Many factors affect how much you pay for car insurance: Your age, gender, where you live, your credit and driving history, and the type of car you drive – among others.
In addition, the types of car insurance you buy and car insurance discounts you qualify for also influence how much you pay. Keep reading to learn the 10 most important factors that affect car insurance rates.
- Some of the biggest factors that impact car insurance rates include your driving record, age, credit score, claims history, and vehicle make and model.
- People with a clean driving record and no recent claims usually pay the lowest rates for car insurance.
- Teen drivers often pay the highest rates for car insurance because they lack experience on the road.
- Taking advantage of car insurance discounts can help you get a more affordable premium.
Top 10 most important factors that affect car insurance rates
Some factors – your location, age, credit and driving history – can dramatically impact how much you pay for car insurance. Others, such as whether you’re married and your gender, aren’t as important. Still, they add up to how much it costs to protect yourself with an auto insurance policy.
Here is the list of the top 10 most important factors that affect car insurance rates:
- Age
- Address
- Driving history
- Credit score
- State of residence
- Vehicle year, make, and model
- Annual mileage
- Claims history
- Auto insurance coverage level
- Discounts
1. Age
Your age will impact your premium, especially if you are a teenager or are 75 or older. According to the CDC, car insurance for those younger than 25 is expensive because teenage drivers are almost three times more likely to be involved in a fatal crash than older drivers.
See average annual and six-month rates for full coverage car insurance by age group in the table below.
| Age group | Average annual rate | Average six-month rate |
| Teens (16-19) | $5,613 | $2,806 |
| Young adults (20-24) | $2,976 | $1,488 |
| Adults (25-60) | $1,903 | $952 |
| Seniors (65-75) | $1,864 | $932 |
Car insurance rates by age
States that don’t allow insurers to consider age for premium determinationSome states don’t allow auto insurance companies to use age to determine insurance premiums; those states are Hawaii and Massachusetts.
2. Address
Where you live (and park your car) will directly impact your insurance premium. Of all the factors that affect car insurance rates, this is one of the most critical factors affecting your insurance rate. Insurers study crime rates, neighborhood densities, the number and severity of claims made annually – even the weather – to assess your risk.
You will pay more for car insurance if you live in an area with a high rate of accidents and theft/vandalism – or prone to severe weather damage. And don’t forget that if you move, your rates could change – see how much they’ll change with this moving calculator.
Learn more: The cheapest and most and expensive ZIP codes for car insurance by state
3. Driving history
Here’s where your driving experience comes in. Young drivers with limited experience will pay higher rates than those driving for longer. Additionally, if you have accidents or speeding tickets on your record, your insurance cost will be higher – rates can increase 26-43% for a speeding ticket and an average of 31% after a crash, according to 2022 CarInsurance.com data.
4. Credit score
When you apply for an insurance policy, the insurer will check your credit history and use the information on your report to predict whether you’ll likely file claims. The most important factors for a good credit score (for insurance) are long credit history, minimal late payments, and open accounts in good standing.
Note that the following states prohibit credit from determining premiums: California, Hawaii, Massachusetts, Michigan and Washington (in effect until three years post-pandemic emergency declarations).
Learn more: Auto insurance scores and why they matter
5. State of residence
In some states, even the mandated minimum coverage includes uninsured motorist coverage or personal injury protection insurance, making insurance pricier than in a state where those aren’t required. Additionally, whether your state is a no-fault or tort state will affect how much you pay for car insurance.
6. Vehicle year, make, and model
Insurers will consider the car model’s claims record, and the type of car you drive will impact how your insurance rate is determined. Smaller, safer cars are cheaper to insure, whereas luxury vehicles with high-end technology and expensive finishes will be expensive.
Read more about car make and model: What do they mean and why do they matter
For your vehicle model, car insurance companies look at the following:
- Purchase price
- Theft rate
- Cost of repairs
- Accident rate
- Safety tests
Car insurance companies also consider the types of safety features your car has. So, if your car has airbags and brake stabilization, you may pay less for insurance. However, cars with high-tech safety features, such as collision-warning systems, may add to the insurance price if the cost to repair or replace the feature is expensive.
7. Annual mileage
The more you drive, the higher your chance of getting into an accident. That’s why insurance companies consider how much you drive when setting insurance rates. If you have a long commute or otherwise log many miles, you will typically pay more because you are considered a higher risk.
Learn more about whether an annual mileage can lower or raise your car insurance rates
8. Claims history
Any claim can affect how much you pay for auto insurance. While at-fault claims will result in higher rates, the number of claims you make is also significant.
If you have made several claims on your policy in a certain period of time, such as three claims in three years, you can expect your car insurance rate to increase. More claims will peg you as a higher-risk driver and raise your premiums for a few years.
9. Auto insurance coverage level
The type and amount of car insurance you buy will affect how much you pay for a policy. If you opt for more coverage, such as the recommended coverage limits of 100/300/100, you’ll pay more for insurance than if you opt for your state’s minimum coverage – which is not recommended.
Standard car insurance coverages include:
- Liability car insurance: Liability car insurance coverage includes body injury liability (pays for injuries) and property damage liability (pays for damage to others’ property) if you’re at fault in an accident.
- Collision and comprehensive insurance: Adding collision and comprehensive means full coverage. Collision covers damage to your car when it hits another object/vehicle. Comprehensive covers your car for natural disasters, animal strikes, theft and vandalism.
- Underinsured/uninsured motorist coverage: This protects you if you’re hit by an uninsured driver – rates of uninsured drivers vary by state from 29% in Mississippi to 3% in New Jersey. It also covers you if the other driver doesn’t have enough coverage.
- Gap insurance: Gap insurance covers the difference between what you owe on your vehicle and its value if it were to be damaged or totaled.
