Top 7 Factors That Affect Your Car Insurance Premiums

Top 7 Factors That Affect Your Car Insurance Premiums

Several factors determine car insurance rates, some of which can be out of your control. For example, getting caught driving recklessly or with multiple speeding tickets can drastically raise your premium.

Your location can also affect your rates since some areas have higher theft and vandalism rates. Additionally, the type of vehicle you drive can influence your rates; fast sports cars are typically more expensive to insure.


Your Driving Record

If you’ve had accidents or major traffic violations, such as a DUI conviction, your insurance company will likely see you as a higher risk and increase your rates. The same goes for any history of filing many claims quickly.

Your driving record also includes any points earned on your driver’s license if your state has a system in place. Depending on the severity of the offense, these points can stay on your record for years.

If you’ve kept your driving record clean, you can save money by taking an accident prevention course, allowing the points on your paper to drop off. This is a factor you can control, unlike other factors that affect your rate, like your age or location.

Your Vehicle

Many factors influencing car insurance premiums are beyond your control, such as where you live or how often you drive. But other things, like your vehicle, are under your control. Choosing an affordable car and keeping it in good condition can keep your rates low.

You’ll typically pay more for car insurance if you commute long to work or drive many miles yearly. This is because more time on the road equates to more roadway risks, such as accidents or vandalism. In addition, some vehicles cost more to repair or replace, such as luxury vehicles or sports cars. They also tend to be more expensive to insure because they’re more likely to attract thieves or cause damage when involved in an accident.

Your Age

Your age plays a big part in your car insurance premiums. Young drivers tend to pay the most, as they have less driving experience and are more likely to get into accidents. But as you gain more driving experience, your rates typically decrease. And by the time you hit your mid-30s, you’ll be paying less for your car insurance than ever before.

Gender also plays a role in your insurance rates. Young men are more prone to fatal accidents than women, so they typically pay more for car insurance. But as you get older, the gender gap narrows, and by age 50, men usually pay less for their car insurance than women.

Most factors affecting your auto insurance rates are beyond your control, but some are within it. Maintaining a clean driving record and choosing a safe vehicle are two of the most important ways to lower car insurance rates.

Your Location

Your location has a direct impact on your car insurance rates. People in urban areas often pay higher premiums than those in the suburbs or rural areas due to a higher rate of theft, vandalism and accidents.

In addition, the amount of time you spend on the road impacts your rates. If you have a long daily commute, your insurer will likely charge more for your coverage than those who only drive their cars for leisure or occasional work trips.

Some factors, however, don’t play a role in your premium. For example, your school doesn’t typically affect your insurance rates, and your occupation needs to be considered when setting your rates. Your home’s security features and whether you park your car in a garage are other factors that can influence your car insurance rates.

Your Credit Score

In nearly every state, your credit score influences how much you pay for car insurance. Your insurance rate may double or even triple if you have poor credit. Good credit can cut your rates significantly. Insurance companies use a “credit-based insurance score” and other rating factors, such as age, gender and the type of coverage you want.

This lesser-known score examines your credit history and the likelihood that you’ll file car insurance claims. Actuarial studies show that drivers with lower credit-based insurance scores are more likely to file claims, which cost insurers more than the premiums they collect. Some states have banned using this score, disproportionately affecting low-income residents and communities of color. But other insurers still rely on it.

Your Car’s Safety Features

The latest and greatest car safety features can impact your insurance rates. For example, lane departure warnings are one feature that alerts drivers when their vehicle begins to veer out of its designated lane. Lane Keep Assist takes this one step further and physically corrects the car’s movement to put it back into the street.

Another new car safety feature that’s gaining popularity is pedestrian detection. This feature, found on some 2022 vehicles, is designed to automatically brake if it detects that you are about to hit a pedestrian.

Other safety features that may lower your premium include automatic tensioning technology that ensures seatbelts are properly secured and anti-lock brakes. These and other safety features in your vehicle can significantly decrease your premiums.

Your Driving Habits

If you drive for work or often commute, your insurer will charge you more for the same coverage. However, if you aren’t on the road as much or use your car for pleasure driving, you can save money by opting for a pay-per-mile program or installing a driver-monitoring device.

Insurers also consider your age, gender and driving history to calculate your rates. For example, teen drivers tend to have higher rates because of their lack of experience and risky driving habits. However, their rates typically drop after they reach age 20 or 25.

Other factors, such as your credit score, where you live and whether or not you have a vehicle alarm, also affect your rates. Fortunately, most of these factors are controlled, so you can influence how much you’ll spend on car insurance.

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