based on credit tier in each state:
7. Retirement
Entering retirement won’t cause any direct changes to your car insurance premium. However, retiring could impact your rate in a few ways. For instance, if you’re driving less often during retirement, you could qualify for a low mileage discount, which would reduce your premium. You could also switch to a pay-per-mile policy to save money on your insurance.
While you might qualify for initial savings during retirement, it’s possible that your premium will increase as you get older. After age 70, car insurance rates tend to go up slightly every year.
Frequently asked
What factors affect your car insurance rates?
Does your lifestyle affect your car insurance?
How does where you live influence the cost of auto insurance?
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