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Why is auto insurance so expensive? And what can you do to make it cheaper? The answer lies in the factors that determine your car insurance cost.
Every car insurance company has its factors that affect car insurance rates for calculating the risk — and therefore the cost — to insure you. Sometimes these algorithms don’t seem fair. But it helps to know the factors that affect car insurance rates and what you can do to get the best deal.
Do you think you’re overpaying on your current policy? Perhaps you think better insurance coverage can be found elsewhere for a lower price? If you’re looking to compare car insurance quotes, look no further than Compare.com’s rate comparison tool.
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15 Factors That Affect Car Insurance Rates
Auto insurance can be much more expensive for some people than others. Keep reading for the top factors that affect car insurance rates to see if you’re likely to be charged more or less than other people — and to determine what, if anything, you can do to lower your bill.
1. Your Age
Drivers under age 25 generally pay higher car insurance premiums, as they’re more likely to rack up speeding tickets and be involved in fatal auto crashes. For example, for liability-only policies, the average monthly premium paid by 18-year-old drivers is $297, versus $109 for 25-year-olds and $97 for 40-year-olds.
What can you do to lower your rates? Younger drivers can reduce their rates by enrolling in a defensive driving course, achieving good grades (e.g., being able to take advantage of good student discounts), and restructuring their policy to increase their deductible (e.g., from $500 to $1,000) and lower liability limits.
2. Your Gender
Males pay more for auto insurance than females since they are statistically more likely to be involved in auto accidents and as a group engage in riskier driving behaviors. The average annual premium for full coverage paid by males is $3,738 versus $3,507 for females.
What can you do to lower your rates? First, use a rate comparison tool like Compare.com to get quotes from multiple auto insurance companies. Don’t be surprised if one auto insurance company quotes a 30% higher premium than a competing company for the same coverage, thanks to using different underwriting criteria.
3. Your Marital Status
Married couples enjoy slightly lower premiums than singles. For example, the average monthly premium for full coverage is $356 if you’re single versus $230 if you’re married.
What can you do to lower your rates?
Single people and married couples alike can save money on their premiums by requesting a multi-policy discount (bundling two or more policies under the same insurer, e.g., auto and homeowners insurance) or a multi-vehicle discount (insuring two or more vehicles under the same insurance), which may be more likely for a married couple. Expect to save anywhere from 5% to 25% off your premium.
4. Where You Live
Auto insurance prices vary depending on the state you live in. For example, New York leads the nation in highest average auto insurance premiums ($337 a month for liability-only coverage), followed by Louisiana ($322) and Michigan ($312). Conversely, expect higher premiums if you live in a densely populated urban area, compared to a more sparsely populated suburban or rural area, thanks to the higher rate of traffic accidents, thefts, vandalism, and other high-risk scenarios in a congested city.
What can you do to lower your rates? Unfortunately, changing your location may be more challenging than maintaining a clean driving record or becoming an “A” student. Be aware that lying on your auto insurance policy about your location equates to insurance fraud, resulting in the denial of your application with potential legal ramifications if you’re caught.
5. Your Driving Record
Drivers with clean driving records (no history of insurance claims, at-fault accidents, or moving violations) are likely to pay much less in auto insurance premiums than those with even one speeding ticket, one at-fault accident, or one DUI on their record. For example, the average annual premium for full coverage for good drivers is $3,285, versus $4,169 for drivers with one speeding ticket and $4,678 for drivers with one at-fault accident.
What can you do to lower your rates? One way to lower your insurance rates is to maintain a clean driving record for the next three to five years. Other ways include restructuring your policy (e.g., eliminating collision and comprehensive car insurance coverage), increasing your deductible, and enrolling in a defensive driving course.
When it’s time to renew your policy, it’s a good idea to shop around and compare rates from at least three auto insurance companies.
6. Your History of Traffic Tickets
Getting a traffic ticket is one of the major factors that affect car insurance rates. One ticket can spike your premiums big time, since drivers with traffic tickets are generally considered higher risk. How much your premium will go up depends on several factors, such as the severity of the offense, the time since your last ticket, and your overall driving record. Obviously, speeding tickets will have less of an impact than a DUI or reckless driving conviction would.
