7 Factors That Influence Your Auto Insurance Rates

If you’ve ever shopped around for auto insurance quotes, you might wonder why they vary among providers, or even why your premiums vary from year to year. The truth is that insurance companies take a number of factors into account when determining your rate. Your personal history plays a big role in determining your insurance rates, but outside factors like changes in state coverage requirements can affect rates as well. All of this simply means premiums can fluctuate from year to year. In this article, we’ll explore some of the different influences on insurance rates.

Past Driving Record

It might seem obvious, but one of the first things insurance companies look at when you’re trying to buy coverage is your driving record. If you have prior violations on your record (such as accidents, moving violations, parking tickets, or other infractions), the insurance company will likely consider you a high-risk driver. High-risk drivers tend to pay higher premiums. Additionally, if you’ve made a lot of insurance claims, you could end up paying higher premiums for the next 3-5 years. (This may happen even if the accident wasn’t your fault!) When you think about how your driving record affects your rate, it becomes all the more important to slow down and drive carefully.

Vehicle Make and Model

Though premium rates don’t vary much between men and women once they’re past the age of 25, men do tend to pay more for insurance overall. However, this is due more to the types of cars men drive. Certain types of cars, like luxury cars and sportscars, for example, cost more to repair, which means higher premiums. On the other hand, cars with high vehicle safety ratings can help you get a discount from your insurance company.

Where You Live

You might not think that your zip code matters all that much when you’re shopping for auto insurance. Surprisingly, though, insurance companies account for certain risks depending on where you live. For example, cities have a higher concentration of drivers, which means more claims. Living in a city also means living in a place with higher rates of theft, which means higher rates. Even the weather you experience can directly affect road condition and the number of claims insurance providers receive, so that too can affect your premium.

Age and Gender

Because they lack experience on the road, insurance companies consider younger drivers (between ages 16 and 24) high-risk drivers. And, because women tend to have lower rates of accidents on the road, male drivers will also tend to pay higher rates during this period. Women are also less likely to drive while under the influence or incur driving infractions. The good news, though, is that this disparity drops off around age 25, so drivers over 25 with good driving records can expect to pay about the same rate regardless of gender.

Your Marital Status

Aside from spending the rest of your life with the person you love, one of the benefits of getting married is the effect on your financial situation. You’ll probably save on taxes, but you may also get lower car insurance rates. If both of you have good driving records, you can save even more. Why? Well, some insurance companies view life events like marriage as a sign that the drivers are mature and therefore less likely to drive irresponsibly. However, this depends on both the company and your state, so you’ll want to check and see if you qualify for discounts.

Frequency of Vehicle Use

Even good drivers will pay more for insurance if they drive frequently. Simply, when you drive more, there are more chances for you to get into an accident. Higher risk of an accident means that insurance companies will charge you more. The good news is, if you can take public transport or carpool to offset the number of miles you drive, you may also be able to save on your premiums.

Whether You’re in Good Standing With Your Insurer

Just like late credit card payments affect your credit score, paying your premium late or missing a payment will ultimately affect your rate. Your rate might not jump after one missed payment, but this is something to keep in mind. Avoid penalties, fees, and other consequences by making payments on time.

While insurance companies use unique algorithms that take more factors into account than we could possibly list here, these are some of the qualities that can change your rate. This is just one of the reasons it’s so important to shop around when you’re looking for coverage. Comparing rates guarantees you’ll find a rate that fits your needs and budget, and it can even help you save big on your next premium.