United States
United States
Auto insurance rates are based on numerous different factors and each insurance company uses it’s own weighting system when calculating premiums. When you request an auto insurance quote, the details you provide are used to set your rate. The main factors that affect your auto insurance rate are detailed below:
A more expensive car costs more to insure. This is due to the higher cost of repairs or replacement.
Certain types of car also cost more to insure. High performance sports cars usually attract higher insurance rates because insurers expect these vehicles to be driven at greater speeds, potentially causing greater damage in an accident. Convertibles normally cost more to insure than the equivalent coupe version without an open top, due to the greater risk of more severe injuries if the car rolls in an accident. Vehicles with better safety features and ratings attract a lower premium.
Cars that are more likely to be stolen attract a higher premium. The National Insurance Crime Bureau maintains a list of vehicles most likely to be stolen.
Where you drive and where your car is garaged influences the cost of insurance. People living in areas with higher rates of theft, vandalism, and traffic accidents tend to pay higher premiums. In general, people living in cities and urban areas will pay more than those living in small towns and rural areas. The National Insurance Crime Bureau also maintains a list of vehicle theft hot spots.
The more you drive, the more you will normally pay for insurance. How far you drive to and from work will affect the cost - the longer the distance, the higher the cost.
If you use your car for a business purpose (beyond simply commuting to and from work), you are likely to pay a higher premium.
Your age, gender, and marital status can all impact your premium. These differences in cost are all based on driving and accident statistics for particular demographics of the population, not your own individual driving record.
Statistically, drivers under the age of 25 are more likely to be involved in accidents, and therefore if you are under age 25 your premiums will probably be higher. In particular, the accident rates of young males tend to be higher than those of young females, and those of single males tend to be higher than those of married males of the same age group.
How many years you have been licensed to drive will affect the cost. Having more years driving experience can have a favorable impact on your premium.
Accidents and moving violations (e.g., speeding tickets, DWI/DUI) adversely affect your premium. These are an indication of higher risk to the insurance company; therefore they will charge you more. But if your record improves, over time your premiums should get lower. Different companies have different look-back periods, but most won’t factor in accidents and violations that occurred more than five years ago, so even if you do end up in an accident, it won’t affect your insurance premiums forever.
A better credit history will lower your rate. Most insurance companies do not use your actual credit score. Instead they use an "insurance score" which is derived from your credit history. An insurance score places different weightings on items in your credit history, putting more emphasis on items that have been shown to have a high statistical correlation to insurance losses.
Not having a current auto insurance policy is likely to result in a higher premium.
The more coverage you purchase the more you will pay. Purchasing additional coverages (e.g. rental car reimbursement coverage) may also increase the cost of your premium.
The higher the deductible, the lower the cost – e.g. choosing a deductible of $500 will result in a lower premium than a policy with a $250 deductible.
In addition to above factors which can affect your premium, you may be entitled to one or more discounts that reduce the cost of your policy. Read more about auto insurance discounts.
The above factors can all affect the amount you will pay for auto owners insurance, but none of these factors should deter you from obtaining and maintaining a current auto insurance policy. From a long term perspective, one of the best ways to lower you insurance costs is to maintain continuous insurance coverage and a clean driving record. And of course, it’s always better to be financially protected in the event of an accident.
