Important Factors That Affect Your Auto Insurance Premiums

Important Factors That Affect Your Auto Insurance Premiums

Your vehicle, driving patterns, demographic factors, and the coverages, limits, and deductibles you select may affect your auto insurance premiums. These variables may include your age, the anti-theft features of your vehicle, and your driving.

Important Factors That Affect Your Auto Insurance Premiums

While it may be tempting to reduce or eradicate coverages to lower your auto insurance premium, it is essential to remember that other factors may also influence the cost. Below are some factors that affect your auto insurance premiums.

Driving Record

One of the most essential things you can do to lower your car insurance premium is to avoid getting any fines or accidents. Several insurance providers provide discounts for drivers who have few or no claims on their record to reward cautious drivers.

Of course, accidents may and do occur. However, your auto insurance premiums will react differently to the several accidents and traffic offenses you have accrued. While state laws vary, most keep records of traffic violations and accidents for three to five years. However, a conviction for a serious offense, such as a DUI, may remain on your record for years.

If you are caught driving 1–5 mph above the limit, your insurance premiums will rise by an average of $409 annually. Your yearly premium will increase by an average of $3,620 if you have three accidents on your record.


For young drivers, age plays a massive role in the grading process. There is a cost difference of more than $5,500 annually between the premiums paid by young drivers and those produced by drivers over 50. Insurance companies see Teenage drivers as high-risk and costly customers to cover. According to statistics, young drivers are more likely to speed up and cause accidents than drivers of any other age group.



Insurance provider 6-month premium — 16-year-old 6-month premium — 50-year-old
All states $4,393 $930
Farmers $4,013 $755
GEICO $2,221 $549
Liberty Mutual $5,268 $693
Nationwide $2,518 $646
Progressive $5,047 $712
State Farm $2,040 $608
USAA $2,114 $461
Average $3,452 $669


The Average Annual Mileage

The amount of annual miles driven has a significant impact on rates, especially in the state of California. The average yearly premium in the United States is $92 less for drivers who put on less than 7,500 miles than those who put on 15,000 or more. However, in the Golden State, this disparity amounts to $557 annually or over 32%.

Marital Status

Your auto insurance premium will vary depending on your marital status in all states except Massachusetts and Michigan. Usually, a married motorist will pay less than a single driver.

Rating plays a role, and discounts play an even larger one. Insurers assume that married drivers are less reckless and more financially secure since they are more incentivized to keep both vehicles on the road. In addition, married drivers may be more likely to get discounts for purchasing several cars or a bundle of related services.

Years of driving experience

This aspect of the score is fundamental. Experienced drivers are safer on the road because they make fewer rookie driving errors that may result in fines and legal trouble.

Also Read: Why Your Business Needs Commercial Auto Insurance

This makes you a safer bet for the insurance provider. In most cases, drivers with more years behind the wheel pay less for car insurance than fresher drivers.

Credit History

Your credit score may be taken into account by insurance companies in most states. Your credit history is as important to insurance providers as your driving record. Low-credit drivers are seen as higher risks on the road because of their propensity for reckless behavior.

The following states have passed legislation prohibiting insurance providers from utilizing credit history for setting premiums:

  • California
  • Hawaii
  • Massachusetts
  • Michigan

In Maryland, insurance companies may use a customer’s credit history when quoting a new policy but not when renewing, canceling, or denying coverage.

Insurance firms’ use of customers’ credit ratings is also regulated in Oregon and Utah. As part of these safeguards, after 60 days of insurance coverage, insurers are prohibited from canceling or not renewing your policy based on your credit.

Claims History

Insurance companies are risk-averse, so if you have a history of making claims, you should expect an increase in your rate. It will depend on your insurance provider and state how much your premium goes up and for how long.

Your insurance premiums might go up after filing even one claim, even if you were ruled not at fault. However, if it’s your first accident in which you were at fault, some insurance providers may waive the premium increase. It will remain on your record if you don’t dispute a claim within three to five years.


