15 Factors That Affect Car Insurance Rates + 2 That Don't

You're not alone if you're wondering why your car insurance costs often change. More factors are used to determine your rates than you might think.

Car insurance companies primarily assess your risk level to determine your premiums. Your driving record plays a role (those two speeding tickets won't help), but so do other factors like how long you've driven, where you live, how much you drive, and the make of your car. Even your age, gender, and marital status can influence your premiums.

Learn the top 15 factors that can impact your auto insurance rates, a couple that won't (despite what you may have heard), and our tips for saving on insurance despite factors outside your control.

Factors that can influence your auto insurance premiums

If you notice that your car insurance premium often goes up, or you're just curious about ways to cut costs, understand how each of these factors contributes to your overall costs.

Type of car

The make and model of your vehicle play one of the most important roles in your premiums. Some cars are more prone to vandalism and theft than others, and the safety ratings on every car differ. Insurance companies look at a car's size, safety ratings, history of vandalism or theft on that type of vehicle, and its overall value, to name a few things.

If your car is worth a lot, expect to have higher premiums as it will cost more to insure than a cheaper baseline-model car. Repair costs and replacement parts for luxury or sports cars cost insurance companies more than less expensive vehicles, and your insurer will always pass these costs down to you when it can.

Where you live

Car insurance companies base your premiums on where you live because some areas are at higher risk of heavy traffic, car accidents, and theft or vandalism. People who live in highly populated areas usually pay higher premiums than drivers in rural areas because of the increased risk that comes with living around more people and drivers.

Where you park

Insurance companies also pay attention to where you park your car. If you park on the street daily, it's at more risk of damage or even theft. But if you park in a secured garage, there's more protection and less risk, leading to lower premiums.

Driving record

Your driving record plays an integral role in your car insurance premiums, as you've likely guessed. If you have a clean driving history, you'll have lower premiums than if you've had multiple moving violations, DUIs, or accidents that you caused.

Auto insurance companies use your driving history to determine your future habits. While one or two mishaps may not cost you a lot more or even affect your rates, if you repeatedly have issues with driving, you'll likely pay more the next time your insurer takes a peek at your record.

Age

Car insurance is the one time that you'll be grateful there are more candles on your cake each year. That's because older drivers tend to get into fewer accidents. So the older you are, the less you'll likely pay for coverage. The same can be said in reverse. Teen drivers or adults sharing a policy with drivers under the age of 25 can expect to pay higher premiums on their auto coverage. For example, adding a 16-year-old driver to your policy adds an average of $2,267 to your annual costs, according to Insure.com data. Being newer to driving and less experienced, teens and young adults are seen to be at a higher risk of accidents and more likely to file claims.

If you're a young driver or plan to add one to your policy, I encourage you to look for companies that offer car insurance discounts for good grades or new drivers who take recognized driver training courses.

Read more: Best Car Insurance for Teens and Young Drivers

Years of driving experience

While age and driving experience go hand-in-hand, not everyone gets their license at age 16. The longer you've been driving, the more chances you have to show a clean driving history. The longer you go without having incidents on your record, the safer you are to insure.

Insurance history

Auto insurance companies look for continuous coverage. Unless you are a new driver, insurance providers see gaps in coverage as an indicator of higher risk. You can expect to pay a higher premium for your car insurance if you have any gaps. This holds true even if the gaps in coverage are short and for perfectly good reasons, such as traveling abroad or moving to a place where you don't have a car.

Claims history

Because insurance companies base their premiums on risk, they pay close attention to your claims history giving lower rates to drivers they perceive as less likely to file insurance claims.

Basically, if they determine you are likely to cost them less money, then they'll charge you less money. Therefore if you have a history of filing claims, this may increase how much you end up paying for your auto coverage.

Annual mileage

How far you drive is another factor that can affect your rates. People with longer daily commutes or those who drive longer distances throughout the year can expect to pay more for car insurance coverage. This is because insurance companies believe that the more you drive, the more likely you are to get into an auto accident or have reason for a claim.

Vehicle use

Much like the distance you drive, how you use your car can also affect the coverage rates you pay. For example, those who use their car less, say for just a weekly trip to the grocery store, will likely pay less than those who drive their car regularly on long business trips.

For this reason, coverage for personal-use vehicles tends to cost less than for cars used for things like business or ridesharing. If you do plan on using your car for work or you live in one of the best rideshare markets, make sure you have proper coverage and expect it to cost you a little more.

