Are car insurance rates going up
- How much does my age affect my car insurance rates?
- Does my address affect what I pay for insurance?
- Are some cars cheaper to insure than others? Why?
- How does my marital status affect my car insurance rate?
- How much does my driving record impact my car insurance rate?
- How much does my commute matter?
- Why should my credit history count?
- Are some types of coverage more expensive?
- Is there any difference between insurance companies?
- Demographic Factors
- Car-Related Factors
- Personal Driving Habits
- Final Word
For ballpark estimates on your car insurance rates, or to find out how, why or how much your car insurance will go up or down after a ticket or a change of address, we have several helpful articles and car insurance calculators.
CarInsurance.com’s average car insurance rates tool provides average auto insurance rates for nearly every ZIP code in the U.S. It allows motorists to explore comparative rates within their own city or across the nation.
The "How much car insurance do I need?" tool can suggest what level of coverage is best for you, based on your age, the state you live in, your car's model year, whether you own or finance your car, and whether you own or rent your home.
By their nature, averages and estimates don't apply specifically to you. For that, you can use our online quote comparison tool and get matched with multiple car insurance providers, who will give you a quote, or you can call one of our licensed insurance agents at 855-430-7753.
But you may simply be looking ahead to a new car, a marriage or a move across town and wonder about the consequences. We advise that you check car insurance rate quotes before making life changes, so you'll be aware of how your premium may change and can budget for it appropriately, or switch to a provider that offers a better price given your new situation.
Below are answers to some of the most common questions about the factors affecting your car insurance rate.
How much does my age affect my car insurance rates?
Auto insurers penalize inexperience rather than age. Of course, the vast majority of inexperienced drivers are teenagers. Rates for 16-year-olds can double or even triple their parents’ car insurance annual premiums.
The less experienced the driver, the higher the rates. Among drivers with clean records and no accidents, no other factor changes rates more.
Statistically, inexperienced drivers crash – a lot – and so they are the riskiest category of drivers to insure. Car insurance rates reflect this high risk.
The inexperience penalty drops slowly until about year 10. As an example, this is what the inexperience surcharge for basic bodily injury liability coverage looks like at one California car insurer during the first decade of driving:
|Experience||Bodily injury base rate||Inexperience surcharge||Premium|
If you keep a clean record after age 25, rates typically stay relatively stable until you become a senior driver, when crash rates go up and premiums begin to rise again.
Does my address affect what I pay for insurance?
If you live in a highly populated urban area, congestion, accidents and insurance claims are more prevalent. Living and driving in a metro area will make your rates higher than if you live in a rural area, where having an auto accident is less likely.
Car insurance companies look at factors such as the rate of stolen cars in your area, and the number of cases of vandalism, claims and fraudulent claims. All of this helps insurers discern the risk associated with insuring you and your car in that ZIP code, whether you ever have made a claim or not.
All other factors equal, your ZIP code can change your rate by hundreds of dollars.
Are some cars cheaper to insure than others? Why?
Auto insurers track which cars have the most wrecks and the worst injury records. Those factors impact the cost you pay for liability insurance -- which covers the damage you cause to others.
Insurers also know which cars are expensive to buy, expensive to repair or more easily stolen. Those factors drive up the cost of collision and comprehensive coverage, which repairs or replaces your own car.
The calculations about the risk of a certain car are made independently. For example, if you are an inexperienced driver in a car with a poor claims record, you are penalized twice. A more mature driver in the same car would pay a surcharge for the car, but not one for inexperience.
Insurers can also choose not to cover certain types or brands of cars. For example, some won’t insure a lifted pickup truck, a kit car or certain exotic cars.
How does my marital status affect my car insurance rate?
Married couples have been found to have fewer accidents and claims than single drivers do.
Rates can be from 5 percent to 15 percent lower for married couples just because of their marital status. But there are also other discounts married couples can look forward to when they combine their policies, such as a multicar discount, or a multipolicy discount if they have a renters or homeowners policy with the same insurer.
An insurer considers you single if you have never been married, or are widowed or divorced.
How much does my driving record impact my car insurance rate?
Your driving record is paramount to your car insurance company. Safe drivers get a discount from standard rates for keeping a clean driving record. On the flip side, individuals who have a moving violation (speeding or a DUI, for example) or an accident on their motor vehicle record are more of a risk and can face a surcharge on top of standard rates.
If you have enough violations or accidents, you can become uninsurable according to some car insurance companies’ underwriting rules. For example, some insurers reject anyone with four or more chargeable accidents in three years, or more than three DUIs in seven years, or more than 15 points on the driver’s motor vehicle record.
In general, a minor violation such as a speeding ticket can boost your rates 20 percent to 40 percent. You may not be surcharged for the actual ticket, but will lose your good-driver discount. If you have a major violation like a DUI, your rates can go up 100 percent or more. The more risk you appear to be to your auto insurer, the more you will pay.
How much does my commute matter?
You car’s annual mileage is a rating factor for many car insurance companies. The less you drive, the less risk you have of being in an accident. Also, how far you drive for your commute lets the insurer know what kind of risk you are during the congested, high-risk hours.
