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car insurance rate factors

Buying car insurance can be stressful and confusing because so many factors influence the price. Although a good insurance agent will explain all of them to you, you should know all of them before calling an agent.  That way, you won’t be pressured into making a quick, perhaps unwise, decision. Here is a list of the major factors that influence your car insurance rates.  

Factors that Influence Car Insurance Rates

Here are the most common situations that affect car insurance rates.

  1. Age. If you are younger than 25, you will pay a higher insurance premium than more mature drivers. This is because statistics show that younger drivers have more automobile accidents.  Because older driver are shown to have less accidents, those aged 40-50 have the lowest car insurance premiums of any age group.
  2. Driving Record. Insurance companies operate from the assumption that your past dictates, or at least influences, your future. So if you have a poor driving record with several traffic violations or automobile accidents, you will pay higher car insurance premiums than if you had a clean driving record.
  3. Driving Habits. The more you drive your vehicle, the higher your car insurance rates will be. This is because the more you drive, the more chances you have to become involved in an accident. If you drive less than 10,000 miles per year, you may be eligible for a low mileage discount on your insurance premium.
  4. Place of Residence. Unfortunately, where you live can have a huge effect on your car insurance rates. For instance, you may pay a higher premium if you live in a high crime neighborhood.  You may also pay more if you live in a city because the heavier traffic can increase your chances of having an automobile accident.
  5. Type of Vehicle. When calculating rates, insurance companies also consider the type of vehicle you want to insure. For instance, some vehicles are “theft magnets” and are more likely to be stolen. Some automobiles are also more expensive to repair than others. If you drive a vehicle that falls into one or both of these categories, you could be charged more on your car insurance premium.
  6. Your Car Insurance Coverage. The type of coverage you choose will significantly affect your rates. The 3 basic types of coverage are:
    • Liability -   This covers the damage to the 3rd party with which you’re involved in an accident. It does not cover your loss. Liability insurance coverage is required in most states, and state laws usually determine the minimum amount of this type of insurance you must carry.
    • Collision – This covers damage to your vehicle incurred as a result of an accident. This type of insurance is required if you finance your vehicle.
    • Comprehensive – This covers non-collision type damage to your vehicle such as that caused by fire, floods, storms, etc.

Depending upon the laws of your state as well as your personal needs, you may choose one or all three of these basic types of car insurance. Whatever coverage type(s) you choose, however, will affect the amount you pay in premiums.

Now that you know the major factors that influence car insurance rates, give your insurance agent a call. You can be confident that you will be able to negotiate the best rates for your situation.