Carrying a loan or lease

If you financed or leased your vehicle, the lender or leasing company may require full insurance coverage on your vehicle. In other words, you may have to carry more insurance than you intended, but must carry it to avoid violating the terms of your contract. Once you own the vehicle without any loans, you can change the coverage as you see fit.

Level and types of coverage

The amount of coverage you choose has a direct impact on your rates, as you'll already know if you've ever tested out different levels of coverage to see possible rates. Different types of coverage also just tend to cost more. For example, comprehensive coverage will cost more than collision coverage alone. In addition, the higher your coverage limit, the higher your premium will be.

Although most states set minimum insurance standards, you can save money on your car insurance by not purchasing any extras you don't need. Start by determining how much car insurance you need for your driving habits and in your state, then decide whether you need to add any extra coverage.

Deductibles

You might think selecting a lower car insurance deductible will save you money in the event you get into an auto accident, but whatever you don't pay in a deductible you'll likely have already paid in the form of a premium.

When it comes to selecting a deductible amount, you should choose one you can afford while considering that a higher deductible often correlates with a lower premium. Remember, the only time you'll be responsible for paying a deductible is when you file a claim, but you must have the money available.

Credit score

There are some correlations between your credit score and your driving habits. Insurance companies use your credit-based insurance score to determine the likelihood of you filing an insurance claim. This score is derived from certain aspects of your credit score, such as your payment history and how much you owe. Insurance companies believe that people with better financial habits will be a lower risk on the road.

This means that if you improve your credit score you'll have a higher insurance credit score and potentially have lower insurance premiums.

Gender

Women tend to pay less for car insurance than men, because studies show that more men than women die each year in motor vehicle accidents and are more likely to take risks while driving. While this may not pertain to you individually, your gender automatically puts you in a premium category based on historical data.

This means in a situation with a male driver and female driver with otherwise similar driving histories, a woman is likely to pay less for coverage than a man.

Marital status

Your marital status can also affect your car insurance rates because some insurance companies believe married couples are more financially stable and also safer drivers. This means these individuals may pay less than single, windowed, or divorced drivers.

Factors that won't influence your auto insurance premiums

Although there's a myth that your car's physical appearance can impact your insurance rates, and one color might be more or less expensive to insure than another, this is not true. What your car looks like plays no role in determining your premiums, although the body style and make do. So go ahead and buy that red car, if that's what you want.

You may have also heard that the number of doors on your vehicle can impact your rates, but this isn't exactly the case either. The make and model of your car absolutely affect your insurance premiums and are, in fact, one of the factors that play the biggest role in this, but simply the number of doors isn't what insurers are looking at. That said, two-door vehicles can cost more to insure than four-door vehicles because two-door vehicles are often coupe-style sportscars that are more expensive to cover than many four-door sedans anyway, but this really just comes down to exactly what car you drive.

How to lower your car insurance costs

There are many factors outside of your control when it comes to your auto insurance rates, but there are a few ways to make sure you're getting a price you can handle on your coverage. Here are three of our top tips for lowering your premium regardless of the rest of your profile.

Shop around

Compare car insurance quotes from at least three to five insurers to determine which can give you the best rate. Getting quotes online generally takes a few minutes, and you're not required to make any commitments during the process.

Consider bundling

Insurance companies often offer a discount if you have more than one type of insurance product with them. For example, you could get auto and homeowners insurance, auto and motorcycle insurance, or auto and life insurance, and likely get a discount on both policies.

Look for discounts

Car insurance companies often have a long list of discounts that can help cut the cost of your coverage. For instance, some may offer a safe driving discount, a discount for young drivers who are good students, or a lower rate if you don't drive often. Insurers may also offer other discounts for drivers with various safety features on their cars. Review the discount options available with your insurer and make sure you're getting credit for each one you qualify for. 

I always ask insurance agents about discounts that may apply to me, because you'll never know what you might be missing out on if you don't investigate.

Bottom line

Knowing the factors that affect car insurance rates can help you save on your premiums. Try adjusting things you can control, like your credit score, driving habits, and coverage, to compare rates for different policies and find the best premium you can qualify for. 

And if you're ready to switch companies, remember to shop with multiple providers, bundle when you can, and always sniff out discounts.