16 Key Factors That Determine How Much You Pay for Car Insurance

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Written by Daria Uhlig Edited by Lequita Westbrooks

Updated March 27, 2024

The national average car insurance premium is $135 per month, according to Compare.com data. But many different factors — such as your age, driving record, history of filing claims, and more — can affect your car insurance rates.

Every insurer has its own algorithm for calculating rates based on these factors, so how much you pay will vary from company to company. That’s why it’s important to shop around to find the best rates.

We’ll cover the most important factors affecting your car insurance rates and how each influences your monthly premiums in the sections below.

Key Takeaways:

• Your driving record, insurance history, and home address are three of the most important factors affecting your rates
• Several rating factors, like age and gender, are out of your hands, but you can still control many other factors.
• Speeding tickets, car accidents, and DUIs can affect your rates for years.

The Most Important Factors Affecting Your Auto Insurance Rates

1. Age
2. Gender
3. Marital status
4. Occupation
5. State laws
6. Insurance company
7. Coverage levels
8. Deductibles
9. ZIP code
10. Vehicle make and model
11. Annual mileage
12. Driving record
13. Credit history
14. Prior claims
15. Coverage lapses
16. Discounts

5 Factors That Are Out of Your Control

Some factors that influence your rates are totally out of your control but still play a significant role in how much you pay for car insurance. So, while you can’t change them, understanding why and how insurers calculate your rates can help you use them to your benefit and better manage the ones you can control.

Your age

Insurance companies use age in their rate calculations because each age group has a certain risk level for filing claims. Young drivers — teens, in particular — have more accidents, on average than drivers age 25 and older.

The following table compares average rates across different age groups, according to Compare.com data.

The higher average monthly premiums reflect the elevated risk younger drivers pose. Drivers younger than age 20 pay nearly three times as much as people age 60 or older because you tend to be more cautious behind the wheel as you age, which keeps your relative risk low.

But note that the average rate increases slightly once you reach age 70 — when you’re more likely to suffer from physical ailments that could affect your driving.

Next, we’ll look at gender and its effect on auto rates.

Your gender

It might surprise you that your gender affects your auto insurance rates. The disparity is usually based on risk — males have more accidents and often pay slightly higher rates as a result, according to the National Association of Insurance Commissioners (NAIC).

The table below highlights the average monthly premiums for men and women, according to our research.

Men pay an average of $12 more per month than women for car insurance, according to Compare.com data.

But that’s not always true. In some states, women were charged higher rates than men with the same driver profiles despite state data showing that men have more accidents.

Let’s see how your relationship status influences your rates.

Your relationship status

Are you single or married? The answer could affect how much you pay for your car insurance. Insurance companies consider marital status when setting rates — and married (and formerly married) drivers usually pay lower rates than people who’ve never been married.

Part of the reason is that married drivers are statistically less likely to file a claim and tend to have fewer incidents on their driving records, according to the NAIC.

That advantage doesn’t end when a marriage does. In fact, formerly married drivers have even lower rates than married ones, according to our analysis.

Let’s take a closer look.

While rates are competitive for married and formerly married drivers, single people pay around $25–$27 more per month than both groups.

Now, let’s look at how your occupation affects your rates.

Your job

Some insurance companies look at occupation when calculating rates. Your occupation is a valid predictor of your insurance company’s risk in insuring you, according to Don Snyder, vice president and assistant general manager of the American Property Casualty Insurance Association.

Rates can differ greatly from one insurer to the next, but if you work late hours, have long work hours, or have a job that’s seen as riskier to insure, you may see higher rates. For instance, insurers may see bartenders as a higher risk because they often work (and drive home) late at night. College-educated professionals also usually pay less than drivers who didn’t attend college or work in service positions.

The table below shows average monthly premiums for several occupations with varying educational requirements, based on Compare.com data.

Occupations in this category have similar rates, but construction workers are the cheapest to insure, based on our research. Still, not all companies rate drivers the same way, highlighting the importance of comparison shopping.

Let’s look at how state laws influence your rates.

Your state’s laws

State laws influence your car insurance rates in a few ways. First, nearly every state has minimum-coverage requirements to drive legally, which include bodily injury and property damage liability insurance.

Some states also require the following coverages:

• Uninsured/underinsured motorist coverage (UM)
• Personal injury protection (PIP)
• Medical payments (MedPay)

Minimum liability coverage requirements vary between states. Take neighboring Maine and Vermont, for example. Maine drivers must have 50/100/25 coverage, which means they need to purchase at least:

• $50,000 bodily injury per person
• $100,000 bodily injury per accident
• $25,000 property damage per accident
• $50,000 uninsured/underinsured motorist bodily injury per person
• $100,000 uninsured/underinsured motorist bodily injury per accident
• $2,000 medical payments coverage per person

Meanwhile, neighboring Vermont drivers must have 25/50/10 coverage:

• $25,000 bodily injury per person
• $50,000 bodily injury per accident
• $10,000 property damage per accident
• $50,000 uninsured/underinsured motorist bodily injury per person
• $100,000 uninsured/underinsured motorist bodily injury per accident
• $10,000 uninsured motorist property damage

Whether you live in a “fault” or “no-fault” state will also influence your rates, as this determines the type of insurance your state requires. Car insurance rates tend to be higher in no-fault states — like Florida and New York — than in at-fault states.

