22 Factors that Affect Car Insurance Premium Rates

By Randy Luton | Last Updated: 07/24/2023

Key Insights

  • There are multiple factors that affect the car insurance rate for any driver of any state in our country.
  • Car insurance checks different factors to analyze your profile and decide your premium amount.
  • All the factors that affect the car insurance cost can be divided into 6 major categories; personal data, demographics, finances, driving habits, vehicle details, and last insurance.
  • Each factor has its own importance; some play a huge role in the car insurance ost while others do not affect much.
  • You can always work on improving your profile by checking these factors and getting lower insurance rates.

Almost all the state of the United States require mandatory car insurance for drivers. If you are someone you thinks that to buy insurance all you have to do is ask your friends and colleague about their agency and buy the similar policy then you might end up paying way too much insurance premium than you deserve.

Buying car insurance is a tricky and complex process. It needs solid research and comparison of insurance companies quotes. Along with that, there are several factors that directly and indirectly impact the final price of the policy.

This blog is all about the top factors that affect car insurance rates.

Factors that Affect Your Car Insurance Rates

RateForce has divided the factors into six major categories to help you understand the impact of each factor.

  1. Your Individual Data
  2. Demographic Factors
  3. Your Finances
  4. Your Driving Factors
  5. Your Vehicle Details
  6. Your Previous Insurance Details

Your Individual Data

The Age of the Driver:

Your age plays an important role when it comes to calculating your annual auto insurance premium cost. The age is directly proportional to the premium rates.

In easy words; if a driver is young around 16 to 25 years he will get higher premium rates as compared to a driver of more than 30 years of age.

The reason behind this is; age is considered as a factor of the experience of the driver on the road. The more experience you have on the road the lesser are the chances of you getting into an accident anymore.

Moreover; the young drivers are always considered as “risky drivers” and hence they get higher premium rates.

Your Gender:

Yes, you read it right; Your Gender plays a role in your insurance premium rate. But it has nothing to do with patriarchy. It is said that young women drivers are more careful on the road as compared to young men drivers.

Here is a detailed report of how women are considered safe drivers. You can check the statistics for traffic violations, fatal accidents, percentage of crashes, etc based on gender.

Your Marital Status:

Even though the difference is minor but yes married people get lower car insurance rates as compared to single, widows, or divorced people. The reason can be marital people are more responsible and tend to file fewer claims.

Your Education:

There is a belief among the insurance companies that people with high education degrees file lesser claims. And hence your education plays an important role in the calculation of your auto insurance premium in the USA.

From the past few years, several companies are eliminating this factor because of government regulations. But still, education plays a role indirectly.

Demographic Factors

Where you live and park your car:

There are two factors under this category; State and ZIP code.

Every state has its own rules and regulations for auto insurance and hence the car insurance rates by state vary a lot.

Your ZIP code has a lot to do with your auto insurance premium rate. The area where you live and where you park your car affects the rates. If your area is prone to natural calamities like floods, volcanic eruptions, thunderstorms, or fire then your insurance coverage will be higher. Similarly, if your area has too many cases of theft or vandalism then also the insurance rates will increase.

cta car insurance rates image
Get best car insurance rates by state. Enter your ZIP code now.

Your Finances

Your Job:

Some states have banned using the occupation of the driver as a factor to calculate the insurance premium. Still, there are states and insurance carriers who believes that drivers with certain profession files more claims as compared to others.

Following are the occupations that are considered high risk :

  • Doctors
  • Executives
  • Lawyers
  • Social workers
  • Salesmen
  • Builders
  • Business owners
  • Architects

The reason behind these occupations getting car insurance rates is the high stress and long working hours. Recently the Consumer Federation of America has declared this practice has harmful for people with low or middle levels of income.

Your Credit History

We all have heard the advice to maintain a good credit record. The credit history of a driver represents its reliability and hence it plays a major role in the premium rate calculation. A person who pays the bills on time and has no pending bills gets a higher credit score as compared to the one who misses the payment deadlines.

Auto insurance credit score is inversely proportional to the premium rates. That means; if a person has a high credit score then he or she will get a lower auto insurance premium rate.

If you Own a Home or Renting it

Homeowners always get extra credits when it comes to buying auto insurance. If a person has bought a home and is paying its EMI on time then it will automatically improve its credit score and creates reliability.

Moreover, there are chances that people who have their own homes tend to buy auto insurance along with homeowner insurance which gives the insurance companies an extra policy.

Your Driving Factors

The Area where You Drive your Car

Your regular driving route also plays an important role in finalizing your car insurance rate. If your driving route involves risky routes or the area is more accident-prone then you will be considered a risky driver, and we all know risky drivers get to pay high auto insurance premiums.

Your Driving Record

The driving record of a driver is one of the most important factors of the auto insurance rate. Different states and insurance companies follow the different timelines of checking the driving records. It can be the previous three years or five years.

