10 Factors That Determine Your Car Insurance Premiums

Car insurance premiums are determined by a variety of factors. Some, such as age and marital status, aren’t things you can change, but others, like your driving record and where you live, do impact the rates you pay.

The type of vehicle you drive also influences your rate; expensive sports cars cost more to insure than minivans, for example. Credit matters, too—in states that allow it, a high score can earn you lower rates.

1. Age

Generally speaking, older drivers tend to pay less than younger ones. This is because teen drivers are involved in many more accidents than other age groups.

Similarly, married people typically pay lower rates than singles or widowed persons. This is due to the fact that married people consider their children’s safety when driving and are thus more cautious.

2. Gender

Men pay more for car insurance than women, although the rate gap closes once drivers reach age 25. This is because younger drivers pose a higher risk due to their lack of driving experience, and insurance companies calculate premiums based on statistics.

But six states, including California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania, do not allow gender to be used as a rating factor in setting rates. This means that male and female drivers should pay the same rate if all other rating factors are equal.

3. Driving Record

Your driving record is one of the most important factors insurers look at when determining your car insurance premium. Most companies will not insure drivers with a history of serious violations or accidents.

Serious infractions like DUI and excessive speeding will have a greater impact on your rates than minor violations. Major offenses typically stay on your record for a longer period of time, while minor claims or tickets are removed from your record after three years.

Keeping a clean driving record means lower rates, so make sure you check your driver’s license record at least once a year for mistakes.

4. Vehicle Type

The type of vehicle you drive plays a big role in your car insurance rates. Certain models are more likely to be involved in accidents or stolen, so they can have higher premiums. Additionally, luxury vehicles with expensive features might cost more to insure than standard trims.

The vehicle’s value, year, purchase price and safety ratings also factor into car insurance rates. The way you use your vehicle is taken into consideration, too. For example, commuting to work on weekdays could impact your rates more than driving it for pleasure on weekends.

5. Vehicle Use

How often you drive your vehicle plays a key role in determining car insurance premiums. If you commute long distances on a regular basis, it’s classified as business use and may cause higher rates than pleasure driving or reduced annual mileage.

The details of your vehicle are also considered, such as its make and model. In addition, features like anti-theft systems and advanced safety technologies may help lower your rates as well. The location of your vehicle is another factor that can affect your rates due to higher claims in certain areas compared to others.

6. Credit Score

While your typical credit score doesn’t factor into car insurance rates, your auto insurance provider does evaluate your credit history. They use a unique scoring method known as a credit-based insurance score to assess the risk of your claim, which helps them determine how much you’ll pay.

They look at your outstanding debt, credit history length and pursuit of new credit to determine this score. The good news is that improving your credit will also improve your rate. However, some states do not allow credit to be a factor in rates.

7. Marital Status

Marital status might not seem like an important aspect to consider when determining vehicle insurance rates, but it actually is. Insurers tend to view married drivers as less risky and therefore charge them lower premiums.

However, this is not universal. Some insurers may not offer any savings for married couples at all.

If you’re not planning on getting hitched just to save on car insurance, there are other ways to reduce your costs. For example, you can ask your provider to list your significant other as an occasional driver on your policy.

8. Mileage

When you apply for a car insurance policy, the insurer will ask you to estimate your annual mileage. If your circumstances change and you drive fewer miles than expected, let the insurance company know. They may give you lower rates based on their insurance mileage brackets or even offer a pay-per-mile insurance plan.

Insurance companies can also monitor your driving and mileage via telematics. This type of device plugs into your car and can be installed by the insurer or by third-party companies. Many drivers save 32% on their car insurance when they halve their annual mileage total.

9. Comprehensive Coverage

Insurance companies review a variety of different factors to determine your car insurance premium. This includes things like your age, gender and driving record. While you can’t change your age or gender, you can control other rating factors, including by driving carefully and avoiding tickets and accidents.

In addition, you can also lower your rates by adding safety features to your vehicle or taking a driver education course. And don’t forget to shop around every six or 12 months for the best rate. You may be surprised by how much you can save.

10. Collision Coverage

Collision coverage covers damage to your vehicle when it hits another car or stationary object, like a fence or a wall. It is usually more expensive than comprehensive insurance, which covers non-accidental damage such as natural disasters, theft and vandalism.

When you decide whether or not to keep collision coverage, consider its value, premiums and your ability to pay a deductible if needed. It may be worth dropping the coverage if you estimate that three to five years of premiums would exceed your car’s value. Otherwise, you might benefit from the peace of mind that it offers.