Factors that Affect Car Insurance Rates

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Car insurance rates vary from one person to another, even if they are driving the same car. This is because each individual’s profile is unique, leading to different rates.

Insurers gather specific data to determine how much of a risk you pose and how likely you are to file a claim. Each company weighs the data and the rating factors differently, which is why insurers have varying rate offerings.

The company’s algorithms go to work to make an informed analysis on your risk level and calculate your insurance premiums. The safer you seem, the less you’ll pay. The riskier you appear, the more you will pay for car insurance.

Read our guide to learn more about the factors that affect your car insurance rates and see how you can save.

What are the main factors that affect car insurance rates?

When it comes to auto insurance rates, there’s no one-size-fits-all. Insurance premiums vary by driver and are determined by a number of rating factors. Some factors, such as location and age, can have a huge impact on your insurance costs, while others, like your marital status, carry less weight with your insurer.

Know how rating factors influence your premiums. Below are some common rating factors that most companies use to decide car insurance rates.

Factors that affect your car insurance rates

1. Age

Age is one of the major factors that many car insurance companies consider when setting rates. The cost of auto insurance for teen drivers is substantially higher than it is for adult or senior drivers. Teen drivers pay $3,894 more than car insurance for senior drivers, based on an Insure.com data analysis. This is largely due to the fact that they are categorized as a high-risk group, making them expensive to insure.

However, rates decrease at different times with different insurers, but generally, your rates can drop as much as 20 percent when you turn 25.

Age group	Average annual premium
Teenagers (16-19 years old)	$5,492
Young adults (20-24 years old)	$2,697
Adults (25- 55 years old)	$1,645
Seniors (60-75 years old)	$1,598

Methodology: Insure.com gathered data from Quadrant Information Services for drivers of different age group and full coverage policy with limits 100/300/100 driving 2021 Honda Accord LX with clean driving record.

2. Location

Where you live can have a significant impact on your car insurance rates because states have different regulations when it comes to car insurance. Insurers take these rules into account when determining how much you pay for coverage.

For example, some states require drivers to carry a certain liability coverage while others do not. Besides, if you live in a highly populated ZIP code, accidents and insurance claims are more prevalent. Living and driving in a metro area will make your rates higher than if you live in a rural area, where auto accidents are less likely to happen.

All of this helps your insurance company to discern the risks associated with insuring you and your car.

Learn more about how much you can expect to pay for car insurance by state in 2023.

3. Gender

Most states allow insurers to base car insurance rates on gender since crash statistics are different for males and females. Data shows males are more likely to crash — especially in the early years of driving.

According to a study by IIHS, crashes involving male drivers tend to be more severe than those involving female drivers. Insurers tend to rate accordingly. Here’s how much male and female drivers pay for car insurance.

The below table shows how much gender affects car insurance rates:

Gender	Average annual premium
Teen male	$5,492
Teen female	$4,844

Methodology: Insure.com commissioned Quadrant Information Services to field rates from six major insurers and 59 company groups for teenage male and female drivers age 16-19 years driving 2021 Honda Accord LX with no traffic violation on their record.

4. Driving record

Drivers with a clean driver’s history qualify for better rates and also are eligible for a good/safe driver discount, which typically is pretty good.

If you have an accident or moving violation (speeding, DUI, etc.) on your record, you end up paying higher car insurance rates. Generally, a minor violation, such as a speeding ticket, can affect your rates by 30%, based on Insure.com rate analysis.

Traffic violation	Average annual premium before violation	Average annual premium after violation
Speeding ticket	$1,915	$2,494
DUI	$1,915	$3,648
At-fault bodily injury accident	$1,915	$3,061
At-fault property damage accident	$1,915	$2,925

Methodology: Insure.com used data from Quadrant Information Services to field rates from 6 major insurance companies and 59 company groups in 1468 ZIP codes for a 40-year-old male driver of a 2021 Honda Accord LX with good credit score and full coverage policy and $500 deductible.

5. Credit score

Your credit score also affects your car insurance rates. It shows a strong financial standing and is indicative of responsibility and an ability to pay premiums on time. Also, people who effectively manage their credit score file fewer claims, according to Insurance Information Institute.

If you have a low credit score, you’ll likely see a hike in your premiums. Also, policyholders with very poor credit scores may be required to pay the entire 6 or 12-month premium upfront in order for the policy to be issued.

Credit rating	Average annual premium
Fair credit	$2,275
Poor credit	$3,377

Methodology: Insure.com in 2022 commissioned Quadrant Information Services to calculate average auto insurance rates for a 40-year-old driving 2021 Honda Accord LX with a fair and poor credit score for a full coverage policy.

