Factors that impact your cost of car insurance
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Almost all drivers must carry a minimum amount of car insurance to drive legally. There is no standardized amount each driver pays. Car insurance companies use many factors to determine how much your auto insurance premiums will be. These factors include your vehicle type, driving record, claims history and the state you live in, and may also include your age, gender, credit score and ZIP code depending on your state’s auto insurance regulations. Knowing the factors that impact your cost of car insurance may help when comparing auto insurance quotes and reviewing policy renewals.
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Compare auto insurance rates
Save on auto insurance with quotes from trusted providers like:
Drivers switch & save an average of $750+/year
Are you overpaying for auto insurance?
Safe drivers choose Allstate®
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Key takeaways
- Your vehicle type, motor vehicle record and previous claims history are a few factors that determine car insurance rates.
- The type of vehicle you drive, how frequently you drive and the coverage you choose also makes a difference.
- Asking about discounts, bundling policies and only filing claims when necessary are ways to potentially save on car insurance.
What factors affect car insurance rates?
When purchasing car insurance, your insurer will need to know several pieces of information to quote you a premium. You can usually prepare details about yourself, your vehicle and your insurance history ahead of time to simplify the shopping process.
Credit history
Your credit score is important for more than just a car loan; it could also be an influencing factor when you apply for car insurance. Although insurance companies don’t use your direct credit score, they may reference what is called a credit-based credit score. However, there are some states that do not allow the use of your credit history when calculating car insurance rates: California, Hawaii, Michigan and Massachusetts.
Your credit history is important to insurers because it is used to help predict future behavior. “Credit has been used in the insurance industry since the 90s to help carriers assess the risk of claims being filed,” says Cynthia Moore of Salzburg Insurance in Norfolk, Virginia. She explained that based on research conducted, people with a lower credit score are statistically more likely to file more claims than those with a higher credit score. Because of this, insurers may factor in the added risk by setting a higher premium.
Average annual full coverage car insurance premiums by credit rating
| Poor | Average | Good | Excellent | |
|---|---|---|---|---|
| National average | $3,479 | $2,176 | $2,014 | $1,764 |
Location
Every aspect of your location could play a role in determining your premium amount in most states. This includes your city and even your ZIP code. John Espenschied of Insurance Brokers Group, LLC, told us that the state where your vehicle is parked or garaged is a huge factor. “Rates by states can vary by as much as 400 percent, with Louisiana being one of the highest in the nation,” he warns. “Twelve states require personal injury protection (PIP) coverage, which significantly boosts the cost of car insurance,” Espenschied explains. “These states are known as no-fault states and require your insurance company to pay for your bodily injury if you are involved in an accident regardless of fault.”
According to Moore, your garaging ZIP code provides details of population size, which can impact the likelihood of thefts and accidents. Although it is important to note that, in California and Michigan, car insurance companies are not allowed to use your ZIP code to determine your rates, along with several other non-driving insurance factors.
Those who live in severe weather areas may also face higher premiums due to related causes of loss. For example, the NICB reports that more than 422,000 insured vehicles were damaged by Hurricane Harvey, about 300,000 claims after Hurricane Katrina, and 250,500 claims following Superstorm Sandy.
