There are many factors that will affect your car insurance rates. The biggest factors are the type of coverage, past violations and accidents, history of claims, the vehicle value, and your age. Here are the major 19 factors that will determine your car insurance rate.
Table of Contents
- 1. State Requirements
- 2. Insurance Company
- 3. The Type of Coverage You Choose
- 4. Your Past Violations and Accidents
- 5. History of Insurance and Claims
- 6. Driving Experience
- 7. New Car or Used Car
- 8. Your Vehicle Value
- 9. Annual Mileage
- 10. Age
- 11. Marital status
- 12. Credit score
- 13. Gender
- 14. Education
- 15. Job
- 16. You Live in a High-Risk Location or Not
- 17. Where You Park Car
- 18. Taking Advantage of Discounts
- 19. Deductibles You Choose
- Final Thought
1. State Requirements
Each state has different requirements for minimum car insurance, so you cannot buy a car insurance policy lower than your state’s minimum.
Liability coverage is the basic insurance required by each state, which includes bodily injury liability and property damage liability. Their structure will vary based on each state. You can compare the rate in your state with others in Bankrate.
2. Insurance Company
The insurance company you choose is one of the biggest factors that will influence your insurance rate. Your rate will be different from company to company, so it’s important to shop around and compare rates before you decide on an insurer.
3. The Type of Coverage You Choose
The type of car insurance coverage you choose affects your rates. For example, liability coverage is the required insurance by states, comprehensive and collision coverage are optional. Your insurance rate will increase if you include them.
Liability coverage covers damage to another person’s property and/or injuries caused by an accident in which you are at fault. While it doesn’t cover damages to your property or your injuries.
Comprehensive coverage is one of the most important types of coverage you can have on your car insurance policy. It helps protect you if your car is stolen or vandalized. Comprehensive coverage also includes protection for damages caused by natural disasters, like hurricanes and earthquakes.
4. Your Past Violations and Accidents
Your past traffic violations and car accidents history can boost the cost of car insurance coverage by 20% to 200%.
If you have been convicted of a DUI or received a number of tickets, your annual premiums will likely be much higher than someone who has not. Car accidents will also affect your rates, even if they were not your fault. Insurers take into account the severity of the accident, as well as how long it took you to file a claim.
5. History of Insurance and Claims
Your insurance and claim history is one of the most important factors that insurance companies take into consideration when determining your car insurance rate.
Most insurers look at how long it has been since they last insured you and whether there were any previous claims made under their policy with them.
The shorter you work with them and the more claims you’ve made, the higher your future rates will be even if it was not your fault.
6. Driving Experience
The more experience you have behind the wheel, the less of a risk you are to an insurance company. This is why many companies offer discounts for drivers who have been licensed for a certain number of years.
7. New Car or Used Car
New cars are more expensive to repair when they have accidents, which can increase your car insurance rate. Also, a certain make and model new car is more likely to be stolen, so your car insurance companies may also charge you more for this risk.
8. Your Vehicle Value
Your insurance company will charge you more if your car is of high value. It’s because they will have to foot a bigger bill if your car is stolen or damaged beyond repair. The lower the value of your car, the less you’ll pay in premiums.
9. Annual Mileage
Your annual mileage is a factor that can influence your car insurance rates because the more time you spend on the road, the more likely you are to have an accident.
According to the U.S. Department of Transportation Federal Highway Administration (FHWA), the national average annual mileage is 13,476 miles per year.
Most insurance companies consider the average mileage to be around 12,000 miles. This means if you rack up too many miles in a year, your insurer may consider you to be a high-risk driver and increase your premiums accordingly. And if you drive less than the average person, your rates may be lower because of this.
Young drivers pay more for car insurance than older drivers. This is because they are more likely to get into accidents. Your insurance may also go up if you’re too old, for example, older than 65.
11. Marital status
Married people can receive lower car insurance rates. Many insurance companies claim married couples drive safer and get into fewer accidents than single, divorced, or widowed people.
12. Credit score
Your credit score is one of the most important factors that car insurance companies look at when setting rates. A poor credit score can lead to higher premiums, while a good credit score can lead to discounts.
Generally, there is a only slight difference in car insurance rates between males and females, but boys and young men are more likely to get in car accidents than other people. So their rate is higher.
If you have a college degree, your car insurance rate may be lower than a high school education driver. This is because statistically show, people without a college education are more likely to get in accidents.
Drivers with office job pay less for their car insurance premiums. The reason for this is because these drivers are seen as being more responsible and therefore, less likely to file a claim.
16. You Live in a High-Risk Location or Not
If you live in a high-risk location, car insurance rates will be higher. This is because there is a greater chance that you will file a claim due to accidents or theft. Some of the most dangerous places to live are major cities, as they have high crime rates.
17. Where You Park Car
Parking your car in a garage is less risky than leaving it on the street, so your car insurance company may give you a discount for doing so. If you don’t have access to a garage, try to find a spot that is well-lit and has plenty of people around.
18. Taking Advantage of Discounts
One way to keep your car insurance rates low is to take advantage of discounts. Most insurers offer a variety of discounts, so it’s important to ask about them when you’re shopping for coverage. Some of the most common discounts are for good drivers, students, seniors, and members of certain professions or clubs.
19. Deductibles You Choose
When your limits in an accident are fixed, deductibles can be used to adjust your insurance rate. For example, if your vehicle is destroyed, a high deductible on your auto insurance policy means you’ll pay more out of pocket for the repaire. On the other hand, High deductibles can help you save money on your insurance. Lower deductibles will save you money on repairs and replacements, but they will raise insurance premiums.
There are a number of factors that can affect your car insurance rates, and it’s important to know what they are before you make any changes. We hope this article has been helpful in explaining the effects of these different aspects that determine your car insurance rate.