There are two tiers of location-based rating factors: state and zip code. Insurance for motor vehicles is a matter subject to the laws of each state. For instance, motorists in the no-fault state of Michigan must have unlimited Personal Injury Protection (PIP) coverage. Auto insurance has become prohibitively costly because of the expenses associated with providing PIP and “unlimited” coverage. The average annual premium for car insurance in Michigan is approximately $2,000 more than in neighboring Ohio.

Automobile insurance premiums are also more finely tuned by region. Insurers use ZIP code-based premiums to account for different external rating variables in each geographic location. More drivers per square mile mean higher insurance premiums. Rates are more significant in areas more likely to be affected by natural disasters or man-made ones, as well as in areas with a higher incidence of crime like vandalism and theft. Car insurance prices tend to be lower in rural locations than in metropolitan ones.

Types and Amounts of Coverage

The cost of vehicle insurance is partly determined by the coverages you choose and the deductible amount you set. New Hampshire and Virginia are the only two states that don’t mandate vehicle insurance. However, there are several possibilities for automobile insurance coverage beyond what is required by law and what is required by your state.

When deciding what kind of insurance to purchase and how much coverage to have, it’s crucial to consider your financial situation. Consider whether you need the very minimum or the most coverage and whether or not any optional extras would be useful.

Tips For Reducing Auto Insurance Premiums

You may save money on auto insurance by purchasing a vehicle from a cheaper insurance group, maintaining a spotless driving record, residing in a secure neighborhood, and limiting the extent to which your vehicle has been customized.

A policy’s cost might vary depending on whether you purchase it directly from the insurer or via a third-party price comparison website. Online comparison tools help scope out the market’s offerings but may only provide generic plans rather than the tailored coverage that would best meet your requirements. Direct purchases provide further advantages. One perk of buying directly from us is the complimentary use of a courtesy vehicle.

However, the basic offers offered by comparison websites are likely to cost the same as purchasing from the vendor directly. In most cases, agreements protect these properties from being undersold. However, you may locate more cost-effective insurance on the insurer’s website, one with more comprehensive coverage or more standard policy perks.

When comparing auto insurance policies, it’s essential to consider how going direct can affect the coverage you get. Not all items are the same, so be sure you know what you’re getting and that the price is reasonable.


Auto insurance is important for keeping yourself safe. You can save a lot of money on vehicle insurance over a year by reading your policy thoroughly, driving responsibly, and modifying your coverage as your requirements change.


The price you pay for car insurance depends on a number of variables, including which insurer you choose. When looking for car insurance, getting quotes from at least three different companies is in your best interest.

Important Factors That Affect Your Auto Insurance Premiums: Frequently Asked Questions

Here are some of the important factors that affect your auto insurance premiums frequently asked questions.

What Is The Most Important Factor In Auto Insurance?

How you drive will likely have the most significant impact on your auto insurance cost. A single racing citation could increase your annual premium for comprehensive coverage by an average of $409. And your rate will increase proportionally to your number of traffic violations and accidents. You could save thousands of dollars a year by driving carefully.

What Effect Does A Car Accident Have On Auto Insurance Premiums?

A car accident that results in a claim will typically increase your auto insurance premium. However, some insurance providers offer accident or claim forgiveness if this is your first claim. Similarly, if it is determined that you were not at fault for the accident, your auto insurer may not increase your premium. However, this may vary by auto insurance provider and jurisdiction.

Does Credit Rating Impact Auto Insurance?

In most states, your credit score determines your auto insurance premium. Insurance companies view lower credit scores as indicative of a more significant loss risk. In conclusion, the higher your credit score, the lower your auto insurance premium.

The states of California, Hawaii, Massachusetts, and Michigan prohibit the use of credit scores in determining insurance premiums. Maryland, Oregon, and Utah limit insurers’ use of credit scores.

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