- Personal injury protection: Personal injury protection coverage might be required depending on your state. It pays for medical expenses and lost wages in a crash, regardless of who’s at fault.
Car insurance rates by coverage level
Car insurance rates vary dramatically depending on the level of coverage you have. The annual average rates for the state minimum (limits vary by state), liability only (limits of 50/100/50) and full coverage (with limits of 100/300/100) are below.
- State minimum liability only: $503
- Liability-only with limits of 50/100/50: $649
- Full coverage (with limits of 100/300/100 and $500 comprehensive/collision deductibles: $1,895
10. Discounts
Discounts can significantly reduce how much you pay for auto insurance. The top discounts include good driver/safe driver, accident-free, student-away, good student and discounts for bundling auto insurance with homeowners insurance. Safety features, telematics, professional organizations and autopay can also save you money on your policy.
Check out our detailed guide on what are the best car insurance discounts
Other pricing factors when it comes to car insurance
Other factors that can affect how much you pay for car insurance include the following:
- Marital status
- Education
- Occupation
- Gender (not in all states)
- Whether you rent or own your home
Like any other major purchase, your auto insurance policy is a big commitment. You can save money on your insurance costs by shopping around when it’s time to renew and being aware of how to save money on a policy.
Learn more about how AI could affect your car insurance rates
Common misconceptions about car insurance
Car insurance is often misunderstood, leading many drivers to make costly mistakes. Let’s clear up some of the most common myths and separate fact from fiction.
Misconception: All car insurance coverage is the same
Many drivers assume that every policy provides the same level of protection, but in reality, coverage varies widely. Liability insurance, which is required in most states, covers damage you cause to others but won’t pay for your own car’s repairs. Comprehensive and collision coverage, on the other hand, protect your vehicle against theft, accidents and natural disasters. The amount of coverage you choose, along with uninsured motorist protection or roadside assistance, significantly impacts what your policy covers.
The truth: Not all policies are created equal. Choosing the cheapest option without reviewing coverage details could leave you financially vulnerable in an accident.
Misconception: Staying loyal to an insurer always saves you money
Loyalty can be a good thing, but when it comes to car insurance, it doesn’t always pay off. Many drivers believe that sticking with the same insurer for years will automatically result in lower rates. However, some insurance companies practice price optimization — gradually increasing premiums for long-term customers who are less likely to shop around.
The truth: Comparing quotes from different insurers every year or two can help ensure you’re still getting the best deal. Some companies even offer new customer discounts, which can make switching worthwhile.
Misconception: Your car’s color affects your insurance premium
A common myth suggests that red cars are more expensive to insure because they are more likely to be pulled over for speeding. However, insurance companies don’t factor in car color when calculating premiums. Instead, they consider elements like the car’s make, model, year, safety features, theft rate, and repair costs.
The truth: A red sports car might cost more to insure—not because it’s red, but because it’s a high-performance vehicle. If you drive a red minivan, your insurance rate won’t be any different from a blue or white one.
Smart moves for lowering your car insurance premiums
There are a variety of ways to reduce your car insurance premium. Here are some tips for saving money on your policy:
- Raise your deductibles: Some car insurance policies, like collision and comprehensive insurance, require a deductible when you file a claim. Choosing a higher deductible will result in a lower monthly insurance premium.
- Improve your credit score: In most states, your credit score can impact your car insurance rate. Boosting your credit score by paying off debt and lowering your credit utilization ratio can reduce your auto insurance premium.
- Pay your annual premium in full: You can typically save money on car insurance when you pay your annual premium upfront and in a lump sum. You might also qualify for savings if you pay bi-annually.
- Bundle your policies: One of the most effective ways to lower your car insurance premium is to bundle multiple policies, like car insurance and home insurance. For example, State Farm says customers who bundle their home and auto insurance can save $1,073 on their combined premium.
- Take a defensive driving course: Car insurance companies usually offer savings to customers who complete an approved defensive driving course. This discount can be especially beneficial if you have young drivers in your household.
- Shop around: Car insurance companies charge different rates for the same types and amounts of coverage. It’s a good idea to shop around and get quotes from multiple insurance carriers to find the most affordable policy for your situation.
Frequently asked questions
How often do insurance companies re-evaluate my premium and what triggers a change?
Car insurance companies re-evaluate insurance premiums during the policy renewal period, which usually happens once per year. Some of the things that can trigger a rate adjustment include changes to your credit score, claim history, vehicle type, home address, and the number of drivers on your policy.
Do discounts significantly lower car insurance premiums?
Yes, car insurance discounts can significantly reduce your premium. However, some discounts are more effective at lowering your premium than others. For example, bundling multiple policies often results in a larger discount than paying your annual premium in full. Every insurance company offers different discounts with varying savings potential.
How do insurance companies determine if a vehicle is too risky to insure?
There are a few criteria that insurance companies look at to determine how risky a vehicle will be to insure. One is the make and model of the car. For instance, an insurer may determine that a very expensive sports car is too risky to insure. Additionally, the insurance company will consider the type of title the car has. If the car has a salvage or rebuilt title, they might deny coverage on the vehicle.
Resources & Methodology
Sources
Centers for Disease Control & Prevention. “Teen Drivers.” Accessed March 2024.
Insurance Information Institute. “Facts + Statistics: Uninsured motorists.” Accessed March 2024.
Methodology
CarInsurance.com commissioned Quadrant Information Services to field rates from 170 insurance companies in 34,588 ZIP codes for 40-year-old drivers of a Honda Accord LX with good credit and full coverage and a $500 deductible with a 12-mile commute.
Get advice from an experienced insurance professional. Our experts will help you navigate your insurance questions with clarity and confidence.
Browse all FAQs