Your insurer can also use the length of your commute to determine if you head into a metro area from your rural or suburban home. If you live outside of Los Angeles, but your commute is 30 miles, your insurer can predict that although your local area is low-risk, your commute into the heart of a very populated metropolitan area pushes your risk factor much higher.
Why should my credit history count?
Insurance companies routinely check your credit rating as part of your application process, except in California, Massachusetts and Hawaii, where state law prohibits credit from being a pricing factor.
Credit scores help the insurance companies assess the risk level of a potential customer. Research has shown that those with lower credit scores (typically under 600) are more likely to file claims, file exaggerated claims, or even commit insurance fraud.
Those with low scores may face a surcharge. Rates for those with higher scores are typically unaffected.
Your credit score can also affect how an insurance company allows you to pay for your policy, since statistics show that people with lower credit scores are more likely to miss a payment. Customers with very poor credit scores may be required to pay the entire premium for a six-month policy up front. Customers with low credit scores sometimes won’t qualify for monthly billing, or they may need to pay a large percentage of the policy up front and the remainder monthly.
Are some types of coverage more expensive?
There are several types of car insurance. The more coverage you get, the more you will pay. If you get a bare-bones liability policy that covers only what the state requires, your car insurance costs are going to be less than if you bought coverage that would repair your own car, too.
Liability coverage tends to cost more because the amount the insurance company risks is higher. Coverage for collision and comprehensive insurance is limited by the replacement cost of the car itself. But medical bills and multiple-car accidents could push a liability claim into the hundreds of thousands of dollars.
If you don’t have enough liability coverage, you could be sued for the difference by anyone you injure.
Comprehensive and collision damage is affected by the deductible you choose. The higher the deductible, the less the insurance company will have to pay -- and the lower your rates.
Medical coverage, such as uninsured motorist bodily injury, medical payments or personal injury protection (PIP), will cause your rates to go up. Without some kind of medical coverage, if you don’t have health insurance elsewhere, you might not be able to pay for treatment if you are injured in an accident you caused.
Is there any difference between insurance companies?
Insurance companies must follow state laws, but within those laws they price coverage based on their own underwriting rules and guidelines. One insurance company may look at your driving record for five years, another only for three. The surcharge for a speeding ticket may raise your insurance by 10 percent with one carrier but only 5 percent with another.
You should shop around and get quotes from several carriers. Make sure you are comparing apples to apples -- the same coverages with each insurer -- and check the reliability and financial stability of the insurance carrier.
Finally, make an informed decision about who you want to be insured with for the best price and protection. Don’t let a small savings drive you away from an insurance company you know and trust.
When shopping for car insurance, it can be tempting to reduce your rates by choosing lower amounts of coverage or by raising your deductibles. These are, of course, the two most obvious factors that affect the cost of your auto insurance.
You may not realize it, but your overall rate is also affected by many more different factors – some of which you can control, and many of which you cannot. However, knowing what affects your rate can help you make a more informed decision when purchasing insurance, and can help you know exactly what to do to lower your expenses.
Your gender, age, marital status, geographical location, and credit score all affect your insurance rates in different ways.
1. Gender and Age
Young men usually incur higher rates than young women as statistically, more male teenagers have accidents than female teenagers. However, older men generally have better rates than older women. Some evidence suggests that older women are in more minor accidents than older men – though the difference in premium costs usually isn’t drastic.
2. Marital Status
Married people tend to have fewer accidents than single people; therefore, getting married (especially for men) can significantly lower your rate. How much your rate decreases depends on your previous driving history – if you are a man who has never been in an accident and has a clean driving record, you could see your rates nearly halved.
3. Where You Live
Because most traffic accidents occur close to home, the area you live in greatly affects your rates. More densely populated neighborhoods with more cars mean you are at a higher risk of accidents, theft, and collisions with injuries.
Repairing your car also costs more in some areas, and some areas have higher rates of theft. Plus, in this economy, many urban areas with high unemployment rates have a lot of uninsured drivers, as many people can’t afford to insure their cars. Detroit and Philadelphia are two of the most expensive cities in which to insure a car, as they both have high traffic density and high rates of uninsured drivers.
4. Credit Score
Many insurance companies take your credit score into account when determining your rate. There is no specific point at which your credit score begins to affect your rate, but in general, lower scores mean higher insurance premiums.
Auto insurance companies may also make correlations between a person’s risk of accident and their profession, and they can adjust your premium accordingly if they think you’re more likely to get in an accident. For example, delivery drivers and journalists are on the road constantly, and thus are more likely to be in an accident, whereas airline pilots often just drive between the airport and home, and don’t spend much time on the road. Others, such as police officers, paramedics, nuns, and insurance underwriters, often receive a good rate, as they are seen to be more careful than the average driver.
The car you drive significantly affects your rate, since some cars are more likely to be stolen, lack safety features that prevent accidents, or cost more to repair.
6. Safety Rating
Owning a vehicle with a high safety rating means there is a lower chance of needing to pay for your or your passengers’ medical bills – therefore, your rate will be lower. Owning a car with a lower safety rating, however, will usually result in a higher cost.
