10 Major Factors Affecting Auto Insurance Premiums

What are the major factors affecting auto insurance premiums?

    There are a lot of factors that go into determining your auto insurance rate. Many of them are obvious. But there are a few factors that may surprise you. So I've created a list of the 10 biggest  factors that affect your auto insurance rate.


These factors are listed in no particular order, as auto insurance companies weigh all of these factors differently. And this is not an all-inclusive list either. But these are the 10 biggest factors that most auto insurance companies look at when determining an auto insurance rates:

1. Age -Age plays a very significant factor when it comes to younger drivers and older drivers. Younger drivers tend to file more claims (accidents) than do middle-aged adults. And therefore pay a higher rate. Younger drivers will continue to pay this increase although it will slowly diminish with most companies. The real landmark age tore you start to get a break with most companies is around 25 years of age. For older drivers, you might start to see slight increases in your premium past 70 years old and slowly increase up until 80. From 80 years on the increase starts to become sharper.
2. Location - People who live in larger cities tend to pay higher rates than people who live in smaller towns. This just simply has to do with the likelihood of having an accident being greater in a big city.
3. Living status -  Homeowners usually pay a significantly cheaper rate than people who do not own their home.
4. Prior coverage - Having current auto insurance at least for the past six months will get you a significantly lower rate than someone who hasn't carried autoinsurance.
5. Marital status- Drivers who are married tend to have fewer claims and accidents versus drivers who are not married and therefore pay a lower rate.
6. Gender - Women tend to have less accidents and claims than male drivers and therefore pay a slightly lower rate.
7. Driving history -  Obviously, someone who has a clean driving record is going to pay a lower rate versus someone who has tickets, accidents DUIs or other violations on their record.
8. Claims history - People who have filed auto insurance claims in the past, whether it be driving related or not, tend to have a higher probability of filing another claim. And thus, they pay a higher rate. Note: some companies do not rate comprehensive claims and count it against you. But most companies do.
9. Credit rating - You may ask yourself what does my credit rating have to do with auto insurance? Well, the fact is, statistics have proven that credit score is a better indicator of the probability of future claims than one's own actual driving record. For more information on how your credit score affects your car insurance rates listen to my short audio blog about your credit score and auto insurance.
10. Vehicles listed on the policy -  This one goes without saying. But as far as liability coverage is concerned, generally a larger vehicle or a vehicle with a more powerful engine will tend to cost more than a smaller less powerful vehicle. Simply because they do more damage when an accident occurs. And of course, if you are carrying physical damage coverage on your vehicle  (meaning comprehensive and collision coverage), the more valuable your vehicle is the higher the premium will be.

Get an online auto insurance quote


Related Articles:



The Basics of an Auto Insurance Policy: Breakdown of each coverage explained

---