The Top 5 Factors That Affect Car Insurance Rates

Are you one of the 88 percent of Americans who own a car?

If yes, there’s no doubt you’re enjoying the perks of owning a ride. From increased convenience and privacy to the ability to be in control of your road safety, a car is a necessary addition to any person’s lifestyle.

But car ownership also has its fair share of downsides, key among them being the cost of insurance.

Have your auto insurance rates been on a steady rise? Or were you just pleasantly surprised with reduced premiums?

You might be wondering why that’s the case.

Continue reading to learn about the factors that affect car insurance rates.

1. Driver Age and Gender

If you’re a young driver, brace yourself for higher auto insurance premiums.

According to the Centers for Disease Control and Prevention, drivers aged between 16 and 19 are far more likely to get into an accident than older drivers. Whether it’s because of driving inexperience or a reckless desire to go hard on the gas pedal or a combination of both, most teens are high-risk drivers. Consequently, insurance companies slap them with higher premiums.

The good news is your premiums will go down as you grow older.

In addition to age, insurers also look at the driver’s gender.

Again, they rely on statistical data to determine which gender has the riskier drivers. Generally, men cause more accidents than women. As a result, male drivers face higher insurance premiums than their female counterparts.

2. Driving Record

One of the surest ways to determine driver risk is to examine their driving history.

If their record has speeding tickets, skipped red lights, hit and runs, and other traffic violations, it’s clear they have a poor driving record. And if there is no violation or penalty on their driving record, it’s safe to conclude they are diligent drivers.

So if you have a bad driving record, insurance companies will consider you a high-risk driver, and from here there can only be one outcome: pricey premiums.

Fortunately, you have the power to shape your driving record and prevent higher premiums. Just drive carefully and follow all traffic rules. If you receive a wrongful traffic ticket, dispute it and ensure it is deleted from your record.

3. Your Insurance Score

You certainly know about credit scores, but did you know you also have an insurance score?

Yes, if you’ve ever purchased insurance coverage in the past, it’s likely you have an insurance score. This score is calculated from the information on your credit report as well as your accident and insurance claims history.

If you have a low credit score and have filed at least a couple of insurance claims in the past (regardless of whether the claim was made to your health or home insurer), your insurance score could be low. And with a low insurance score, your auto insurance company will charge you higher premiums than if you had a higher score.

That said, keep in mind that insurance score isn’t an industry-approved metric, so it’s possible to find an auto insurance company that doesn’t consider it at all.

4. Car-Related Factors

The type, model, value of your car can all affect your insurance rates. Here is a brief explanation of the most influential car-related factors.

Car Age

Newer cars cost more to insure. In the event of an accident that totals a car, the insurance company will have to replace it. And since new cars are pricier than older cars of the same make and model, the insurer stands to pay out more money to the owner.

Car’s Safety Rating

The National Highway Traffic Safety Administration performs crash tests on every new car model and awards it a safety rating.

This is a no brainer. Cars with a high safety rating (4-5 stars) are less likely to be involved in road crashes, so they attract lower premiums. And cars with a low safety rating are dangerous to drive, and as such have higher premiums.

Likelihood of Theft

Is your car among the most stolen model in the United States?

If you own a Honda Accord or Honda Civic, you’re not in luck. These cars are hot cakes for thieves. Because of the high likelihood of theft, insurance companies slap owners of these models with higher premiums.

If you’re in the market for a new car, it helps to research your preferred model’s reputation before making a purchase decision.

5. Your Location

Did you know the average car insurance premiums in Louisiana and Michigan are 56 percent higher than the national average?

There are reasons why premiums can be higher in certain locations. Perhaps that location experiences a high number of traffic accidents or vehicle theft is rampant.

Either way, if you live in a location that has such a reputation, expect to pay more for auto insurance.

Beyond Insuring Your Car

In addition to purchasing auto insurance, there are other steps you can take to protect your prized asset from risks. For instance, you should always take it to a repair shop that has adequate liability insurance. In case a mechanic inadvertently damages your car, the repair shop’s insurance company will compensate you.

Be sure to learn more about auto service insurance. It’s beneficial to both drivers and repair shop owners.

Embrace the Factors That Affect Car Insurance Rates

After buying a car, the last thing you want is to spend a lot of money on insuring it. But now that you know the factors that affect car insurance rates, you’re in a good position to keep your premiums as low as possible.

Continue reading our blog for more car ownership tips.