Factors that Affect Car Insurance Rates
Car insurance is a necessity for drivers. It's our way of ensuring we're financially protected in the case of an accident or some other mishap with our vehicles. But how can you make sure you're getting the best rate possible, and if you did have a good rate before, are you now left asking, "why did my car insurance go up"? Today, GoodCar will walk through what affects car insurance rates so that you can make informed decisions about purchasing insurance.
Introduction to Car Insurance Rates
Regarding car insurance, rates vary greatly from company to company. And while many factors go into setting rates, understanding how they work can help you save money on your premiums.
Here's a look at what makes car insurance go up, and we will go into further detail with:
- Your driving record. Insurers consider your driving history when setting rates. For people with a clean record, you'll likely pay less than someone with speeding tickets or accidents on their record.
- The type of vehicle you drive. Insurance companies also consider your car's make and model when determining rates. Generally, luxury and sports cars will cost more to insure than economy models.
- Your location. Where you live can also impact your rates. For example, urban areas typically have higher rates than rural areas due to increased traffic and crime rates.
- Your age and gender. Statistics show that younger drivers and males are more likely to get into accidents, so they usually pay higher rates than older drivers and females.
- Your coverage level. The amount of coverage you purchase will also affect your premium costs, and higher levels of coverage generally equate to higher premiums.
Types of Coverage
There are many different types of car insurance coverage, and each has factors that affect the rate. The most common types of coverage are liability, collision, and comprehensive.
Liability coverage is the minimum amount of insurance required in most states. It covers bodily injury and property damage to others if you are at fault in an accident. The rates for liability coverage are based on your driving record, the type of vehicle you drive, and the coverage limits.
Collision coverage pays for damage to your car when you are involved in an accident with another vehicle or object. The rates for collision coverage are based on your driving record, the type of vehicle you drive, the limits of coverage, and the deductible you choose.
Comprehensive coverage pays for damage to your car from events that are not collisions, such as theft, vandalism, or weather-related damages. The rates for comprehensive coverage are based on your driving record, the type of vehicle you drive, the limits of coverage, and the deductible you choose.
Factors that Influence Car Insurance Rates
There are a few key factors that auto insurance companies take into account when calculating your premium. Some of these, like your age and gender, are out of your control. But others, like your driving record and the type of car you drive, are within your power to change.
- Age: Generally speaking, younger drivers tend to be riskier and therefore pay higher rates. This is because they have less experience behind the wheel and are more likely to get into an accident.
- Gender: Studies have shown that men are more likely to get into accidents than women; as a result, they typically pay slightly higher premiums.
- Driving record: One of the more important aspects that determine your premium is your driving record. If your driving record is clean with no accidents or moving violations, you'll likely pay much less than someone with a poor record.
- Type of car: The make and model of the car you drive can also impact your rates. Certain luxury or sports cars tend to be more expensive to insure because they're at a higher risk for theft or damage.
Age and Gender
Several factors affect car insurance rates, and age and gender are two of the most important. Your age is a factor because it indicates your driving experience. The younger you are, the less experienced you are likely to be and the more likely you are to have an accident. Your gender is a factor because studies have shown that men are more likely to have accidents than women.
If you are a young or male driver, you can expect to pay higher rates than average for your car insurance. However, there are things you can do to offset these risk factors. For example, If you have a clean driving record or if you take defensive driving courses, you may be able to get lower rates.
Insurance companies look at many different factors when determining what premium you should pay, with one of the top being Your driving history. Insurance companies use your driving history to determine how risky you are as a driver and how likely you are to file a claim.
If your driving record is clean, you can expect to pay less for car insurance than someone with multiple accidents or traffic violations. Similarly, if you have been convicted of a DUI or other serious offense, you can expect to pay more for car insurance.
Insurance companies also consider your vehicle type when determining your rates. If you drive a high-end sports car, you can expect to pay more for car insurance than someone who drives a more modest sedan.
Finally, where you live also affects your car insurance rates. If you live in an urban area with a high crime rate, you can expect to pay more for car insurance than someone who lives in a rural area with a low crime rate.
When it comes to your car insurance rates, your credit history is just as important as your driving history. Insurance companies use credit information to help determine how likely you are to file a claim, and those with poor credit can expect to pay higher rates.
If you're looking to save on your car insurance, make sure you're maintaining a good credit score. Pay your bills on time, keep a healthy credit mix, and don't let your balances spiral out of control, and you'll be in good shape.
Vehicle Make, Model, and Year
The make, model, and year of your vehicle can significantly impact the cost of your car insurance. Here are some factors to consider when determining how much your car insurance will cost:
- The make of your vehicle. Some vehicles are more expensive to insure than others. For example, luxury and sports cars tend to be more expensive to insure than economy or mid-size cars.
- The model of your vehicle. Certain models of vehicles are more expensive to insure than others. For example, newer models usually cost more to insure than older models.
- The year of your vehicle. Newer vehicles usually cost more to insure than older ones, and this is because they typically have more costly features to replace or repair in case of an accident.
Annual Mileage Driven
The amount of time you spend on the road each year is one of the key factors insurers consider when setting rates. The more time you spend behind the wheel, the higher your chances are of being involved in an accident. That's why drivers who log a lot of miles every year typically pay more for car insurance than those who don't.
If you drive fewer than 10,000 miles annually, you may be able to get a low-mileage discount from some insurers. But even if you don't qualify for that break, driving less can still save you money on your premiums. One way to keep your rates down is to take public transportation to work or carpool when possible.
Why Your Rate Increases Over Time
The insurance industry is constantly changing, and insurance carriers always look for ways to stay ahead of the curve. To do this, they need to charge higher rates to customers over time. This is because the risk of insureds filing a claim increases as they age, and carriers must account for this by charging more.
There are a few other reasons your car insurance rates may increase over time. If you move to a new area, the rates in your new zip code may be higher than what you were paying before. Additionally, your rates will likely increase if you add a new driver to your policy or get a ticket.
Although it can be frustrating to see your car insurance rates increase over time, it's important to remember that this is just how the industry works. If you want to keep your rates low, make sure you shop around and compare quotes yearly to get the best deal possible.
Tips to Save on Car Insurance
You can do a few things to lower your car insurance rates. One is to shop around and compare rates from different companies. Another is to ask about discounts. Many companies offer discounts for things like having a good driving record, taking defensive driving courses, or installing safety devices in your vehicle. You may also be able to get a lower rate if you have a car that is not worth much or if you only drive it occasionally.
Car insurance rates can vary vastly, and understanding the factors that affect them is vital for anyone searching for the best rate, and can easily answer you if you came here asking, "why is my car insurance going up"? From personal information such as age, gender, and marital status to more specific details such as type of car, driving history, and credit score, all these can influence the amount an individual pays for car insurance. Hopefully, GoodCar has highlighted some of those key elements so you can find a great deal on your next car insurance policy.
FREE Vehicle Search
- Problem Checks
- Title Records
- InfoPay, Inc. (dba GoodCar) is an Approved NMVTIS Data Provider