What factors affect your car insurance rates?

When you purchase most goods or services, chances are you’ll be charged the same as everyone else. But how much you pay for car insurance can differ significantly from what your friends, relatives, neighbors and others pay. That’s because insurers value different criteria when calculating rates.

Among the factors insurers consider when setting individual auto rates:

• Your age
• Your car’s make and model
• Where you live
• Your driving history
• Your claims history
• The miles you drive
• Your coverage options and levels
• Your deductible
• Your marital status
• Your gender
• You credit history

Note that California, Hawaii, Massachusetts and Michigan prohibit insurance companies from using certain details like gender and credit history in their calculations.

Why is it important to know what goes into setting your car insurance rate?

Looking more closely at the factors that affect what you pay and working to improve areas within your control – such as your deductible or the miles you drive – can lead to a lower car insurance bill.

Key highlights

• Carriers commonly evaluate several car insurance factors when determining the rates they charge, such as where you live, your claims history, your coverage levels – and even your credit history.
• Talk to your insurance agent or carrier about how they calculate your rate and inquire about ways to reduce your costs.
• You can pay less for car insurance by shopping around among different insurers, driving safely and qualifying for eligible discounts.

Which factors affect car insurance rates?

Insurance companies don’t arbitrarily determine the rates they charge customers. They carefully evaluate several aspects, including your likelihood of filing a claim.

“Insurance rates are typically determined via a thorough actuarial analysis of an insurer’s data,” says Rich Gibson, senior casualty fellow with the American Academy of Actuaries. “This process generally involves assessing an insurer’s exposure to loss associated with an insurance policy – based on a model that takes into account many factors. Rating factors that indicate a higher exposure to loss will generate a larger premium price.”

According to Mark Friedlander, director of corporate communications for the Insurance Information Institute (III), an industry trade group, auto insurers typically assess more than a dozen individual rating factors when determining the costs of a policy.

“Each insurer has its own proprietary underwriting methodology, so some may rate certain factors higher than others or not include particular factors,” he says. “Additionally, some of these factors are prohibited in certain states [such as] your credit, gender, age and marital status.”

Let’s take a deeper dive into each of the key factors that affect car insurance rates.

Factor #1: Age

In general, mature drivers have fewer accidents than less experienced drivers, particularly adolescents.

“Insurers generally charge higher premiums for teenagers and young adults below age 25 because they have the highest risk of accidents,” Friedlander says. “Rates typically steadily decline for adults until about age 70, where there is a slight uptick in premiums due to an increased risk of accidents.”

Auto insurance comparison site CarInsurance.com and its data partner Quadrant Information Services found that car insurance prices can vary significantly across age groups. For instance, the average state minimum rate for full coverage for a 16-year-old is $7,149, versus $2,259 for a 25-year-old, $1,897 for a 40-year-old, $1,737 for a 55-year-old, and $2,010 for a 75-year-old driver, according to data we pulled from Quadrant Information Services in the spring of 2024.

Note that age is prohibited as a rating factor in Massachusetts and Hawaii, although Massachusetts permits insurers to use years of driving experience as a rating factor.

Factor #2: Vehicle make and model

It’s little surprise that the type of car you drive impacts the price of insurance. Case in point: the national average full-coverage rate for a Honda CR-V is only $1,722 and just a bit more, $1,737, for a Chevrolet Express van. But the price skyrockets to $2,665 for a Toyota GR Supra and $4,005 for a Tesla Model S.

“Insurance carriers will usually decrease your premiums if you have an older car, as older vehicles have less value. A newer car will have a higher value, meaning your premium will likely be higher. If you own a luxury car, your insurance rates may be even costlier due to specialty features, high repair costs, and a higher likelihood of being stolen or vandalized,” says Nick Christensen, agency owner with Goosehead Insurance in Nampa, Idaho.

Factor #3: Where you live

Your address can make a big difference in determining what your carrier will charge. We found, looking at Quadrant data, that you’ll pay an average rate of $1.086 in Bridgewater, Maine, or $1,309 in Boise, Idaho, but the price jumps to an average of $3,280 in Detroit and $2,600 in New York City.

