Top 7 Factors Affecting Car Insurance Rates

Car insurance is an important financial backup in case your vehicle gets damaged or stolen. But, depending on a few factors, you can pay anywhere from $$ to $$$$ for it. 

So, if you want the safety of car insurance without getting bankrupt, it’s natural to think about what affects car insurance rates and how you can lower them. Below, we have explained exactly that. Let’s dive in!

1. Personal Details

Car insurance companies like ROLLiN’ car insurance always ask the applicant about their age, gender, marital status, and residence. All these details aren’t for recordkeeping – instead, they’re used to determine the insurance rate. 

If you’re an older, married woman who lives in a suburban area, you will get much lower insurance rates than a young, single man. This is because:

• Older people have much more driving experience than youngsters (age).
• Married people exhibit safer driving behavior than single, divorced, or widowed people (marital status).
• According to studies, women are less likely to get into serious accidents than men (gender).
• People living in cities have a higher risk of accidents and theft than people living in rural or suburban places. 

All of these conclusions are supported by independent research. You can also interview any car insurance employee to learn about other unique personal details that their company uses to determine rates. 

Personal Details

2. Driving Record

Your driving history is the biggest influencing factor on the insurance rate you get. If you have received a lot of speeding and traffic violation tickets in the past, you will be viewed as a risky candidate and the company will charge you higher rates. 

Things get even worse if you have been into at-fault accidents or DUI-related events. In this case, insurance companies might refuse to offer you any insurance at all and you may have to consider non-standard car insurance. 

Driving Record

3. Credit Score 

Your credit score reflects how likely you are to pay back a loan on time. This might make you question – isn’t this related to banking?

Well, it is. But car insurance companies also use it to calculate how likely you are to file a claim for insurance. This is called a credit-based insurance score. 

If you have a good credit score, your credit-based insurance score will also be good and you will get a lower rate. However, if both turn out to be average or poor, you will have to pay more for insurance.

Credit Score

4. Insurance & Claim History

Insurance companies also assess your auto-insurance history to determine your insurance pay rates. If you have coverage gaps, you’re likely to get a higher rate. That’s because the insurance company will see you as a risky candidate. On the contrary, if you’ve paid all your monthly payments on time and in complete, you’re likely to get a lower rate.

Similarly, if you’ve exhibited a high claim rate in the past, you’re likely to get a higher insurance rate. This is because you’ll cost more to the insurance company as compared to someone who rarely makes insurance claims.

Insurance & Claim History

5. Car Model

The average full-coverage car insurance for a budget car model is about $1730 per year. However, the average full-coverage car insurance for a luxury car like Tesla Model 3 is about $3209 per year. 

So, the more expensive your car is, the higher the insurance rate you will pay. This is because in case of an accident or damage to the car, the insurance company will have to pay more for replacing or fixing the damaged parts. This is also true for limited editions and rare models. 

Also, if your car can be handled only by a specific mechanic, there’s a high chance they’ll have higher-than-usual charges. The car insurance company will have to pay more as a result, which means you’ll pay more for insurance.

Car Model

6. Coverage Type

Your car insurance rate also depends on your coverage type. If you have a plan that secures your car against a wide range of damage sources, you’ll have to pay more. 

Here are a few types of car insurance: 

• Liability Coverage: This is the most basic type of car insurance and covers damages that you cause to another party.

• Collision Insurance: This type of insurance pays for the damage that occurs to your car if you run into another vehicle on the road.

• Comprehensive Coverage: This type of insurance pays for car damages caused by adverse weather conditions, vehicle collisions, vandalism, and accidents with animals.

• Medical Payments Coverage: This type of insurance pays for the car damage as well as the medical bills in case a person is injured.

Coverage Type

7. Discounts 

Discounts may help reduce your car insurance rate. Some auto insurance companies offer exclusive discounts to:

• people who purchase multiple policies from their company (such as home or holiday insurance)
• young students who exhibit a good academic record
• other similar profiles (such as military personnel) 

So make sure to ask your provider about any discounts they’re running and see if you qualify for one.

Discounts