7 factors that could affect your ability to get a lower car insurance rate

Two friends riding in a car and wondering what factors determine their car insurance rates. Image: Two friends riding in a car and wondering what factors determine their car insurance rates.

In a Nutshell

Whether you already have a car insurance policy or are shopping for one, several factors could make it difficult for you to get a lower car insurance rate. Some of these factors, such as your driving history and the vehicle you own, are within your control. But others — such as your age — aren’t. Shopping around for auto insurance and asking about discounts may help you find a lower rate.

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Behind-the-wheel behavior — such as getting a traffic ticket or being involved in a crash — isn’t the only factor that affects your car insurance rates.

A host of other factors can also dictate how much you pay for car insurance. Your credit history — and even where you live — could prevent you from getting a lower car insurance rate.

Let’s take a look at seven factors that can help determine whether your car insurance premium is affordable or astronomical.

Factors that can affect car insurance rate

  1. Driving history
  2. Vehicle
  3. Coverage
  4. Location
  5. Credit history
  6. Driving routine
  7. Age

1. Your driving history

The better your driving record, the lower your premium, says Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry-backed nonprofit that helps consumers understand insurance issues.

If you’ve had accidents or serious traffic violations, it’s likely you’ll pay more than if you have a clean driving record.

Aside from accidents and traffic tickets, reckless driving and driving while intoxicated can bump up your car insurance premium, according to the car insurance company Liberty Mutual.

2. Your vehicle

The rate for insuring a luxury car like a Mercedes-Benz normally will be higher than the rate for an everyday car like a Honda.

Why? A higher-priced car typically costs more to repair or replace than a cheaper model does, says John Espenschied, owner of Insurance Brokers Group.

Another rate-setting variable is a car’s overall safety record, Worters says.

“Insurers not only look at how safe a particular vehicle is to drive and how well it protects occupants, but also how much potential damage it can inflict on another car,” she says. “If a specific vehicle model has a higher chance of inflicting damage when in an accident, an insurer may charge more for liability insurance.”

Forty-nine states and the District of Columbia require liability coverage.

A car with top-notch safety features might qualify for an insurance discount, Worters says. These features include antilock brakes, anti-theft systems and dual air bags.

3. Your coverage

Generally speaking, you’re required to buy a minimum amount of car insurance. Most auto loan lenders require you to have some liability coverage, and it’s mandatory in every state except New Hampshire.

New Hampshire does, however, mandate that drivers prove they can provide a sufficient amount of money in case of an at-fault crash.

The car insurance mandate has a slight twist in Virginia: The state requires a driver to buy coverage or pay an uninsured motorists vehicle fee to the state Department of Motor Vehicles, according to the Insurance Information Institute.

If you have a car loan or lease your vehicle, the lender might insist on even more coverage, such as comprehensive and collision coverage.

As you’d expect, the more coverage you purchase, the higher your insurance costs will be.

How to find good, cheap car insurance

4. Your location

Where you park your car matters. In setting your rates, car insurers judge where your car is parked the majority of the time.

Because of generally higher rates of vandalism, theft and accidents, car owners who live in urban areas might pay higher auto insurance premiums than their small-town or rural counterparts do, Worters says.

In setting car insurance rates, insurance companies drill down to the ZIP code level to look at neighborhood crime rates.

Here are some other location factors that can affect your auto insurance rates.

  • How much auto insurance fraud occurs in your area
  • Which kinds of severe weather, such as hailstorms and ice storms, hit your region (and how often)
  • How much car repairs cost in your area

5. Your credit history

How you handle credit affects not only your ability to get a credit card or a mortgage, but it can also influence how much you spend on car insurance.

Depending on state law, car insurers can use what’s known as a credit-based insurance score when calculating the price of your coverage.

Among other things, insurers take into consideration your credit reports, payment history and credit utilization to come up with your credit-based insurance score.

Historical data suggests that your credit history can help predict the likelihood that you’ll file an insurance claim — those with less-than-perfect credit are more likely to file auto insurance claims than those with good credit.

So a not-so-great credit history can trigger a rise in your insurance rates, because you’re viewed as a bigger financial risk.

State laws in California, Hawaii, Michigan and Massachusetts prohibit this credit-based insurance scoring from being factored into car insurance rates.

Keep in mind that a credit-based insurance score isn’t the same as the credit scores that come into play when you apply for a car loan or credit card.

Regular credit scores examine an array of factors to determine how likely you are to repay a loan or a line of credit, the National Association of Insurance Commissioners says.

Meanwhile, a credit-based insurance score looks at some, but not all, factors in your credit history to determine how likely you are to file an insurance claim.

6. Your driving routine

Do you have a lengthy commute to and from work each day? If so, you might pay more for car insurance than someone who merely depends on a vehicle to run quick errands. That’s because more miles logged translates into more roadway risks, such as a car crash.

7. Your age

Younger drivers with little to no on-the-road experience normally pay a steeper price to get behind the wheel than their parents do. Why? Teens are at a higher risk of crashing a car than drivers in any other age group.

For 16- to 19-year-olds, the fatal crash rate per mile driven is almost three times the rate for drivers age 20 or older, according to the Insurance Institute for Highway Safety’s analysis of 2017 data from the U.S. Department of Transportation.

Generally, a car insurer will charge a higher rate if any driver below age 25 is covered under a policy, Worters says.

Next steps

A number of factors — like driving record, driving routines and your credit history — can greatly affect your car insurance rates. Some of these factors, like your age, may be out of your control, but shopping around and comparing auto insurance quotes could help you find a lower car insurance rate.

Be sure to ask insurance companies about any rate discounts they might offer. For example, you might be able to get a lower premium if you have certain vehicle features, are a good student or take a defensive driving course.

And if you already have an auto insurance policy, shopping around each year can help you assess whether you still have the best rate for yourself or can find a better rate elsewhere.