| State | Average annual full coverage premium | Average annual minimum coverage premium |
|---|---|---|
| Alabama | $1,843 | $441 |
| Alaska | $1,946 | $421 |
| Arizona | $11,810 | $587 |
| Arkansas | $11,907 | $443 |
| California | $2,291 | $636 |
| Colorado | $2,121 | $500 |
| Connecticut | $1,533 | $620 |
| Delaware | $2,103 | $801 |
| Florida | $3,183 | $1,128 |
| Georgia | $2,085 | $639 |
| Hawaii | $1,275 | $344 |
| Idaho | $1,133 | $267 |
| Illinois | $1,806 | $552 |
| Indiana | $1,295 | $327 |
| Iowa | $1,315 | $223 |
| Kansas | $1,878 | $416 |
| Kentucky | $2,124 | $678 |
| Louisiana | $2,909 | $815 |
| Maine | $941 | $225 |
| Maryland | $1,971 | $815 |
| Massachusetts | $1,262 | $429 |
| Michigan | $2,691 | $1,104 |
| Minnesota | $1,760 | $585 |
| Mississippi | $1,771 | $446 |
| Missouri | $1,943 | $490 |
| Montana | $1,889 | $310 |
| Nebraska | $1,624 | $359 |
| Nevada | $2,779 | $973 |
| New Hampshire | $1,262 | $319 |
| New Jersey | $1,754 | $782 |
| New Mexico | $1,591 | $346 |
| New York | $3,139 | $1,371 |
| North Carolina | $1,446 | $432 |
| North Dakota | $1,302 | $269 |
| Ohio | $1,266 | $338 |
| Oklahoma | $1,998 | $406 |
| Oregon | $1,415 | $616 |
| Pennsylvania | $2,040 | $428 |
| Rhode Island | $1,886 | $551 |
| South Carolina | $1,532 | $524 |
| South Dakota | $1,553 | $276 |
| Tennessee | $1,429 | $371 |
| Texas | $2,109 | $565 |
| Utah | $1,510 | $539 |
| Vermont | $1,061 | $238 |
| Virginia | $1,439 | $494 |
| Washington | $1,410 | $515 |
| Washington, D.C. | $2,072 | $607 |
| West Virginia | $1,580 | $421 |
| Wisconsin | $1,292 | $358 |
| Wyoming | $1,582 | $263 |
Prior insurance
Your insurance history affects your car insurance rates in two separate ways. Prior insurance shows that you have continually maintained insurance, which is required by every state but New Hampshire, according to Espenschied of Insurance Brokers Group. “People who drive with no insurance and then decide to buy insurance have a much higher likelihood of canceling, especially if purchased simply to renew license plates or go to court to show proof of insurance,” he explained. However, if you have five or more years with one insurance company, Espenschied said it will typically qualify you for better rates. “It shows longevity and willingness to keep insurance year after year.”
However, if you have had a lapse in coverage, it could work against you. Some insurance providers may charge you more to cover the additional risk.
Driving record
Drivers with a clean history free of tickets and at-fault accidents typically get the cheapest car insurance. An at-fault accident will usually cause rates to increase more than a speeding ticket conviction. But if you have a severe infraction, like a DUI conviction, you can expect your rates to increase even more. For some high-risk drivers, especially those with a DUI conviction or multiple convictions and accidents in a short window, some insurers may deny coverage. These drivers may need to find high-risk car insurance or seek out coverage through nonstandard car insurance companies.
| Average annual full coverage premium | |
|---|---|
| Clean driving record | $2,014 |
| Speeding ticket conviction | $2,427 |
| Accident | $2,854 |
| DUI conviction | $3,901 |
Age and gender
During your lifetime as a driver, your rates will see spikes and decreases in most states based solely on your age. Teen drivers have four times as many crashes as drivers who are 20 or older. This is often a result of inexperience and risky habits. At the other end of the spectrum, drivers over the age of 70 have higher crash rates than middle-aged drivers—although still not as many as young drivers.
Gender also plays a factor in calculating car insurance rates in many states.
“Men typically have higher premiums than women, especially in the under 25 category,” said Moore of Salzburg Insurance. “Rates stay level between 30-65 and then, with most carriers, you will start to see an increase in rates for drivers over 65, and especially over 75.” When asked why, Moore explained that studies show older drivers have a slower reaction time and decreased vision, causing more claims.
According to the IIHS, male drivers are more likely to speed, drive while impaired and skip wearing their seatbelts, which may explain the trend toward higher premiums. The total number of vehicle deaths for males was more than double compared to females every single year between 1975 and 2020. However, data from recent years shows this disparity among genders is narrowing, a trend greatly attributed to the increase in vehicle safety features. Crash statistics show that every decade, the newer vehicle models reduce deaths for both genders. In fact, since 1975, death rates have decreased 14 percent for males and 10 percent for females.
The following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania.
Average annual full coverage premiums by age and gender
| Male | Female | Difference | |
|---|---|---|---|
| 18-year-old | $6,541 | $5,679 | $862 |
| 25-year-old | $2,552 | $2,393 | $159 |
| 40-year-old | $2,020 | $2,008 | $12 |
| 60-year-old | $1,832 | $1,816 | $16 |
*18-year-old rates are for drivers on their own policy.
Vehicle
You would probably expect a new vehicle to cost more to insure than an older one, but it is not always that simple. Newer cars are typically more expensive to insure due to having new parts. However, if your new car qualifies for additional savings, like for having safety features, it may be less expensive to insure than an older-year car.