For perspective, the average monthly premium for full coverage for a driver with one speeding ticket is $347 versus $274 for someone with a clean driving record.
What can you do to lower your rates? Enroll in a telematics program. Telematics discounts of up to 30% are awarded to drivers who use a smartphone, Bluetooth beacon, or similar tracking device to track their driving behavior. Some of the more popular programs include GEICO’s DriveEasy, Nationwide’s SmartRide, and State Farm’s Drive Safe & Save program.
7. Your History of Speeding Tickets
Drivers who have racked up one or more speeding tickets are known to be higher-risk drivers, especially if they’ve received multiple speeding tickets within a short period. Drivers with one speeding ticket pay an average annual liability-only premium of $1,918 versus $1,480 for a driver with a clean driving record.
What can you do to lower your rates? Enroll in a defensive driving course. These courses teach drivers about road hazards and safe driving techniques in exchange for a small discount. Insurers that offer defensive driving courses include but are not limited to Progressive, Nationwide, Travelers, Liberty Mutual, Allstate, and GEICO.
8. Accident History
Vehicle accidents have a very detrimental effect on your auto insurance premium. Drivers with one at-fault accident on their record average an annual liability-only premium of $2,144 versus $1,480 for drivers with no accidents.
What can you do to lower your rates? First, do your best to maintain a clean driving record, one of the main factors that affect car insurance rates. The longer you go without an accident, the lower your premiums. If you have had one at-fault accident, it doesn’t hurt to shop around and get quotes from competing auto insurance companies, as not all providers treat all at-fault accidents the same.
9. Any History of DUIs
One of the quickest ways to spike your premium cost is by racking up DUIs, especially within a short period. For example, the average annual premium for full coverage paid by drivers convicted of a single DUI is $6,434 versus $3,285 for a driver with a clean driving record.
How long does a DUI affect insurance? In most states, a DUI conviction will stay on your record for three to five years. However, each state has its own look-back window. For example, in California, DUI charges remain on your record for up to 10 years, versus five years for Alabama and 15 years for New York.
After a DUI conviction, expect your premiums to stay elevated for a minimum of three years before gradually dropping over time, as long as you maintain a clean driving record.
A DUI conviction is easily one of the biggest factors that affect car insurance rates.
What can you do to lower your rates? One way drivers with DUI convictions can save on auto insurance is by finding a provider that offers a discount in exchange for installing an ignition interlock device, which requires the driver to pass a breathalyzer test before starting their vehicle.
10. Your Insurance History
Your insurance history is one way auto insurance companies determine how much to charge for premiums. Any lapses in coverage may result in a registration/driver’s license suspension, fines, administrative fees, and possibly even jail time, depending on the severity of the offense, the reason for the lapse, and any applicable state laws.
For example, the penalty for driving without insurance in Florida for first-time offenders will result in a $150 fine. Subsequent offenses can cost up to $500 if they occur within three years of your first offense.
What can you do to lower your rates? First, to reduce your auto insurance rate, avoid any lapses in coverage and maintain a clean driving record free of claims, at-fault accidents, and traffic violations for as long as possible. Typically, good driver discounts kick in after three to five years of safe driving. Also, depending on the years you remain with the same auto insurer, you may be eligible for a multi-policy discount. For example, Progressive offers an average savings of 5% for a person purchasing two or more policies.
Learn more: What Happens If Your Car Insurance Lapses?
11. Your Occupation
One criterion auto insurance companies use to set insurance premiums is your occupation. Expect professionals such as accountants, CPAs, and nurses to pay lower premiums than those in jobs that don’t require a degree, such as custodians, janitors, and servers. For example, nurses are charged an average annual full coverage premium of $2,521 versus $3,322 for retail salespeople.
What can you do to lower your rates? If it aligns with your goals, pursuing a degree or switching to a new occupation may result in lower rates. But the cost of schooling will likely cancel out the savings, so we’re definitely not recommending changing jobs just to save a bit on insurance. If you’re already switching fields though, check in with your insurance on if your new path comes with a better rate. Be sure to be truthful on your auto insurance application. Lying about your work may force your insurance company to cancel your policy or lead to a refusal to pay a claim in the future.
