15 Factors That Affect How Much You'll Pay for Car Insurance

It’s among the bigger bills we pay, and yet just what drives – so to speak – the cost of car insurance is probably unclear to many of us. Knowing the multitude of factors insurance companies consider when setting your premium may allow you to make money-saving tweaks to your policy – or to avoid changes that might make your bill rise.

True, many of the factors that affect your car insurance premium aren’t easy to adjust, but if you’re aware of them, at least you’ll better understand your bill and be more prepared when it changes. Here are 15 factors that help determine the size of your car insurance bill.

Personal factors

Insurance companies look at every licensed driver in your household, not just yourself. They’ll generally ask who the primary driver is for each car, with everyone else being listed as a secondary driver.

Insurers will then weigh each driver’s details to come up with your overall policy price. You might not be able to change who you are, but it’s still helpful to know how these personal factors impact your car insurance costs.

1. Age

Most people know that teenage drivers pay more for insurance, and that’s generally true. Rates tend to decrease throughout your life as you gain more experience, although they may start to climb again for older adults as baseline physical abilities and reaction time start to decrease.

2. Gender

In most U.S. states, insurers are allowed to take your gender into account when setting your rates. Women tend to pay less for insurance than men because, statistically speaking, they get into fewer accidents.

3. Location

Where you live — even down to your ZIP code — has a big impact on your rates, since different locations have varying types and levels of risk. Car theft is more common in urban areas than in rural locations, for example, and hurricane-related vehicle damage is more common in, say, Florida than in Minnesota. Each state also has car insurance laws that set out minimum coverage requirements, and those can have an impact on price, too.

4. Education

Iin most states, insurance companies can also take your education level into account, since the insurers say that data shows that people with college degrees are less likely to get into a car accident. One 2019 report showed that California drivers without a college degree typically paid up to 14% more compared to those with degrees.

5. Credit score

Along the same lines, a higher credit score is associated with a lower risk of filing a claim, and so insurers often take your credit into account when calculating your premiums. Rather than the FICO score that lenders use, insurers generally use a related insurance-specific credit score. Some states ban insurers from using your credit as a pricing factor for your car insurance, but it’s still the norm in most of the country.

6. Marital status

Industry data shows that married people also get into fewer car accidents, regardless of gender. For that reason, many insurance companies also charge higher rates for single people.

7. The primary driver

Most of the time, insurance companies will allow you to designate the person in your household who drives each car. But some insurers will automatically list the riskiest person in the house as the primary driver of a car, whether they drive it much or not.

If you have a “riskier” adult in the house who won’t be driving a particular car, some states allow you to exclude them from coverage for that car to lower your rates. (But be warned that if the excluded driver causes an accident while driving that car, it won’t be covered by insurance.)

8. Your policy choices

The insurer from which you buy a policy matters because each company calculates your premium differently, based on how they score your rating factors, structure their discounts and price the coverage options you select. Regardless of the insurer you choose, adding provisions like collision and comprehensive coverage will of course raise your costs. Conversely, opting for only the state minimums for liability coverage will also save you money, although many experts caution against the risks from such cost-cutting.

Also important is your choice in a deductible — as in the amount you will pay out of pocket on a claim before your insurance kicks in to cover the remainder of the costs. This matters because if you agree to pay more up-front when you file a claim, you’ll pay less money for coverage.

Your driving habits

Your personal details aside, how you use your car matters. Insurers have several ways of looking at this, and this is a key opportunity to make changes to save money on your car insurance rates.

9. Driving record

Insurance companies have access to state Department of Motor Vehicle records that list out things like prior speeding tickets. In fact, insurance companies can use things they find on your driving record as grounds to deny selling you a policy entirely, especially if you have serious violations like DUIs.

10. Claims history

Third-party companies also create a record when you file home or auto insurance claims, similar to how credit reporting agencies work. Insurance companies can use this information to charge you higher rates depending on how you’ve filed claims with insurance companies in the past seven years.

11. Self-stated usage

Insurance companies will also ask how you plan to use your car and how often you plan to drive. If you work from home and only use your car on the weekends for groceries, for example, your chances of getting into a car accident are lower than if you’re out every day in rush-hour traffic, and that’s often reflected in your rates.

12. Telematics data about your driving

Most major car insurance companies offer an option for you to record your driving with a telematics device, which is usually an app on your smartphone. It records things like the times you drive, how you brake, how much you use your phone while driving and more. If you drive well, your rates could be significantly reduced — but if you don’t drive well, some companies will actually increase your rates.

Vehicle factors

It's unlikely most of us will switch the wheels we drive simply to save on insurance costs. But the next time you go to buy a car, keep these factors in mind if you want to score a lower rate on your policy.

13. Vehicle age

Newer cars – and those that use new technologies, like electric or hybrid power — may be more expensive to insure in some cases. That’s because they often come with more advanced features that increase repair costs, as opposed to older models with simpler and cheaper-to-repair parts. They’re also more likely to be stolen.

14. Financing status

If you lease your car or are paying back a car loan, your lender will generally require you to buy full-coverage insurance, which adds comprehensive and collision coverage to your policy. This ensures that most types of damage to your vehicle are covered, and it protects their interest in the arrangement. (If you default on the loan and your car is totaled, for example, your lender won’t get their money back — but with a full-coverage policy, they will.)

15. Vehicle make and model

Different car makes and models are also more or less susceptible to certain risks. As a rule, cars, such as many models of Dodges and BMWs, that emphasize performance are pricier to insure, because they’re associated with expensive claims for high-speed accidents. Premiums for Kia and Hyundai cars can be higher than other brands, because they’re easy auto theft targets. Even as EVs go, Teslas are especially costly to repair. These factors can have a heavy hand in determining the cost of your car insurance.