6. Vehicle type

The type of car you drive also affects your rates. Brand-new sports cars are likely to come with higher premiums than older models since insurers will factor in potential replacement costs when determining rates.

Additional factors determined from your vehicle model:

Purchase price
Theft rate
Cost of repairs
Accident rate
Safety tests

And just because a car does well on safety tests doesn’t mean it will be cheap to insure. Cars with extra safety features, such as collision-warning systems, may add to the price of insurance if the cost to repair or replace the feature is expensive.

7. Annual mileage

The less you drive, the less risk you have of being in an accident. That’s why car insurance companies consider annual mileage when determining your insurance premiums. Long commutes or high mileage can lead to higher premiums since they indicate an increased risk level for insurers.

If annual miles driven go down, let your insurance company know — you can likely save money.

8. Claims record

Insurance companies don’t just look at your driving record but also gather reports on what claims you’ve filed with them or previous auto insurers. At-fault claims will likely result in a surcharge, while not-at-fault collisions and comprehensive claims may not.

If you’ve had three claims in three years, auto insurance providers are going to see you as risky to insure and either hike up your rates or decide not to renew your policy at the end of the term. A few accidents and claims make you a riskier driver, so insurers charge you higher rates.

9. Coverage level

When selecting car insurance, the amount of coverage you choose can have a huge impact on your policy costs. Opting for higher limits, such as the recommended coverage limit of 100/300/100, may cost more — but this extra protection could prove invaluable in an emergency.

While purchasing only the bare minimum car insurance coverage may be tempting in terms of saving money, it could leave you financially exposed if something were to happen.

Liability car insurance: Liability coverage pays for injuries and damage to other people’s property if you are at fault in an accident.

Comprehensive and collision coverage: Comprehensive insurance provides protection against natural events such as floods, hail, etc. While collision insurance covers damage if you hit another vehicle or object.

Underinsured/uninsured motorist coverage: This protects you if an uninsured driver hits you or the other driver doesn’t carry enough coverage.

Personal injury protection: PIP is mandatory in some states and optional in others. It pays your medical bills and covers lost wages, irrespective of who’s at fault.

10. Vehicle use

A vehicle used to commute to school or work poses more risk than a car you only take out of the garage once a week. Personal use of a vehicle costs less than business use since those using their car for business purposes have a higher chance of being in an accident due to increased driving time.

11. Marital status

Married couples are found to be less active and safer than single drivers, resulting in fewer accidents and claims. Single drivers are twice as likely to be in an auto accident than married drivers, based on a study published on the National Library of Medicine website.

Most car insurance companies offer a discount to married couples than single drivers due to their marital status. Married couples can also receive discounts when they combine their policies, such as a multi-car discount and a multi-policy discount for bundling policies with the same company.

12. Previous insurance coverage

Insurance companies believe that those without a lapse in coverage are less likely to get into an accident, so having a continual auto insurance history can help get you a better rate. It doesn’t matter if your prior car insurance policy was with your current insurer or someone else. However, if you keep continual coverage with the same company for at least a few years, you’ll likely earn a loyalty discount, as well.

How to get affordable car insurance rates

You can’t control your age or gender, but there are some factors you can control. Keep a clean driving record, build a good credit score, purchase a vehicle whose insurance won’t break the bank, and choose the right coverages for your needs.

Just because your rating factors aren’t perfect doesn’t mean you can’t get better rates. Find the insurer that is pricing competitively for your specific situation by shopping around. If you can show insurance companies that you pose less of a risk with the rating factors you can control, your wallet will be happier, too.

Frequently asked questions

What types of drivers pay more for car insurance?

Teenagers, seniors above 65 years of age, drivers with poor credit scores and traffic violations on their record and drivers with a history of accidents usually pay more for car insurance.

What makes car insurance rates go up?

At-fault accidents and traffic violations are common reasons for your car insurance rates to go up. Other reasons include location change, buying a new vehicle, increased insurance claims in your ZIP code, etc.

Will my car insurance go down when I turn 25?

Yes. Drivers age 25 pay 72% less for car insurance than 16-year-old novice drivers. Still, some factors affect how much you pay for car insurance, like your claims history. So if you get into an accident just before your 25th birthday, your rates may not go down.

Sources:

Insurance Information Institute. “What determines the price of an auto insurance policy.” Accessed January 2023.

Insurance Information Institute. “Credit and insurance scores.” Accessed January 2023.

Insurance Institute for Highway Safety. “Fatality Facts 2020 Males and females.” Accessed January 2023.

National Library of Medicine. “Motor vehicle driver injury and marital status: a cohort study with prospective and retrospective driver injuries.” Accessed January 2023.

Shivani Gite

Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions.