5 Things That Can Drive Up Your Auto Insurance Rates

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.

5 Things That Can Drive Up Your Auto Insurance Rates


Do you feel like you pay too much for auto insurance? To qualify for the best rates, you need to be viewed as a low risk by insurance underwriters.

To be profitable, auto carriers must set their rates high enough to offset potential losses. According to 2013 data from the nonprofit Insurance Information Institute (III), the average annual car insurance premium is about $840, but that figure may rise substantially if your carrier thinks you pose a greater risk.

Here are five things that can drive up your auto insurance rate.

1. Having a Poor Credit History

Janet Ruiz, a spokeswoman for the III, says most state insurance regulators allow carriers to factor in credit histories when they set car insurance rates. Carriers use credit-based insurance scores to predict how likely you'll be to make an insurance claim.

According to the California-based United Policyholders consumer group, only California, Hawaii and Massachusetts bar insurers from considering credit histories when setting rates.

If you're worried about your credit score, there are numerous ways you can improve your credit health over time, including:

You may also want to consider checking your credit reports several times each year so you can track your progress and correct any errors you find.

2. Buying an Expensive Car

Typically, the more your car costs, the more expensive it will be to repair or replace, says Carole Walker, executive director of the Rocky Mountain Insurance Information Association.

"When you spend more on a car, you may also spend more on insurance," she says.

Before you make a car purchase, ask your insurance agent about the impact on your auto insurance rates or use an online auto insurance calculator. Your agent can help you identify makes and models that are beyond your insurance budget.

3. Moving to a ZIP Code With a High Frequency of Claims

Because the environment you live in can influence your likelihood of having an accident, insurance companies may factor in your ZIP code when setting your rate. Walker says rural communities generally have lower car insurance rates than urban areas because there's typically lower traffic density and less risk of vandalism or theft.

If you move from an area that has few claims to one where they're more common, your insurer may be concerned about the increased likelihood you'll make a claim and may raise your rate as a result. They do this by considering your new ZIP code's historical claims data before adjusting your rate.

4. Getting Traffic Tickets

If you ignore the rules of the road, you'll end up paying more for car insurance, says Kevin Foley, a New Jersey insurance agent. Generally speaking, any tickets for moving violations you receive can be used to justify higher rates. These moving violations include citations for speeding, failing to stop and reckless or careless driving.

"Tickets demonstrate that you're an at-risk driver," Foley says.

Walker says your goal should be to have a driving history free of traffic tickets. Insurance carriers may factor in traffic violations for several years after the violations have occurred. For example, Esurance asks car insurance applicants if they've had any moving violations over the past three years.

"That's pretty typical," Ruiz says.

If you're convicted of driving while under the influence of alcohol or drugs (DUI or DWI), the violation may be used to justify higher car insurance rates for longer than three years. For example, Esurance continues to consider such convictions for a decade.

5. Making a Claim

Everyone needs auto insurance to protect themselves from losses, but if you have to use your policy, there's a chance your insurance rates will rise.

In February 2016, a study by insuranceQuotes.com found that drivers who make a single claim of $2,000 or more see their rates increase 44 percent on average.

Walker says that if another driver is at fault, his or her auto insurance will typically cover the claim, and your rates won't be affected.

However, if you live in a no-fault state (District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania or Utah), it usually doesn't matter who was at fault for the accident; you'll generally use your own policy for medical costs for minor injuries, car repair costs and lost income, up to the policy's specified limit.

What To Do If Your Rates Rise

If you see an increase in your car insurance rates, try to determine the cause. Your car insurance agent may be able to provide guidance. In addition, here are some other strategies you may want to consider:

Shop for a new auto policy each year. Insurers often weigh rating factors differently, so the quotes you receive may vary greatly. However, make sure that if you opt for an inexpensive policy, you still have the amount of coverage that you need.

Compare insurance quotes. Insurance companies routinely adjust prices. The only way to know you're getting the best deal possible is to compare insurance quotes.

See if you qualify for discounts. Common auto insurance discounts include a discount for bundling your auto and home policies, paying your annual policy in full or going paperless for your bills and policy papers and choosing to receive correspondence online.

Bottom Line

Many factors can affect what you pay for auto insurance. Some may be in your control, while others aren't. Generally, the best way to get low rates is to make sure you're viewed as a low-risk policyholder. You should strive to have a strong credit history and a clean driving record.

About the Author: Emmet Pierce is a freelance writer based on the West Coast. He has developed numerous news contacts in the public and private sectors while writing about personal finance, lending, insurance, real estate, health care, technology and science.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
1 Contribution
0 People Helped

I am an insurance agent and what has been said here is true.  Going on line for insurance may give you a little discount, but you won't have face to face rapport if something happens and you need someone.  Develop a relationship with your independent insurance agent and it will serve you well.  I recommend doing a Trust but Verify review with an independent agent every 3 years to make sure you are not being overcharged and that things are not missing you should have.  An independent works for you and is not captive to any one company.  Drive carefully, watch your claims and keep your agent in the loop on changes.  Make that insurance agent work for you.  FInally, do not be a hopper, changing every year for a couple of dollars.  If your rates go up over 10% and you are not a contributing factor via behavior, then call your independent agent to find a better choice for you! 

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.


Comment on this Article

Write your comment:
Enter Your Comments