12. Your Vehicle Make and Model
One of the biggest factors that affect car insurance rates is your vehicle’s make and model. According to Kelley Blue Book, in 2021 the most expensive vehicle to insure was the Maserati Quattroporte ($4,823 was the national average rate), and the cheapest car to insure was the Chrysler Voyager L ($1,272).
Premiums vary depending on the type of car. Every vehicle’s premium is priced differently due to recall records, body style, safety features, cost of parts/labor, and other variables.
Does car theft affect insurance premiums? Yes, car theft does affect auto insurance premiums. According to the National Insurance Crime Bureau, the most stolen vehicles in the United States in 2021 were the 2004 Chevrolet Pick-Up (full size) and the 2006 Ford Pick-Up (full size).
As a result, insurance premiums for these vehicles may be higher than the average across comparable makes and models.
What can you do to lower your rates? First, consider dropping collision and comprehensive coverage if you have them, as the cost of both coverages may be higher than your vehicle’s actual value. Another way of lowering your rate is to purchase an older model vehicle. If you’re driving a newer model vehicle, offset higher premiums by “risk-proofing” your car with anti-theft devices, anti-lock brakes, daytime running lights, and other safety features.
13. Your Credit Score/History
On average, drivers with good credit pay less in auto insurance premiums than those with fair or poor credit. Drivers with excellent credit pay an average annual premium of $3,148 for full coverage versus $4,572 for drivers with fair credit and $7,063 for drivers with poor credit.
What states don’t allow insurance companies to use credit scores? Only three states don’t allow insurance companies to use credit history as a factor: California, Hawaii, and Massachusetts.
What can you do to lower your rates? Unfortunately, boosting your credit score is a marathon, not a sprint. Recommended strategies include paying all your bills on time, reducing your credit utilization ratio (ideally below 30%), and regularly checking your credit report for errors. Even a single mistake on your credit report can cause your score to drop by 100 points or more.
Research some debt management tricks online, for example, paying off your debt using the snowball or avalanche method. The snowball method pays off your debt from the smallest to the largest balance, while the avalanche method pays off debt from the highest to the lowest interest rate with no regard to the balance owed.
14. Your Education Level
Studies have shown that those with a higher education level pay lower premiums than those with a lower education level. For example, according to a study by Consumer Reports that requested nearly 1,000 quotes from nine insurers across 21 ZIP codes, GEICO, Liberty Mutual, and Progressive quoted higher average premiums to consumers with less education. GEICO and Progressive also quoted higher average premiums to those with service jobs versus managerial jobs.
Using carrier-reported data from statewide insurance bureaus purchased by Compare.com, a direct comparison saw accountants/CPAs pay an average annual full coverage premium of $2,819 versus $3,015 for retail cashiers.
What can you do to lower your rates? Service workers and those without a degree can reduce their rates by maintaining a clean driving record free of moving violations, claims, and other risky behaviors for three to five years. Other ways include enrolling in a telematics program, signing up for a defensive driving course, or removing collision and comprehensive coverage from your policy (this is not recommended for newer vehicles, where the vehicle’s value exceeds the cost of both coverages).
15. Annual Mileage/Driving Behavior
The more you drive, the higher the risk you’re considered to be by auto insurance companies. Consistently clocking more than 15,000 miles yearly increases the likelihood of claims, moving violations, and at-fault accidents.
What can you do to lower your rates? One way drivers can lower their rates is by enrolling in a telematics program. For example, State Farm’s Drive Safe & Save Program offers an automatic 7-10% discount in exchange for tracking your driving behavior (e.g., hard cornering, nighttime driving), along with adjusted discounts of up to 30% if you keep your annual mileage below 7,500 miles.
Learn more: How Car Insurance Monitoring Can Save You Money
Methodology: All of the data referenced in this article has been gathered in collaboration with Quadrant Information Services. We analyzed more than 2.5 million rows of carrier-reported data to calculate the average rates referenced above. All rates are based on an insurance profile of a single-vehicle policy for a Honda Accord driver. For more information on how we calculate rates, please reference our data methodology.
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