“Factors such as local crime rates, weather patterns and traffic density can influence rates,” says Jason Rodriguez, agent and principal owner of Prominent Insurance Agency in Wilmington, Delaware. “For example, urban areas with high traffic congestion may see higher premiums due to an increased risk of accidents.”

Whether you park in a garage and install vehicle anti-theft features also matter. Additionally, note that many states permit insurers to rate by ZIP code in addition to state and city.

Factor #4: Driving history

Your track record behind the wheel greatly affects your auto insurance policy cost.

“Your driving record is one of the major factors that determines the rate you will pay, as it provides the insurer with visibility into your level of risk and probability of filing a claim,” Christensen says. “If you have a lot of tickets on your record, your premiums will go up. Alternatively, keeping a clean record can lower your rates and unlock good driver discounts.”

To illustrate this point, consider that your full coverage rate will go up by an average of 162% (from $2,352 to $6,164) in Michigan if you are caught driving under the influence (DUI). And you can count on forking over between $217 to $1,355 more annually for full coverage if you are cited for speeding 11 to 29 mph over the limit, according to our analysis.

Factor #5: Claims history

Like your driving record, your history of claims provides an indication of your driving habits and level of risk to the insurance company. Insurers check your Comprehensive Loss Underwriting Exchange (CLUE) report, which reveals your claims history over the past seven years.

“If you have filed one or more claims during this period, you will be rated as a higher risk than a driver with a clean CLUE report,” Friedlander says.

We found that car insurance rates rise around 56%, on average (from $1,897 to $2,964), after one at-fault accident with more than $2,000 in damage. If you have two at-fault accidents that create property damage over $2,000, your rate may increase 122% (from $1,897 to $4,219).

Factor #6: Mileage driven each day

The law of averages dictates that the more miles you put on your odometer, the greater the chance of accidents. Consequently, you’ll pay more if you drive your car to work or use it to commute long distances.

“If you drive only occasionally – what some companies call ‘pleasure use’– you will pay less. A low-mileage driver who typically accumulates fewer than 7,500 miles per year will pay less in premiums on average,” Friedlander says.

He adds that many carriers offer pay-per-mile insurance programs targeted to low-mileage drivers, which can result in significant savings. Granted, some major insurance companies, such as Progressive, don’t offer these programs, but other companies, such as Metromile, specialize in pay-per-mile insurance.

Factor #7: Coverage levels and options chosen

Your insurance price will also depend on the type of auto insurance coverage and levels of protection you choose. 

If you choose higher liability limits and add comprehensive and collision coverage, your cost will go up.

Liability insurance pays for the injuries and property damage you cause in an at-fault accident.

Collision insurance pays to repair your vehicle after an accident involving another car or a stationary object, such as a telephone pole. Comprehensive insurance pays to repair damage to your vehicle from non-collision events, such as theft, vandalism or weather damage. 

Collision and comprehensive coverage are also packaged in what’s known as full coverage – which not only covers damage you cause but also helps pay for repairs to your vehicle in an accident.

Coverage limits are expressed as a set of numbers, for example, 50/100/50, which means $50,000 for bodily injury per person, $100,000 for bodily injury per incident and $50,000 for property damage per incident.In many states, the minimum required coverage is 25/50/25.

“The higher your chosen coverages, the higher your premium will likely be,” says Michael Silverman, founder and president of New York City-based Silver Lining Insurance Agency. “However, there are times when opting for lower coverages will still produce a higher premium based on your driving record and other factors.”

The rates below were collected from auto insurance comparison site CarInsurance.com and its data partner Quadrant Information Services for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for full coverage insurance policy with liability limits of 50/100/50 and 100/300/100 with a $500 comprehensive and collision deductible. 

Factor #8: Deductible

There’s a simple calculus at work when it comes to your deductible, or the amount you’re willing to pay out of pocket when you file a claim: The higher it is, the lower your premium, and vice versa. Drivers should always have their deductible amount in savings if they need to file a claim. Your claim payout will deduct the deductible amount you chose when you purchased your policy.

