Factors That Impact Your Car Insurance Rate

Last updated May 10, 2022

How car insurance companies determine your rates

The cheapest car insurance for you might not be the cheapest for your neighbor, friend, or relative. This is because car insurance companies charge drivers differently, depending on their driver profile. Your driver profile is made up of a combination of many different factors including who you are, where you live, and how you drive.

Auto insurance companies assess your driver profile for risk, and the riskier they think it is, the more they’ll charge you for insurance. While each company has its own unique formula, most use the same set of factors to calculate this risk.

Some factors, like your age, will impact your rate more than others, such as your marital status. So while a single 40-year-old might pay slightly more than a married 40-year-old, the difference between what the same 40-year-old pays and what a 19-year-old pays will be much larger.

Additionally, some states have restrictions around what factors insurance companies are allowed to consider when calculating their rates. One is example is California, Hawaii, and Massachusetts all prohibit insurance companies from assessing credit history when determining rates.¹

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Factors that impact your rate

Below are some of the most common factors that impact your car insurance rate and how you can expect them to affect you.

Coverage and limits

The most obvious impact on your rates is the kind and amount of coverage you buy. While it might be a good idea to buy a policy with more coverage or higher limits so you’re fully covered in case of an accident, you’ll pay more than if you purchase a policy with the minimum coverage allowed by law.

Location

Perhaps the biggest factor in determining your car insurance rate is your location. Each state has its own set of requirements for how much insurance you need to carry.

Related: Shop insurance by state

Car insurance companies also have their own data on which states file the most claims, and this can impact your rate as well. For example, if a company has a higher number of claims from the state of Florida than the national average, they might assume Florida drivers will be riskier to insure and they’ll set their prices accordingly.

The biggest differences in car insurance costs are state-by-state, but your zip code and where you park your car can also factor into your final rate. If you live in a densely populated area or one with a high crime rate, it may cost more to insure your car. This is why people who live in the country generally pay less than people who live in cities.²

Age

Another huge factor in your car insurance rate is your age. Car insurance companies see teenage drivers as most risky to insure, since they have the least amount of driving experience and are more prone to take risks on the road.³ Alternatively, those between ages 35 and 75 typically have lower base rates.⁴

Gender

Your gender may have an impact on your car insurance rate. Some car insurance companies see young females as less risky to insure than young males. However, the impact your gender has on your rates tends to diminish as you get older.²

Marital status

Car insurance companies typically provide cheaper quotes to married people⁵, who are viewed as less likely to take risks and more likely to combine their policy with their spouse’s – which is more valuable to insurance companies.

Homeownership

Owning your own home may lower your car insurance rates, especially if you bundle your home and auto policy with the same insurance company.

Credit score

Your credit score and/or credit history may impact your rate. Some insurance companies correlate higher credit scores to clients that may tend to be more risk averse. California, Hawaii, and Massachusetts do not let insurance companies use credit score in calculating their rates.¹

Vehicle

Year, make, model, and trim level all affect your car insurance rates. It all boils down to this: the more your car will cost to repair or replace, the more it will cost to insure. This is why sedans are cheaper to insure than trucks, and cars that are five years old are cheaper to insure than brand-new vehicles.

Additionally, recent safety features that have been proven to reduce the chances of an accident – such as lane departure warnings or blind spot sensors – may help lower your car insurance rate.

Driving record and incident history

Yes, car insurance companies will pull up your driving record when determining your rates. Incidents like accidents and past claims may impact your rate.

Tickets and traffic violations can also greatly impact your insurance rate. Each state has parameters around what violations can affect your insurance and by how much, but typically, you can expect the impact to be proportionate to the severity of the violation (ie a 10mph speeding tickets won’t hike up your rates as much as a DUI or reckless driving infraction).⁶

Years of driving experience

Sometimes, car insurance companies look at not only your age but also how long you’ve been driving. The idea here is that the more driving experience you have, the less risky you are to insure.

Annual mileage

Your annual mileage refers to an estimate of how much you drive on average each year. Someone who drives 10,000 miles a year is typically cheaper to insure than someone who drives 30,000 miles, since the more miles you drive increase your chances of an accident.

Insurance and claims history

People who have been insured continuously for 3-5 years or more with little to no insurance claims usually pay lower rates. Insurance companies see people with large gaps in insurance coverage or those with a history of making a lot of insurance claims as more risky investments.

Vehicle ownership

This refers to whether you own, lease, or finance a car. Even though your car insurance company might not factor this information into their rates, some lenders require a certain base level of car insurance which may not be the cheapest option.

Common discounts

Car insurance companies also offer discounts for certain qualifying factors.⁷ When you receive a quote from a provider, be sure to ask if you qualify for any discounts or can easily earn a discount. Some common discounts include:

Military status – active military or veterans often get discounts on their car insurance.
Education level – those with more completed levels of education may pay less for insurance.
Full time employment, auto pay setup, or paying in full at start of policy as opposed to monthly – these all indicate to insurance companies that you are less likely to miss a payment.
Low mileage – the less you drive, the less likely you will get into an accident.
Loyalty – if you’ve been with the same provider for a few years, you may qualify for a loyalty discount.
Bundling – if you bundle your home, renters, or special insurance policy with your auto insurance, you may qualify for a discount.
Safe drivers discounts – sometimes, insurance companies will give discounts to safe drivers who haven’t had any reported incidents, installs a device that monitors their driving, or takes a defensive driving course

Finding the best insurance rate for your driver profile

All of these factors make up your driver profile, and your specific driver profile will be more attractive to some providers than others. Because of this, it’s important to compare quotes form multiple providers to find the cheapest insurance for your unique situation.

Rate Retriever will find the car insurance companies most likely to give you the best rates based on your driver profile. Take our quiz to get started.

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Sources

About Rate Retriever

At Rate Retriever, our mission is to make the way you shop for insurance transparent and fair through user-friendly tools that respect your privacy and deliver reliable, comprehensive results.

So we took everything we hated about comparing insurance quotes online – the spam, the long questionnaires, the limited choices, the inaccuracy of quote prices – and threw it out the window, favoring a short form that more accurately estimates what you’ll pay at each of the top insurance providers near you.

Rate Retriever is an independent company that is not owned by an insurance provider, nor do we provide insurance ourselves. This independence allows us to be your free and impartial insurance research tool, helping you make the best decisions for your insurance needs.

We may earn a commission when you click one of the links or call one of the providers listed on our site; however, we do not allow our partnerships to influence which information we provide.

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Factors That Impact Your Car Insurance Rate

How car insurance companies determine your rates

Find cheap car insurance near you

Factors that impact your rate

Coverage and limits

Location

Age

Gender

Marital status

Homeownership

Credit score

Vehicle

Driving record and incident history

Years of driving experience

Annual mileage

Insurance and claims history

Vehicle ownership

Common discounts

Finding the best insurance rate for your driver profile

Find cheap car insurance near you

Sources

About Rate Retriever

Ready, set, retrieve

Ready, set, retrieve