Why do car insurance rates differ for various groups of people?

What factors influence auto insurance rates are determined by the fact that certain groups generate more revenue for the insurance company. The biggest factors are age, gender, location, credit score, car, and driving record.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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: Jun 30, 2020

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Here's what you need to know...

  • Most insurers offer some sort of incentive for groups to obtain car insurance through their company
  • Which group pays more for car insurance? There is a downside to group affiliations, such as high-risk drivers
  • Regardless of your affiliation to a group, your individual level of responsibility will be reflected in your insurance rate

Why do car insurance rates vary so much?  Certain groups of people get better car insurance rates because they generate more revenue for the insurance company.

Whether your group is made up two or two hundred, an insurance agent will be glad to have your business.

Your business will also benefit from either being part of a group or from acquiring group coverage.

If you belong to the high-risk or non-standard group, you may not be getting the better insurance rates.

The good news is you can detach yourself from this group with a little time and patience so that you can get better car insurance rates later.

You can get online car insurance rates and discounts by entering your ZIP code in the FREE search tool provided here!

How do insurance companies determine car insurance rates?


What factors affect car insurance rates? Insurance companies use a table to determine your car insurance rates.

This table includes certain factors that affect car insurance rates such as:

  • Age
  • Gender
  • Zip code
  • Make and model of vehicle
  • Driving record
  • Credit rating

With these essential factors, the insurance underwriter determines the risk and likelihood of you filing a claim.

Your discounts are applied to this number, and the more discounts you can claim, the less your premiums will cost.

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

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Which groups get better car insurance rates?

If you are a good driver with no moving violations, you belong to the exclusive good driver group. If you have good credit, you belong to the group of drivers with good credit.

Your affiliation with these two groups in particular guarantees that you will receive a good rate as a preferred driver.

Your affiliation with AAA, AARP, the state Bar Association, the National Association of Realtors, the Association of Family Practitioners, or any similar group entitles you to a discount.

Your loyalty to a particular insurance company may also entitle you to a better rate.

When you combine the following factors, you may have an advantage on getting better car insurance rates:

  • Club and association affiliations
  • Good credit score
  • Geographical location
  • Desired vehicle make and model
  • Preferred safety features
  • Advanced premiums
  • Longevity with the company
  • Good driving record

How can I become a part of a group that gets better car insurance rates?


For starters, you can become a member of these preferred groups. There are some things that are simply out of your control, however, like your age.

However, there are things you can control. For example, you can improve your credit or your driving record.

If you have made mistakes, time will erase your moving violations if you avoid them from this point on.

Remember that you need other compensating factors to place you with the groups who get better car insurance rates.

To get FREE online car insurance quotes, enter your ZIP code below !

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