Trying to figure out why you pay what you pay for auto insurance can be a daunting task. Insurance companies analyze hundreds of factors to determine risk and coverage cost.
Here are 18 factors that affect your rates. You can’t change all of them, but the ones you can change can save you money down the road.
1. Your location
There’s a reason why your ZIP code is the first thing you enter in a car insurance quote. The denser the population, the more congestion there is and the more likely accidents and other insurance claims are. Cars in urban areas are also more prone to theft and vandalism.
2. Your age
Younger drivers get in more accidents and pay higher premiums as a result. Rates start to drop at age 25 and level off around 30.
3. Your gender
According to the Insurance Institute for Highway Safety (IIHS), men get in more accidents and are more likely to drive dangerously—like speeding or driving without a seatbelt—than women. They don’t always pay higher premiums, but it’s a factor for many policies.
4. Your credit report
Insurers use a number like your credit score—called a credit-based insurance score—to help determine premiums because studies have shown that people with better credit are less likely to get in accidents or file claims.
5. Your driving experience
Drivers with more experience are less prone to risky behavior and more likely to avoid accidents.
6. Your driving record
Accidents and tickets for moving violations are the best indicator of future claims. Making an effort to drive more carefully will lower your rates if you can avoid any incidents for at least three years.
7. Your claim history
Previous claims can increase your rates, even if you haven’t been in an accident.
8. Your previous coverage
Drivers whose insurance coverage has lapsed at any time don’t just risk legal penalties—they’ve also been shown to get in more accidents.
9. Your education level
College grads pay less for insurance than those without degrees.
10. Your occupation
Working in an industry with less driving (and thus less insurance risk) can also earn you discounts on coverage.
11. Marital status
Statistics show married drivers get in fewer accidents than single or divorced drivers—half as many according to the IIHS. Married couples can save even more money by sharing a car insurance policy or combining it with renter’s or homeowner’s insurance.
12. Vehicle type
Insurers use accident and claim data to determine which makes and models cost the most to cover. Safety ratings, repair costs and theft rates are all factors, too.
13. Vehicle size
Larger cars are safer than smaller ones and earn lower premiums, even when they have similar safety ratings.
14. Engine size
Sports cars with V8s or other big engines also cost more to insure than similarly-sized cars with smaller engines.
15. Safety features
Common safety features like anti-lock brakes, airbags and running lights can all earn you discounts on your coverage. New technologies like collision and lane departure warning systems don’t always lower rates because the total costs to repair them can be greater than the amount saved on claims.
16. Vehicle age
Older cars don’t always cost more to fix than newer ones, but they’re more likely to be “totaled” when the cost to repair them exceeds the cost to replace them.
17. Vehicle use
Even if you’re using it solely for personal reasons, a vehicle used for commuting costs more to insure than one you drive or twice a week.
18. Annual mileage
The more you drive a vehicle, the more likely it is to be involved in an accident. Always let your insurer know about significant increases or decreases in your annual mileage.
The best way to ensure your auto coverage matches your needs is to speak with a knowledgeable agent. Request a quote to get started.
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