11 Factors You Can Control

Fortunately, the factors you can control outnumber the ones you can’t — and regardless of your age, gender, or relationship status, you can use the factors under your control to get better rates. Making changes in some of the areas below can result in immediate savings. Others may take some time but are worth prioritizing to improve your rates.

Let’s take a closer look at each.

Your insurance company

Rates can vary dramatically from one insurance company to the next, so comparing quotes from a few different companies when your needs change can save you a lot of money.

The table below shows the average monthly rates for some of the nation’s top insurers, based on Compare.com data.

State Farm and GEICO offer the cheapest average monthly premiums of $85 and $88, respectively. Liberty Mutual charges the highest average premium of the companies shown — $61 more per month than State Farm. That’s $732 per year in savings.

Although your actual rate might differ, these averages will give you an idea of where to look for the lowest rates on auto insurance.

Your coverage levels

As you might expect, the type and amount of coverage you have affects your auto insurance premium — and the cost difference between a liability policy and a full-coverage policy is substantial. State-minimum liability policies are the cheapest policies available, but full coverage costs more.

Basic liability insurance doesn’t cover your injuries or damage to your vehicle. But full coverage — which includes collision and comprehensive coverage in addition to liability insurance — covers your vehicle damage and injuries.

The table below shows the cost difference between basic liability and full-coverage insurance, based on our research.

Again, the added protection you get from full coverage comes at a price — it nearly doubles your monthly premium. But for many drivers, the extra protection is worth the additional cost.

Next, let’s explore how deductibles affect your rates and what you can do about it.

Your deductible amounts

If you have full coverage and need to file a claim, you’ll have to pay a deductible — the amount you’re responsible for paying before the insurer pays the rest. Common deductibles are $200, $500, and $1,000.

You won’t have to pay a deductible if you have a liability-only policy.

A lower deductible means you’ll have fewer out-of-pocket costs, but your auto premium will be higher. On the other hand, if you choose a higher deductible, you’ll pay more out of pocket if you file a claim. But because you’ll shoulder more of the cost, you pose less of a risk to the insurance company, which translates to lower premiums.

How much lower also depends on where you live. Let’s take a closer look.

Where you live

State laws aren’t the only location-specific factor that affects how much you pay. Your ZIP code and even your address play a role. In this case, your location also influences your level of risk to insurance companies.

Local factors — such as high crime rates, litigation frequency, medical care and car repair costs, severe weather, and auto insurance fraud — can drive your rate up, according to the Insurance Information Institute (Triple-I).

The car you drive

Car insurance costs are also affected by the vehicle you drive, which can trigger higher or lower rates depending on its make, model, trim, and year. In fact, certain vehicles can double your monthly premium.

The table below shows the average monthly premium for five of the bestselling vehicles in 2023.

The Tesla Model Y is the most expensive vehicle to insure in this category, with monthly rates $114 higher than the Ford F-150. High repair costs are one of the reasons why insuring a Tesla can be expensive.

Surprisingly, the Ford F-150 is the cheapest to insure despite full-sized Ford pickups being the second-most-frequently stolen vehicles in America, according to the National Insurance Crime Bureau (NICB). One reason might be that F-150s cost less to repair compared to other full-sized pickups.

How much you drive

The more you drive, the higher your chances of getting into an accident. The average annual mileage for male and female drivers in all age groups is 13,476, according to the Federal Highway Administration (FHA).

The table below breaks down your average monthly premium based on your annual mileage, according to our data.

Drivers putting fewer than 5,000 miles per year on their cars get the best rates. On the other hand, driving more than 15,000 miles increases the average premium by about 28%, according to our research.

Next, let’s see how your driving record influences your rates.

Your driving record

Auto insurance rates are all about risk, so it makes sense that insurers would penalize drivers with a history of high-risk driving habits on their records. The severity of the penalty depends on the seriousness of the infraction.

The good news is that improving your driving and maintaining a clean driving record will eventually bring down your rates. Tickets and insurance claims usually fall off within three to five years — but a DUI could stay on much longer.

The table below shows the average monthly premiums you could pay based on your driving history, according to Compare.com data.

As expected, drivers with a clean driving record pay the cheapest rates, but, if you get a ticket or are involved in an at-fault accident, your rates can increase by almost 20% when your policy renews. Worst of all, a DUI could raise your insurance rate by about 47% and cause your insurer to deny you coverage.

Some states limit how long an incident can affect your rate.

Your credit history

In many states, auto insurers look at your credit history to calculate an insurance score, which measures how risky you are to insure. While not the same as a FICO credit score, the insurance score is a credit-based score that affects your insurance rate.

Fortunately, some states — including California, Hawaii, Maryland, Michigan, and Massachusetts — have banned or limited insurers from using credit to determine rates, according to TransUnion.

