Key Factors That Determine Auto Insurance Rates


If you’re shopping for car insurance, it could be tempting to go for the lowest rate available. This doesn’t always guarantee that it will be the best deal. That’s why you should be focusing on the factors that determine rates and not just the cheapest quote because there could be more than meets the eye. Even if you might not know it, there are a couple of factors that could affect the rates you pay for auto insurance and we’re going to highlight some of them.

Demographic Factors

Where you live, gender and even marital status could have a bearing on how much is paid for auto insurance. Statistically, younger men are likely to pay more in premiums compared to younger women but the reverse is true for older men. There are some studies that have shown that older women are likely to be involved in minor accidents compared to older men.

Research also shows that single people get into more minor accidents compared to married couples. The rate at which the premiums decrease will hugely depend on your driving record. For a man that has never been involved in an accident, you could see the rates dropdown by almost half.

Where you live can also determine how much you pay as most accidents will happen close to home. Living in a densely populated city comes with a higher risk of being involved in an accident. A lot of insurance companies will also take your credit score into consideration when coming up with the final rate.

Type of Car You Drive

Not all cars are the same. There are some that are going to be more expensive than others. If your car has a “sporty” appeal to it, you’ll definitely pay higher auto insurance than you would with a normal car. This is something that you’ll not have control over once you’ve bought the car. That’s why it’s important that you’re conscious about the purchasing decision and how it is going to affect the different areas of your life including insurance.

Buying a car with high safety ratings will reduce the chances of injuries in case of an accident. That means that the insurance company will not have to pay a lot for the medical bills hence the low premiums. Larger vehicles also tend to be safer and the rates can reduce if the vehicle is packed with extra safety features.

Age of the Repairs

The repair costs for an old car will be almost the same for a new one. The only difference is that the old car is likely to be totaled in case of an accident. Someone that drives an old car will not want to include collision coverage because the vehicle will most likely be totaled.  For new cars, such kind of coverage is necessary and will add up to the total costs.

Personal Driving Habits

If you’ve been in an accident more than once and received a couple of tickets, the insurance company will be wary. Given past records, there is a chance that you’re likely to make a claim and that’s why they might charge high premiums. It’s also possible that you might be denied insurance altogether because of your driving record.

If you’ve accumulated tickets for wild driving over the years, you’ll want to start transforming your behavior as a driver. Go slowly and observe traffic rules. Most penalties will go away after three years.

Driving Activity

How often do you drive? What’s the mileage you cover in a month? There are insurance companies that will use your driving activity when coming up with the rates. You can’t expect to pay the same rate as someone that only drives a mile a week when you’re commuting for three hours every day.

Likelihood of Theft

There are some cars that are likely to be stolen compared to others. Insurance companies most likely have this data but you can buy an alarm and anti-theft devices to reduce the premiums.

To Sum it Up

Paying for car insurance is one of the biggest costs that come with car ownership. If you analyze your individual circumstances, you might find that you’re paying more than you should. That’s why it is important to have an understanding of the different dynamics that contribute to what you pay for auto insurance. Don’t just depend on comparison websites for research. Reach out to the individual insurance companies and ask them about the different ways you lower the rates.



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