If you have a clean driving record for the last few years then you will definitely be categorized as a low-risk driver. And hence you will get lower insurance rates. Similarly, if you have too many traffic violations, at-fault accidents, and even one DUI ticket then you are going to get higher insurance rates.

Your Parking Spot

Where do you park your car also affects your insurance premium.

If you have a parking garage to keep your car safe from the unexpected collision and natural calamities, then you will get a lower insurance rate. If you park your car on street then your car is always at high risk and hence your insurance rate increases.

How much you drive your vehicle

Yes, the miles you are covering every year also affects your insurance premium cost. If a person is driving less it means he or she is spending less time on the road and hence fewer chances of getting into an accident.

Even low-mileage drivers get an option of a pay-per-mile model for their policy where they will pay only for the miles they are driving.

Your Driving Experience

The number of years a driver is driving a vehicle is also an important factor of auto insurance premium calculation. The more experience a driver has the more are the chances of being a good driver.

A new driver is most of the time considered as a highly risky driver and hence gets the highest auto insurance premium.

cta auto insurance rates image
Do you have clean driving record? Get discounts on insurance rates.

Your Vehicle Details

Safety Features in your Car

The vehicles which have strong safety features have their advantage and disadvantage. Most of the time the high-tech safety features are considered as a factor of fewer injuries and hence the driver gets a lower insurance premium.

On the other hand; high-tech safety features are of very high cost sometimes and hence it leads to the high cost of replacement and repair for the insurance carrier. As a result, the driver might get a high insurance premium.

Type of Car

The model of your car will be compared and analyzed with the same or similar models in the database of the insurance agencies. They check factors like if the car is a sports car, what is the average repair cost, how much damage the vehicle causes to other vehicles, and how many cases of speeding are registered with that kind of vehicle model.

Chances of someone Stealing your Car

High-end, luxurious cars are most of the time the favorite of car thieves. Insurance companies also have data about what kind of cars are mostly stolen. If your car also comes under that category then you will definitely get higher premium rates.

Trim Level of your Car

Cars that have the latest technologies like inbuilt GPS, automatic doors, and high-end audio always get higher insurance premiums. Every car has a trim level; which defines the features in the car. The trim level is directly proportional to the insurance rate of the car. In simple terms; the higher trim level means higher insurance rates.

If Car is on a Lease or You own it

Most of the time the leasing company keeps it mandatory for the drivers to buy comprehensive and collision insurance along with gap insurance and low deductible. This keeps the leasing company safe and the driver will pay the difference between the amount pending on the lease and the value of the car. Hence; leasing a vehicle might cost way too high for insurance.

Your Previous Insurance Details

Your Previous Insurance Company

If you have a previous record of buying insurance from a nonstandard company. Afterward, you choose a large insurance provider that covers all risks then you might get into the category of a risky driver. And hence the new company will give you high premium rates.

Insurance Carrier you are Choosing

One insurance company can be the cheapest in one state but can be the most expensive one in other states. Still, it is always advised to shop around and compare the prices as much as you can for your insurance requirements. 

Type of Deductible You Select

Car insurance deductible is an amount you have to pay when you file a claim. The driver can select the deductible but the amount of deductible decided the insurance premium. If a driver has agreed to pay $500 and the cost of repair is $2000, then the insurance company will pay only $1500.

Deductibles generate some sort of surety that the driver will not get into an accident just to get the insurance claim.  Hence the higher deductible you decide to pay the lower will be the rate of your insurance premium.

Your Loyalty might Cost You

As a driver and loyal customer of our insurance company, we expect to get some loyalty points, bonus or some discounts. But most of the time it is just the opposite, insurance companies have a practice called “price optimization” which allows them to check the chances of a driver to change the insurance company.

By using many methods the companies try to earn more profits from the drivers which are less likely to change the insurance agency. A report by the National Public Radio in 2008 highlighted this issue among the citizens of America.

Best 5 Tips to Decrease Your Auto Insurance Premiums

As we have mentioned earlier; the most important trick is to compare the prices. Moreover; there are few other factors which help the driver to get lower insurance cost.

  1. Pay your bills on time to maintain a good credit score.
  2. Buy your car after checking if you need all the high-tech features and safety features.
  3. Keep your driving record clear from traffic violations, DUIs, and most importantly at-fault accidents.
  4. If possible try to pay a higher deductible to get lower premium rates.
  5. Ask for as many discounts as possible from your agency. Negotiate your rates.

Related Read >> Top 13 Tips To Lower Your Car Insurance Premiums

Over To You!

These are the factor that is going to affect your insurance premium rate. Make sure you check and follow this list before buying your policy. You can save hundreds of bucks. Moreover, try to compare auto insurance quotes as much as possible by using RateForce.

rating star

We generated 12,100,000+ Quotes (...counting), Helping People to Save Money and Time.

The more you compare the rates from different companies the more clarity you will get about how different factors impact your final premium quote.

Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.

Was this article helpful?

Randy Luton is the Founder and CEO of RateForce. He is passionate about InsurTech services and has in-depth knowledge about the auto insurance sector of the USA.