11 Factors Affecting Your Car Insurance Rates (And How to Lower It)

Simply put, the riskier an auto insurance company thinks you are, the higher your premiums will be. This makes sense—the riskier you are on the road, the greater the chance of an accident. The more accidents that occur, the more claims are filed, and the more insurance companies have to pay out.

While there are several more obvious factors that impact your premiums—like the type of coverage you choose—there are several lesser-known factors that could be skyrocketing your premiums.

Below are the 11 factors impacting your car insurance premium.

11 Factors Impacting Your Car Insurance Rate

Age

Younger drivers tend to have higher premiums due to their lack of experience on the road. According to one study, drivers aged 16 to 19 represent just 3.6% of all licensed drivers, yet they account for 9.1% of drivers in all crashes. In comparison, drivers aged 65 to 74 represent 13.4% of all licensed drivers, but just 7.1% of drivers in all crashes.

This makes sense given that youth are less experienced and more likely to participate in risky driving behaviors such as distracted driving, tailgating, and speeding.

The riskier the driver, the more expensive to insure. This means that, in general, teen drivers will pay the most in car insurance premiums. Rates tend to decrease around age 20 to 25, then begin to increase again around age 70.

Gender

If your license lists you as a man, you may experience higher car insurance premiums. This is because studies have shown men engage in riskier driving practices, like not wearing a seatbelt, driving while impaired by alcohol, and speeding.

That said, states have begun to ban the use of gender as a factor in setting car insurance premiums. At the time of writing, the following states have bans:

• California
• Hawaii
• Massachusetts
• Michigan
• Montana
• North Carolina
• Pennsylvania

Driving Record

If your driving record has a few minor offenses, like a parking violation or failing to use turn signals, your insurance premiums might not take as much of a hit. However, if your driving record contains a major offense, like a DUI, speeding, or reckless driving, your insurance premiums will likely increase quite a bit.

According to one insurance agency in Masschusetts, one speeding ticket would increase your potential for a future violation by two driving record points. This would increase your annual insurance rate by 30%.

State You Live InAccording to a 2024 study from the National Association of Insurance Commissioners (NAIC), the most expensive states for auto insurance are New York, Louisiana, and the District of Columbia.

Certain states are more expensive due to factors like road conditions, accident frequency, traffic density, the cost of repair and labor costs, and state-specific insurance laws.

For example, we’re not surprised to see Rhode Island fairly high on the list given that the state has some of the worst road conditions. Likewise, Louisiana has one of the highest rates of fatal motor vehicle accidents, which contributes to increased premiums across the state.

What Neighborhood You Live In

Generally speaking, insurance premiums are higher for drivers in urban areas, as opposed to  rural or suburban communities. This is because urban areas tend to have higher rates of vehicle theft and vandalism.

Based on a recent study, the most expensive neighborhoods for car insurance were Brooklyn, New York, Bronx, New York, and Hamramck, Michigan. This isn’t surprising given the density of these three cities and the increasing vehicle theft rates.

On the flipside, the three least expensive neighborhoods were Rowe, Bernardston, and Deerfield, Massachusetts—three more rural neighborhoods with nearly non-existent vehicle theft rates.

Car You Drive

The car you drive impacts insurance premiums for a few reasons.

New vs. Used

Generally speaking, new cars are more expensive to insure because of the higher costs to repair and the overall value being higher. However, this isn’t true 100 percent of the time.

Make and Model

Make and model play a larger role. Vehicles known to be safe and reliable, like the Subaru Outback and Honda CR-V, are often cheaper to insure.

Cost of Repairs

If you experience damage to your vehicle that’s covered in your insurance policy, you’d submit a claim. The insurance company would then evaluate the claim and send an appraiser to evaluate the cost to repair the damages. If the claim is approved, the insurance company would pay out the cost to repair the damages, minus your plan’s deductible.

If you own a vehicle with high repair costs, you can expect higher insurance premiums. This is how insurance companies offset higher repair costs should a claim go through.