The safety rating is based on several factors, including the likelihood of the car’s owner getting into an accident, and also how likely a passenger is to be injured in an accident. Safety features such as airbags, automatic seat belts, and traction control help make your car safer, which makes you less likely to get in an accident, as well as making it less dangerous.
7. Vehicle Size
Larger cars are generally safer than smaller cars in an accident. Therefore, many larger cars with good safety ratings have lower premiums than smaller cars with otherwise similar ratings. However, cars with larger engines relative to body size tend to have higher rates – for instance, insurance for a sports car with a V8 engine costs much more than a small car with a V4 engine.
8. Age of the Car
Though the repair costs of an older vehicle are similar to the costs of a newer vehicle, an older car is more likely to be “totaled” in an accident. This is because the cost of significant repairs needed for an older car can often be higher than the vehicle’s entire worth. Therefore, it is likely that the owner would simply discard the vehicle and replace it, rather than paying for repairs.
Since the cost to replace a new car is much higher than to replace an old car, newer cars are not considered to be totaled as often, and generally have much higher collision coverage rates than older autos. The higher coverage translates to a higher premium for a newer car.
However, if your car is quite old, you could probably drop the collision coverage altogether and simply save the money to buy a replacement jalopy if you get in an accident.
9. Likelihood of Theft
Some cars are more attractive to thieves than others, and a car model that hits the top 10 most stolen list is likely to have higher rates than one that’s not a likely target. But if you have a car alarm or other anti-theft features, this can lower the premium.
Personal Driving Habits
While the above items do influence your overall rate, the most important factor in determining your insurance costs is your personal driving record.
10. Driving History
If you have been in accidents, received any tickets, or made previous auto insurance claims, the insurance company has learned that you’re more likely to make another claim than a similar driver who doesn’t have any blemishes on their record. If your driving record is bad enough, some insurance companies will refuse to give you insurance at all.
Fortunately, these blemishes tend to become less important over time. So if you had some wild years with a few tickets or accidents in your past, making an effort to drive more slowly and carefully in order to avoid future problems can pay off in time. Most tickets and non-injury accidents stop affecting your rate after three years, and injury accidents generally do not affect your rate after five years. A DUI ticket can affect your premium for up to 10 years, however, and many companies won’t insure someone with one.
11. Driving Activity
Some companies can alter your rate based on what you use your car for, the distance you drive, and where and when you drive. Business commuters usually put more miles on their car, and the more you’re on the road, the more likely you are to get in an accident. You may be able to get a discount on your insurance if you don’t drive the car much, or don’t use it to commute to work. Plus, if you can keep your car in a secure location, such as a garage, it’s less likely to incur damage, which lowers your rate further.
Paying for car insurance is a major part of the cost of owning a car, so anything you can do to lower the rate is beneficial for your budget. Many insurance companies also offer additional discounts if you also purchase renter’s insurance, homeowner’s insurance, or other types of insurance as part of a bundle, or if you use alumni or fraternal group associations to get discounts.
What other tips do you recommend to reduce your auto insurance premium?
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American drivers are taking their eyes off the road more than ever before — and that danger behind the wheel is now going after your wallet.
When Babette Labeij of Marina del Ray, California, wanted to add her 17-year-old daughter Nikki to the family's car insurance policy, she was shocked to discover the new annual cost would skyrocket to $4709.
"It's double the price. Unbelievable!" she told NBC News.Play How Distracted Driving is Taking a Toll on Insurance Costs 1:40 autoplay autoplay Copy this code to your website or blog
Her family is one of millions of Americans hit by the rising cost of car insurance. The cause? Distracted driving.
Since 2011, the average insurance premium has jumped 16 percent to $926. Insurance companies say the sharp spike is partly caused by more drivers distracted on their smartphones and getting into accidents.
More than 40,000 people died on the road last year — up 14 percent since 2014 — the sharpest rise in 53 years. And distraction-related deaths were up almost 9 percent in 2015, according to data from the National Highway Traffic Safety Administration.
"We're talking about a generation that was texting first, driving second," Chris Mullen, Director of Technology research at State Farm, told NBC News. "When they get behind the wheel, if they've been watching you use the phone, if they would rather use the phone it's gonna be hard to break that habit and get them driving safely from the get go."
Everyone Pays the Price
And it's not just teenage drivers. State Farm says 36 percent of all drivers text and drive — and it's making everyone's costs go up.
"Every American is going to pay more because of the distracted driving epidemic," said Robert Hartwig, co-director of the Center for Risk and Uncertainty Management at the University of South Carolina. "That's because no fault can be attributed in an accident and also because many people who are distracted driving certainly aren't going to admit to it. So what winds up happening is these costs are imposed on the system overall. Everyone is a victim of distracted driving."
While Labeij plans to shop around for new insurance and rework the family budget, she also wants to make sure her teenage daughter isn't going to be part of the problem either.
"Don't text and drive," Labeij tells Nikki. In fact, when in the car, "Don't use your phone at all," she advised.