Seven Key Factors That Impact Your Car Insurance Prices

There are a number of ingredients that go into how car insurance prices are set. Providers calculate car insurance rates based on factors about you and your driving patterns, as well as the coverage choices you make. The following are seven of the more important factors used in setting auto insurance prices that you can actually monitor and change. Taken together, they give you a lot of control over how much you have to pay each month to insure yourself against the risk of an accident.

Car / Auto Insurance

A couple factors you can’t control

Two characteristics that you cannot change about yourself that are critical in calculating your car insurance prices are your age and gender. Males tend to face higher car insurance prices than females (especially single males under 30) Rates decrease as you age, until you hit a certain stage where you are considered a senior driver and at higher risk for accidents and incidents.


While there’s not much you can do about your age or gender, you still have a number of options available to know and control some factors contributing to what you will be charged for car insurance.

1. Your coverage types, levels and deductibles

One of the easiest ways to decrease your monthly payments and yearly premium is to change your coverage scheme. Specifically, if you increase your deductibles and eliminate extra coverage such as redundant medical insurance for your own injury, your rates will drop. There’s a tradeoff that you have to evaluate depending on your risk aversion, but the less concerned you are that you’ll have or be in an accident that requires costly repairs, the more you can pare down your coverage closer to the legal minimum.

2. What you drive

Some cars are less likely to be stolen, have better safety ratings, and are more likely to be driven conservatively. If you have a car that is in the top ten most stolen list, tends to break down, or has a low safety rating that increase your chances of ending up in the hospital, the insurance company will charge you more. Conversely, anti-theft and safety features that you add to the car, such as theft deterrents and airbags tend to lower your rates. So consider these features when car shopping.

3. Where you live

Your neighborhood and state impact not just how likely you are to have an accident or be the victim of minor vandalism, but also how certain market factors affect the car insurance price you face. Regional market differences have a profound impact on rates. If you are moving and plan on driving a lot, research zip codes and neighborhoods that appeal to you and see if that changes the prices you are being quoted.

4. Your credit score

Many insurance companies want your Social Security Number and other personal info in part so they can perform a credit check. This gives them another general piece of data about how trustworthy and reliable you are. Take the time to clean up your credit score and pay off lingering debts and you can get lower insurance rates.

5. Your current driving profile

The more you drive, the more chances you have to get in an accident. Insurance companies ask for info on your daily commute and yearly mileage because this tells them how much time you spend on the road. If you carpool or find other ways to reduce your average mileage, you can report this change to the insurance company for a rate reduction.

6. Personal factors such as marital status and profession

Historical data show that married people are safer and more reliable on average, so they get lower rates than their single counterparts. Certain jobs, such a field sales agent, require more driving and thus more risk, while other professions are correlated with risky behavior. Both of these increase your chances of an accident in an insurance company’s eyes, while being an airline pilot means you drive very little except to and from the airport, meaning you have less of a chance of being in an accident.

Car Insurance Prices for Married Couple

7. Your driving history

Tickets and accidents in your past increase your rates, as do points on or against your license. Improve your driving and these negative factors will fall away. Insurance companies look most closely at activity in the past three full years of driving when considering what to charge you for a new or renewing policy. You can also take driving safety courses to get points off your license, and other classes such as a defensive driving course, to lower your rates further and make up for the impact of any past accidents.

Your car insurance prices are not set in stone. Go online and complete a request for a free quote and you can see all the different pieces of data companies collect to determine how likely you are to have an accident and cost them money. Take corrective steps based on these seven factors and make insurance companies think a crash is less likely.

Guest Author: Jeffrey Davidson is a writer with Reply!. He has more than 25 years of marketing research, public relations consulting and freelance writing experience and work in all areas of the auto insurance industry. For more help, see his main article on Car Insurance Prices.

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