In addition to newness, size also plays a role. If you know a vehicle’s make and model, you may be able to better gauge what car insurance premiums you will see.
| Car model | Average annual full coverage premium |
|---|---|
| BMW 330i | $2,513 |
| Dodge Charger | $ 2,824 |
| Ford-150 | $1,753 |
| Honda CRV | $1,635 |
| Honda Odyssey | $1,735 |
| Jeep Wrangler | $1,820 |
| Subaru Outback | $1,603 |
| Toyota Prius | $2,117 |
Ways to lower your insurance premium
Understanding your rate factors may help you bring down your cost of car insurance. However, there may be other ways to lower your car insurance premium and save money on your policy.
- Ask about discounts: Several insurance companies offer many types of car insurance discounts for things like claims-free, loyalty and pay-in-full.
- Bundle your insurance: When you bundle your home and auto insurance policy with the same company, you can likely earn cheaper premiums on both. You may be able to bundle other types of insurance, like condo, boat, life and health insurance.
- Opt for a higher deductible: Drew Scott, senior vice president of Scott Insurance in Stratford, CT, said this can be a helpful approach, but to see significant savings, you might want to opt for a higher deductible for several vehicles. Keep in mind that although your monthly payment will be lower, you will have a higher out-of-pocket expense if you are in an accident.
- Consider claims carefully: Espenschied advises against filing or contacting your insurer about insignificant, small claims. Even if no money is paid out, Espenschied explained all claims—even zero pay-out claims—cost time, money and energy to investigate.
- Add safety features: If your car does not have adaptive headlights, anti-theft devices, blind spot detection, rear-view cameras or anti-lock brakes, you could consider having them installed to earn savings. Many insurers offer discounts for safety features. Additionally, the added security might reduce your chances of an accident.
- Shop around: Whether you have a policy currently in action or are coming up on the end of your policy period, it might pay to shop around for car insurance at least once a year to ensure you are paying the best price for your coverage. You may find that you can get better rates by switching carriers, which might be useful information to have before your policy renewal date.
Frequently asked questions
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Carrying only the state minimum required liability limits may result in the cheapest car insurance premiums, but the true cost may put you at a major financial risk. If you are involved in an at-fault accident and the costs are higher than your car insurance limits, you’d be responsible for paying the excess out of pocket. Having a policy with higher liability limits, along with optional coverage, like collision and comprehensive, may be more expensive up front, but it may save you more in the long run.
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How frequently you drive as well as the mileage you put on your vehicle in a given time span may impact your car insurance rates. Drivers who use their car less may be able to qualify for low-mileage or reduced use discounts if they meet certain thresholds of eligibility.
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Because you will likely add your spouse to your policy once you are married, marriage could impact your rates. However, whether your premium increases or decreases is largely dependent on your unique situation. If your spouse has multiple moving violations on their record or drives a higher-risk vehicle, you may see your rates increase. Some insurers do offer savings that married policyholders may be able to benefit from, such as multi-car discounts for insuring more than one vehicle.
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When you have been convicted of a moving violation, the increase in your premium may be significant. Not only may a surcharge apply to your premium, but you might lose existing good driving discounts. Generally, a speeding ticket or accident will stay on your record from three to five years, whereas a DUI may stay on your record five to 10 years or permanently. However, the length of time a poor driving record will impact your premium depends on both your state’s department of motor vehicle laws and your insurance company.
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Your education level is one of the factors that impacts car insurance rates with some carriers. The higher your education level, the less you typically pay for auto insurance. However, the cost difference can vary by carrier. Rating formulas are proprietary, so it may be difficult to determine which companies use education to determine premiums. If a company does not ask about education, it may not factor it into your final cost. Getting several quotes from different carriers may help you find the best price for your coverage needs and driving profile.
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Methodology
Bankrate utilizes Quadrant Information Services to analyze 2023 rates for ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2021 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
Credit-based insurance scores: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit or limit the use of credit-based insurance scores as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts and Michigan.
Incident: Rates were calculated by evaluating our base profile with the following incidents applied: clean record (base), at-fault accident, single speeding ticket and single DUI conviction.
Model: To determine cost by vehicle type, we evaluated our base profile with the following vehicles applied: BMW 330i, Dodge Charger, Ford F-150, Honda CRV, Honda Odyssey, Toyota Prius, Jeep Wrangler, Subaru Outback and Toyota Camry (base).
Age: Rates were calculated by evaluating our base profile with the ages 18-60 (base: 40 years) applied. Depending on age, drivers may be a renter or homeowner. Age is not a contributing rating factor in Hawaii and Massachusetts due to state regulations.
Gender: The following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, North Carolina, Pennsylvania.
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