Various Factors Affecting Car Insurance Rates

Many factors affect car insurance rates, including your age, gender, credit score, and ZIP code. Your driving record is also a major factor.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 17, 2021

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Here's what you need to know...

  • There are many different factors that affect your insurance rates
  • Some companies put more weight on different factors than others
  • Typically males pay more for insurance
  • Look for discounts because there are almost always some that apply to your situation
  • Your driving record will have a serious impact on your insurance premium

The factors that affect car insurance rates are similar across the board, but the precise value each car insurance company assigns to those factors varies widely.

Complex formulas are used to determine the car insurance rate for any given driver. These formulas take into account areas such as:

  • the type of car
  • your demographic
  • your location

Males are more likely to pay higher premiums than females. Drivers older than 70 or younger than 25 will probably pay more than people who fall between those ages.

Those in possession of sports car will pay more than the stable sedan owners. City dwellers that drive where more accidents happen will see that risk reflected in their insurance payments.

But even a 23-year-old man tooling around New York City in a Mazda Miata can catch a break if he keeps his eyes open. So can you.

Deals and discounts are always available if you know where to look.

Read on to learn how to find cheap car insurance rates. Then, enter your ZIP to start a FREE comparison online!

Location Matters

The first rating factor considered by the car insurance company considers the location, or territory, in which you drive the vehicle.

Each state is divided into rating “territories,” and each car insurance company determines and scores territories differently. Over time, statistics about drivers’ claims in each territory are collected and studied.

Regardless of where an accident occurs, the driver’s home location is ultimately affected.

For example, if a driver from California drives to Florida and causes an accident there, the statistics about the accident are reflected in his home territory.

The loss experience of the territory, from the insurance company’s perspective, determines the first basic car insurance rating factor.

Then, depending on the driver’s experience and specifics, the insurance company builds a car insurance premium rate for the driver.

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Gender Affects Car Insurance Rates

We all know that males and females differ greatly in:

  • Their behavior
  • Their mental processing
  • Their emotional wiring

Insurance companies are perhaps more aware of this than most other industries. They have commissioned and cited many different studies to back up higher car insurance rates based on the increased risk presented by males.

It’s true the world over. Scientific studies performed from Africa to Europe support the finding that men are more likely than women to be driving when a crash occurs.

It is thought that psychology, and not skill, is the main factor in this gender divide.

Males are considered to be more aggressive and more straightforward in the expression of that aggression. They break more rules. They engage in riskier behavior and more of it.

Another factor that goes into higher premiums for men is a preference for costlier vehicles. Whether they are high-end, fast, or rare, such vehicles cost more to insure.

Men also tend to cover more ground with their vehicles than women do, thus raising the overall risk level behind the wheel.

Fast and Fancy Equals More Money in Rates

Sports cars lead to higher car insurance rates due to the higher cost of repairs and heightened level of risk from driving them.

Maintaining a clean driving record is crucial to keeping your premiums as low as possible when driving a sports car.

You may wonder what constitutes a sports car in the eyes of insurance companies. The exact definition varies, but the same general components remain constant:

  • Model
  • Engine size
  • Cylinders
  • Horsepower
  • Weight
  • Height

You can recognize a sports car as a low, aerodynamic ride with two doors.

Driving Records Play a Role

The individual driver and the vehicle he drives affect additional rating factors. Some car insurance companies assign a multiplier rating factor to the territory base rate.

If the car insurance company determines a 1.5 multiplier, then the driver pays one-and-a-half times more than the base rate premium within the territory.

A 1.5, 2.0, or 3.0 multiplier increases the premium rates of the driver based upon a record of previous car insurance claims.

These days, car insurance companies routinely evaluate their policyholders’ driving records.

When a prospective insured applies for car insurance, the car insurance company requests a CLUE (Comprehensive Loss Underwriting Exchange) report from ChoicePoint.

The CLUE report helps a new car insurance company learn how many car insurance claims have been submitted by the driver over the past five years.

This report, in addition to the driver’s location, age, credit report, marital status, and other car insurance company-specific factors, helps determine how likely the driver is to submit claims to the insurance company in the future.

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Impact of Age on Rates

Younger operators are considered higher risk drivers by most car insurance companies.

Some additional factors, such as good student or good grade discounts, help young drivers pay lower-than-average car insurance rates.

So-called non-youthful drivers or operators gain the most favorable ratings by car insurers if they’re female and between the ages of 30 and 64. If the driver uses the vehicle for pleasure, she improves the car insurance rating factor.

If she drives to work 10 or fewer miles per day, her car insurance factor slightly increases. If she uses the car for business purposes, the likelihood of paying higher car insurance rates increases.

Age (65 years or older) is considered by car insurance companies as a rating factor. Older or elderly drivers typically pay higher insurance rates.

Older drivers using a personal vehicle for business use are assigned a higher car insurance rating factor than drivers using the vehicle for personal use.

You Get What You Pay For

While price is important, you need to make sure you look at the whole picture when choosing car insurance.

Selecting an insurer based on price alone may leave you with an inadequate level of coverage.

You should carefully evaluate the coverage offered by each insurer, as well as the rating of the insurance company.

Choosing the highest deductible you can afford to pay in the event of an emergency will also keep your premiums lower.

You should also be sure to supply the on-line quote comparison tool with all the information that may provide you with a discount, such as:

How can the policyholder get lower insurance rates?

Whether the policyholder can control certain factors or not there is always something they can do to try and get a lower car insurance rate.

The most obvious suggestion is to not settle on the first car insurance provider that they come across.

Some people stay with the same car insurance provider because that is just the company they are familiar with.

By researching other providers via A.M. Best’s website or other sources, and getting quotes, a policyholder can often find a lower car insurance rate.

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An Online Quote Comparison Tool Finds the Best Car Insurance Rates For You

One way to access the best rates comes in the form of the free, online quote comparison tool. Such programs allow you to access a host of different car insurance quotes from respected companies just by typing in your information one time.

The results are instantaneous, allowing you to compare several companies right away. Whether you are searching for quotes in the morning, at noon, or in the middle of the night, the results will be available. The online quote comparison tool saves you money and time.

The online quote comparison tool saves you money and time.

When typing in your information to a quote comparison tool, you will be asked for such information as:

Each company weighs these factors differently when computing your quote. The only way to find out the company with the formula that equals the most savings for you is to get quotes from as many as possible.

The quote comparison tool is the most thorough and quickest way to accomplish that goal.

Regardless of what factors go into your car insurance policy, you can find the best rate by using the online quote comparison tool.

Men and women, young and old, city dwellers and country dwellers: they can all save money by finding the best quote online.

Enter your ZIP code in BELOW now to start finding the cheapest car insurance rates!

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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