“The less you have to pay out of pocket, the more the carrier has to pay out. For this reason, having a lower deductible will increase your premium,” Christensen says.

Be aware that there can be separate deductibles for collision and comprehensive coverages, as well as uninsured/underinsured motorist coverage. Auto insurance policies do not include deductibles for liability coverage.

Factor #9: Marital status

Actuarial data indicates that married drivers are safer and are involved in fewer accidents. That translates to paying cheaper rates on average than unmarried drivers (although marital status is prohibited as a rating factor in Michigan and Hawaii).

“If you are married, it’s to your benefit that you are almost always required to be on the same auto insurance policy as your spouse since you both have access to the same vehicles. Remember to inform your agent if you get married,” Christensen says.

Factor #10: Gender

Women often pay less for auto insurance than the opposite sex. The reason? Females statistically tend to get into fewer accidents, especially serious accidents caused by DUIs, than males.

“For nearly every year from 1975 to 2021, the number of male crash deaths was more than twice the number of female crash deaths,” according to a report from the Insurance Institute for Highway Safety posted in May 2023. But, the report notes, “the gap has narrowed.”

However, California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania do not allow insurers to use gender as a rating factor.

Factor #11: Credit history

Actuarial research reveals that how you manage your financial affairs can be a good predictor of your likelihood to file insurance claims.

“Using credit history as a rating factor allows carriers to better match insurance premiums with the amount of risk that an individual customer might pose,” Friedlander says. “The goal is to minimize the possibility that customers with lower risks might subsidize rates for those with higher risks.”

In California, Hawaii, Massachusetts and Michigan, however, credit history is not allowed as a rating factor.

How to save on car insurance

The good news is that, even if some of these rating factors are out of your control, you can lower your bill by following best practices. Here are recommended ways to reduce car insurance costs:

• Review and adjust your policy and coverages annually to match your current needs and budget.
• Drive vehicles with higher safety ratings and lower insurance expenses.
• Practice safe and responsible driving to maintain a clean driving record.
• Increase your deductibles.
• Shop around. Compare quotes from different carriers to find the best deal.
• Opt for usage-based insurance. These programs use a plug-in device or a mobile app to see how often and how safely you drive to set your rate. 
• Capitalize on insurance discounts. “[You] could save 40% or more off your premium bill,” Friedlander says.  
  Common options include discounts for:
  
  
  • Combining your auto insurance with other policies under the same provider, such as bundling auto and home insurance.
  • Insuring multiple vehicles under the same policy.
  • Maintaining a clean driving record with no accidents or moving violations for the past three years.
  • Keeping low annual mileage on your insured vehicle.
  • Installing anti-theft devices on your vehicle.
  • Driving a car equipped with advanced safety features.
  • Completing a defensive driving course.
  • Undertaking a certified driver’s education program, especially for newly licensed drivers.
  • Establishing a long-standing relationship as a customer.
  • Enrolling in automatic payment options.
  • Choosing paperless billing for convenience.
  • Paying your premium in full rather than through installments.
  • Being a homeowner.
  • Participating in usage-based or telematics insurance programs.
  • Maintaining good grades as a student driver in high school or college.
  • Living away at college without a vehicle as a student.

Bottom line

Being a more informed consumer can help you make better decisions when it comes to shopping for car insurance. Take the time to understand how carriers determine their rates and ask questions about anything in your policy or on your bill that you don’t understand.

Methodology

Editors collected rate information from auto insurance comparison site CarInsurance.com and its data partner Quadrant Information Services for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for full coverage insurance policy with liability limits of 100/300/100 and a $500 comprehensive and collision deductible. We also calculated rates for a 50/100/50 liability-only policy.

We analyzed more than 53 million quotes, more than 34,000 ZIP codes and 170 insurance companies nationwide.

Note: 100/300/100 means up to $100,000 for the medical bills of those you injure, up to $300,000 per accident for bodily injury liability for all persons injured in one accident, and $100,000 to repair other drivers’ cars and property that you damage.