Let’s look at how premiums change based on credit, according to our data.

On average, drivers with excellent credit scores pay $37 less each month than people with poor scores. Paying bills on time and keeping your credit utilization low are two of the best ways to raise your credit score.

Next, we’ll look at how your claims activity can influence your rates.

Your claims history

One of the best tools insurance companies have to evaluate your risk of filing a car insurance claim in the future is to look at whether you’ve filed claims in the past — and why.

Your lender is likely to see a claim for an accident you didn’t cause as less serious than an at-fault accident. A claim for an accident accompanying a traffic violation — especially a major one like a DUI — could have a stronger effect.

How long claims affect your rates depends on the claim. An at-fault accident claim could take three to five years to clear up. On the other hand, a claim for an accident resulting from a DUI could take many years — as long as 10 years and may even permanently stay on your record, depending on your state.

Previous insurance lapses

Auto insurers treat a lapse in coverage as a risk factor and could increase your rate as a result. While you likely have a grace period before your insurer cancels your policy and might be able to reinstate it, a lapse of just one day can increase your rate down the road.

If you want to pause coverage because you won’t drive for a while or you no longer have a vehicle, consider buying a non-owner or comprehensive-only policy instead. A non-owner policy offers liability coverage when you drive someone else’s car.

It’s also a good idea to purchase comprehensive coverage, which covers you if your car gets damaged by fire, vandalism, natural disasters, or if it’s totaled.

Discounts and savings opportunities

Car insurance discounts can significantly reduce your insurance premium, and most auto insurers offer them. Multi-policy discounts, for example, lower your insurance costs when you bundle more than one policy with your insurance company.

Sticking with an insurer can earn you a loyalty discount. You can also earn discounts for going a certain period of time without filing a claim, by reducing the number of miles you drive, or by installing a telematics device that tracks your driving and lets you earn good-driver discounts.

You’re not limited to just one discount. Ask your insurance agent to make sure you get all the price breaks you qualify for.

Insurance Rate Factors FAQs

Auto insurance could be one of your larger monthly expenses, so it’s important to know as much as possible about how insurers calculate rates. Here are answers to some of the most common questions people ask about car insurance rates.

What are the most important factors that determine the price of your auto insurance?

Many different factors determine how much you pay. Some of the major factors are your age, driving record, and credit history. The car you drive and where you park it also play a role.

Why do rates vary so much from one insurer to another?

Auto insurance companies base rates on similar factors, but each uses its own formula, and the calculations might weigh the various factors differently. Comparing rates from several insurers will help you find the best rate for your specific situation.

How long does a past insurance claim affect your rates?

It depends. The length of time a past claim can affect your insurance rates varies on what the claim was for and what state you live in. A claim for an at-fault accident might stay on your record for five years in some states, while others limit the effect to three years.

Does your credit score affect your insurance rates?

Insurers don’t look at your credit score — but, in states that allow it, insurance companies might look at your credit history and use it to calculate a “credit-based insurance score.” That score gives insurers a clue as to how likely you are to file a claim or default on your bill.

A good credit-based score might increase your chance of getting a better insurance rate, but since this is one of many factors used to set rates, it’s not a guarantee.

Why did your rates go up?

It depends. Your auto rates can go up for many different reasons. Perhaps you had a moving violation or dropped a homeowners or renters insurance policy that was bundled with your auto insurance. Changing cars or moving to a new home could also cause your rates to increase.

Data Methodology

Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.

All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.

Sources

1. Insurance Information Institute, “What Determines the Price of an Auto Insurance Policy?,” Accessed March 15, 2024.
2. National Association of Insurance Commissioners, “Combining Your Insurance,” Accessed March 15, 2024.
3. National Association of Insurance Commissioners, “Best Practices for Insurance Rate Disclosures,” Accessed March 15, 2024.
4. Consumer Reports, “Why Your Education and Job Could Mean You’re Paying Too Much for Car Insurance,” Accessed March 15, 2024.
5. Insurance Information Institute, “Automobile Financial Responsibility Laws by State,” Accessed March 15, 2024.
6. National Insurance Crime Bureau, “New Report Shows Full–Size Trucks Have Highest Theft Rate,” Accessed March 15, 2024.
7. Justia, “Insurance Consequences of DUI,” Accessed March 15, 2024.
8. Insurance Information Institute, “Do Auto Insurance Premiums Go Up After a Claim?” Accessed March 15, 2024.
9. Maryland Insurance Administration, “Automobile Insurance Rates: What Impacts My Cost & What Can I Do About It?” Accessed March 15, 2024.
10. Transunion, “What Is an Auto Insurance Score?” Accessed March 15, 2024.

Daria Uhlig Personal Finance Writer

Daria Uhlig is a freelance writer and editor with over a decade of experience creating personal finance content. Her work appears on USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, Credible, GOBankingRates, AOL, and Insurify. As a licensed Realtor and resort property manager, she specializes in real estate topics, including landlord, homeowners, and renters insurance. In her spare time, Daria can be found photographing people and places on Maryland's Eastern Shore. Connect with her on LinkedIn.