How Much You Drive

This one is quite simple. The more you drive, the more chances you have of getting into an accident. Those that drive for work or have longer commutes will see higher insurance premiums.

If you drive less than 7,500 miles per year, you may qualify for “pleasure use” insurance, which is cheaper than commuter coverage.

Insurance Company You Choose

According to a US News study, USAA, Geico, and State Farm offer the cheapest annual car insurance rates. On the flip side, Allstate and Farmers have the most expensive average rates.

That said, each auto insurance company will provide you with a different quote. It’s important to shop around and see what you qualify for.

Type of Coverage

There are several types of coverage available. In most states, you’re required to have both Bodily Injury Liability and Property Damage Liability coverage. These cover costs associated with injuries and damage to you, another driver, or property like buildings and fences.

Beyond that, some states also require Medical Payments or Personal Injury Protection (PIP), which reimburses medical expenses to you or passengers in your vehicle. Your state may also require Uninsured Motorist Coverage, which reimburses you when an accident is caused by an uninsured driver.

You’ll also have the option to purchase the following coverage:

• Collision: Reimburses damage to your vehicle as a result of a collision with another vehicle or object
• Comprehensive: Provides coverage against theft and damage caused outside of collisions, such as a tree falling on your vehicle

The more comprehensive your coverage, the higher your insurance premiums will be. Similarly, like all insurance policies, the lower your deductible, the higher your insurance premiums are likely to be.

Credit Score

Studies have shown that those with lower credit scores are more likely to file an insurance claim. Those with higher credit scores are less likely to file a claim.

Keep in mind—insurance companies make money when they don’t have to pay claims. The more claims you file, the more insurance companies might have to pay out.

Marriage Status

Insurance companies view married drivers as safer, often lowering their premiums. Married drivers may also qualify for multi-vehicle discounts by bundling insurance policies together. That said, marriage status does not play a role for drivers in Massachusetts and Michigan due to state laws.

How to Lower Your Car Insurance Rate

There’s only so much you can do to lower your car insurance rate. You can’t change your age, and moving to a more affordable area isn’t that simple. Instead, here are a few things you can do to lower your premium:

Ask About Discounts

Some car insurance companies offer discounts for maintaining a clean driving record, being a loyal customer, or an affiliation with a specific university or military organization. Ask your auto insurance company about any discounts they may offer.

Bundle Insurance Policies

Most insurance companies offer a discount if you bundle several insurance policies together. Bundling simply refers to the process of purchasing multiple insurance policies from a single insurer, as opposed to having each policy with a different company.

On average, you’ll see a discount of anywhere from 5% to 30% depending on the insurance company.

Higher-Deductible Plans

High-deductible plans may cost less each month, but they also cover less if something happens. Before switching to a high-deductible plan, think about how much you could pay if your insurance didn't cover most of a claim.

Shop Around

As with any major financial purchase, it’s important to shop around and obtain quotes from several auto insurance companies. Because insurance rates are dependent on various factors, the cheapest option for your friend or spouse might be the most expensive option for you. Do your research and shop around before signing the dotted line.

Frequently Asked Questions

Why is My Car Insurance so High?

Your car insurance may be expensive if you’re a young driver, have poor credit history, have a spotted driving record, or live in an area with higher premiums, among other factors. Your auto insurance company may be able to provide insight into why your rate is more expensive.

Does the Color of My Car Impact My Auto Insurance Rate?

According to the Insurance Information Institute, the color of your vehicle does not impact auto insurance rates. This is a common myth, but is completely untrue.

Does Car Size Affect Insurance Rates?

Large vehicles often cost more to insure because of the potential damage they can inflict in an accident. For example, if both a Volkswagen Beetle and Chevrolet Suburban hit a fence, there’s a good chance the Suburban would cause more damage.

Do New Safety Features Affect Car Insurance Rates?

Vehicles with enhanced safety features can lower car insurance premiums. This is because the vehicles may be deemed safer, and therefore less risky on the road.