10 Factors That Impact Your Auto Insurance Rate

Before you buy car insurance, it’s important to know what factors impact how much you’ll pay. After all, car insurance rates vary considerably.

Knowing car insurance rating factors will help ensure you get the best deal for your situation. So in this article, we’ll go over the top 10 factors you must consider. Here they are:

  1. Auto insurance type and deductible

As with any type of insurance, auto insurance rates depend first and foremost on the amount of coverage, the coverage limit, and the deductible.

The amount of coverage can be anything from liability only to full coverage for any liability, damage, theft, medical costs, and more. The more things your auto insurance policy covers, the higher your rate will be.

Every auto insurance policy will have a coverage limit. This is the maximum amount an insurance company will pay out per covered incident. Most of the time, there is a separate coverage limit for each type of claim (liability, collision, theft, etc.)

A deductible is the amount you must pay out of pocket before your insurance policy will kick in. The lower your deductible, the higher your monthly premium will be.

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  1. State requirements

Each state has different auto insurance coverage requirements. Some only require you to have liability coverage, others require full coverage, and some don’t require you to have any auto insurance at all (e.g. Virginia and New Hampshire). The more coverage the state requires you to buy, the more expensive your policy will be.

  1. Age

Auto insurance companies evaluate risk by looking at a driver’s age. Why? Statistics show that younger drivers are more likely to get into an accident. According to the Center for Disease Control and Prevention (CDC), teens aged 16 through 19 are three times as likely as drivers aged 20 or older to be in a fatal crash. If you are still learning to drive, consider getting driver learner insurance

After you hit age 25, rates start to drop. Then once you hit 65, they start to rise again, not for lack of experience but because the elderly start losing their reaction time and are more prone to getting injured in an accident.

  1. Driving record

Car insurance companies also look at your driving record to determine risk. If you have a lot of violations on your record, it tells them that you are more likely to get in an accident and make a claim. 

However, if you have a clean record, it shows that you are a responsible driver and your insurance rate will likely be less. In some cases, you can even get safe driver discounts. 

  1. Annual mileage

Of course, how much you drive plays into your car insurance rate as well. After all, the more you’re on the road, the more likely you are to get in an accident. 

Most auto insurance companies will ask you to estimate your annual mileage when signing up. If you have a long commute, your rate will go up. But if you only drive the car for leisure, be sure to report that so you can get a lower rate. 

  1. Car make and model

The type of car you own affects the potential for injury and damage, the likelihood of theft, and the cost of repairs and replacement—and all of these factor into your car insurance rate.

That’s why auto insurance companies look at the make and model of your vehicle when determining your rate. For example, cars with many safety features like anti-lock brakes and airbags will cost less to insure, while expensive vehicles like sportscars will cost more to insure because they are bigger targets for theft and cost more to repair.

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  1. Location

Where you live impacts your car insurance rate, too. For one, population density affects how many cars are on the road and thus how likely you are to get into a collision accident. Urban areas also have a higher rate of vandalism and theft. And some areas are more prone to extreme weather events like hurricanes that could damage your vehicle. 

All of this can have an impact on the amount of risk you pose to car insurance companies, thus impacting your car insurance rate.

  1. Credit score

Believe it or not, your credit score can also impact your car insurance rate. Though it may not seem related to driving, your credit score says something about how responsible you are in general. 

Studies show that those with higher credit scores tend to make fewer insurance claims. So if you have a low credit score, you’ll pay more in auto insurance. 

That said, some states like California, Massachusetts, and Hawaii don’t allow insurance companies to take your credit score into account. So if you live in those states, you won’t have to worry about this.

  1. Gender

Men and women tend to drive differently. Male teenagers are the most reckless drivers on average, so they tend to pay more in auto insurance than their female counterparts. At the same time, men in their 40s tend to pay less than women. 

So even though it’s not something you have control over, know that your gender may have an impact on your car insurance rate. 

But like your credit score, age is not allowed to be factored into your car insurance rate in certain states, including California, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania. 

  1.  Marital status

Lastly, your marital status can affect your car insurance rate (albeit only slightly). Why? Married people are seen as more responsible and less likely to get into car accidents. So if you are married, you might pay less for car insurance. 

But again, marital status is only taken into account in some states. In Hawaii, Montana, and Massachusetts, it’s not.

But again, marital status is only taken into account in some states. In Hawaii, Montana, and Massachusetts, it’s not.

Adding It All Up

Now that you know what factors impact your car insurance rate, you’re better equipped to find the best policy. Shop around online until you find a policy that’s both affordable and meets your coverage requirements.