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Life events that impact your car insurance rates

Written by Elizabeth Rivelli

Reviewed by Alyssa DiCrasto

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 7,605 1,376 3,889
Alaska 6,387 1,375 4,342
Arizona 7,737 1,434 4,174
Arkansas 7,413 1,581 3,815
California 4,949 1,817 3,900
Colorado 9,082 1,640 3,919
Connecticut 8,633 1,567 4,073
Delaware 13,898 2,194 5,672
Florida 10,770 2,135 5,282
Georgia 9,917 1,550 4,300
Hawaii 1,658 1,229 1,238
Idaho 5,457 978 2,666
Illinois 7,234 1,417 3,626
Indiana 5,198 1,152 2,884
Iowa 4,938 1,146 2,745
Kansas 7,937 1,567 3,712
Kentucky 8,815 1,630 4,553
Louisiana 10,958 2,290 6,306
Maine 4,359 1,011 2,525
Maryland 8,930 1,870 5,042
Massachusetts 4,971 1,468 3,233
Michigan 8,300 2,140 5,231
Minnesota 6,354 1,578 3,930
Mississippi 7,104 1,343 3,626
Missouri 8,233 1,750 4,256
Montana 6,527 1,266 2,694
Nebraska 5,967 1,508 3,431
Nevada 12,093 1,880 5,932
New Hampshire 5,557 1,140 2,834
New Jersey 11,605 2,070 5,757
New Mexico 6,982 1,358 3,208
New York 9,402 2,895 6,296
North Carolina 3,626 1,298 2,689
North Dakota 6,131 1,258 2,865
Ohio 5,207 1,061 2,663
Oklahoma 9,134 1,846 4,569
Oregon 7,052 1,324 3,547
Pennsylvania 6,565 1,694 4,394
Rhode Island 10,172 1,707 5,058
South Carolina 6,314 1,437 4,204
South Dakota 7,112 1,789 3,757
Tennessee 6,602 1,320 3,700
Texas 7,222 1,708 4,245
Utah 8,270 1,469 3,637
Vermont 4,172 1,012 2,643
Virginia 7,743 1,296 4,113
Washington 6,749 1,341 3,366
Washington DC 8,047 1,645 4,224
West Virginia 7,632 1,401 4,070
Wisconsin 5,939 1,151 2,993
Wyoming 4,214 1,118 3,077

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?

There are dozens of factors that affect car insurance rates. Some of the most notable factors are your location, age, gender, credit score, driving record, claim history, vehicle type, coverage limits, coverage types, and deductible. Additionally, the car insurance company you select can affect your car insurance premium.

Does your lifestyle affect your car insurance?

There are several lifestyle-related factors that can impact the cost of your auto insurance policy. For example, if you have a long commute to work or take road trips frequently, you might pay more for car insurance than someone who drives less often. Similarly, if you live in a city or urban area, your rate might be higher than someone who lives in a rural area. However, factors like your job, hobbies, or health don’t have any impact on your car insurance.

How does where you live influence the cost of auto insurance?

Where you live has a significant impact on the cost of your car insurance policy. Insurance companies look at things like the severe weather risks in your area, the rate of vehicle thefts in your neighborhood, the number of uninsured drivers in your location, and the cost of car repairs and labor. If you live in an area with few risks, you will probably pay less for car insurance.

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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