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12 Key Factors That Affect Your Car Insurance Rate

Factors That Affect Your Car Insurance Rates

Have you ever wondered why your car insurance costs more than your colleague’s? Or why it’s considerably cheaper than your sibling’s?

Well, good on you! These are important questions to ask.


Because knowing what influences your car insurance rate is the first step to reducing it. After all, you might discover something you can do to appease insurance companies and get lower monthly premiums!

Read on for 12 primary factors that affect your car insurance rates.

1. Personal Characteristics

Everything from your age and gender to your marital status can come into play here.

For example, younger drivers pay more because they have less experience behind the wheel. Likewise, the majority of states also charge male drivers more than females—especially in their younger years.

As for marital status, you’ll almost always pay lower rates if you’re married.

2. Where You Live

Thanks to varying regulations in each state, your address has a significant impact here too. Someone in Maine, for instance, will pay half of what someone with the same vehicle in Michigan would have to!

Plus, because of the higher risk of theft and vandalism, city dwellers tend to pay more than people in rural areas.

3. What You Do

Although there’s a push to change the role of your occupation on insurance rates, there’s no denying that your job can be a factor.

You’ll find cheap car insurance for civil servants, for instance, but expensive ones for racecar drivers. This is because the latter is, according to insurers at least, more likely to file a claim.

4. Your Credit Rating

There are only a few states where credit scores are barred from playing a role in your car insurance rates. Unless you live in one of those states, it’s likely that your credit score will play a large role in your insurance rate.

What’s your credit score looking like at the moment? If there’s room for improvement, then try remedying the situation before applying for car insurance.

Trust us, the rates you’re offered will be considerably lower as a result.

5. Your Vehicle

Trying to find the best car insurance for a 4×4? Expect to pay higher premiums than someone driving a coupe. Not only is your car more likely to be targeted by thieves, but it’s probably also faster and more expensive to repair.

The specifications of your vehicle make a difference too. Those with a higher trim, for instance, cost more to repair, which increases insurance rates. By contrast, you’ll receive sizable discounts if you install high-quality safety features.

6. Your Insurance Choices

Each insurer will offer you a different rate. The best way to save money on your insurance rates is to choose the cheapest vehicle insurance company in your area!

Of course, the quality and extent of your coverage are crucial considerations too. But if you’re on a tight budget, it makes total sense to shop around until you find the most affordable rate possible.

7. Blemishes on Your Record

Your driving record is another primary factor that can affect your car insurance rate. Expect everything from major issues, like a DUI violation, to minor ones, such as traffic tickets, to increase your rate.

In your bid to pay the least possible amount each month, you should do your best to keep a clean record at all times. If the situation’s too bad, your only hope might be an insurer that specializes in higher-risk drivers. 

8. Past Claims

Drivers with no past insurance claims receive lower rates every time. After all, that positive track record makes them appear much less risky from an insurer’s standpoint.

The difference isn’t negligible either. On average, someone filing an at-fault claim could pay over 50% more than someone with a clean record.

9. Past Inquiries

However, you don’t even need to make an actual claim for your coverage to start costing more! Simply asking an insurance company about a possible claim can have a similar effect.

That’s because some companies record these inquiries in a database that other insurers use to evaluate a driver’s risk.

10. Your Parking Location

Where do you park your car during the day and overnight? Is it on your own private driveway or out on the street? How about in a garage?

The riskier the location, the more you’ll pay. For cheaper rates, having a garage or driveway is always preferable to on-street parking. This minimizes the risk of your car being stolen or damaged. 

11. Whether You’re a Homeowner

For one reason or another, homeowners often enjoy lower car insurance rates than tenants.

Better still, you can access the discounts without even using the same insurer to purchase homeowners insurance! You may, however, be eligible for further reductions if you do.  

12. Driving Frequency

People who spend more time behind the wheel are more likely to have an accident, right? Right.

That’s why drivers who use their cars less frequently tend to receive lower insurance rates. Once again, there’s less risk involved, which is a significant plus in the eyes of an insurance company.

How to Lower Your Rates

As we noted above, the best way to lower your insurance rate is often to shop around for the best possible policy. Get multiple quotes from trusted companies, compare prices, and read online reviews to decide on which to choose.

From there, consider increasing your deductible or asking for discounts that might apply to your situation. If you want to stick with your insurer, you can still update them on any changes such as driving your car less or gaining access to a garage and inquire about relevant discounts. 

Boosting your credit score is sure to make a difference too.

Frequently Asked Questions

1. Why Am I Paying So Much for Car Insurance?

It depends! Any of the factors above could be impacting your current rates; some of them will be totally outside your control.

If you’re trying to lower your premiums, focus on those factors that you can control. Things like improving your credit rating, driving sensibly, and keeping a clean driving record will all help.

2. What Occupation Is Cheapest for Car Insurance?

You’ll find different answers to this question wherever you look. Overall, it’s widely accepted that people in desk-based jobs pay less than those in hospitality or public sector roles. Mechanics, designers, account executives, and managers are a few examples of job titles that pay lower rates.

3. What States Have the Cheapest Car Insurance?

Iowa is by far the cheapest state to live in for acquiring auto insurance. Wyoming, Hawaii, Alaska, and South Dakota aren’t too far behind.

Featured Image: Megapixl

About the author: Liam McGillivray is a writer and editor at Wealthy Millionaire. He holds a Master's degree in Public History from the University of Victoria and a BA in History and Classical Studies from Queen's University. His interests include fantasy literature, NFT gaming, and film studies.

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