19 Factors That Can Affect Car Insurance Prices

Car insurance premiums are mysterious. Your rates differ across providers but can also randomly change over time with the same provider. What gives? 

In truth, many factors influence what you pay for car insurance. Each insurer has its own system, but your rate might consider 15 or more details about you, your driving, and your car. 

Here's a closer look at 19 factors that commonly influence car insurance premiums. These are grouped into five categories: coverage-related issues, demographics, driving history, car factors, and other details. More importantly, we'll also cover which factors you can manipulate to pay as little as possible for the auto coverage you need.

Coverage-related factors 

1. Optional coverages 

Optional coverages vary by state, but they usually include comprehensive and collision for vehicles that aren't financed, rental insurance, gap insurance, roadside assistance, and sometimes uninsured motorist coverage. 

Except for comprehensive and collision, most optional coverages are inexpensive add-ons to your state-mandated minimums.

Even so, when insurance quotes come in too high, it's natural to consider reducing your optional coverages. Doing so will lower your rates, of course. The downside is that you'll end up with less protection -- which can be counterproductive. 

For that reason, we recommend you define how much coverage you need based on your assets and driving habits. If the rates are too high, look at other ways to reduce premiums first -- you'll find some below. Only consider cutting coverages as a last resort.

2. Deductibles

Higher deductibles have lower premiums. You can raise your comprehensive and collision to get a lower rate. Just make sure you have the cash on hand to cover the higher deductible if you need to.

Demographics 

Demographics also influence your car insurance premiums. Unfortunately, you generally can't adjust these factors for cheaper car insurance -- unless you're willing to get married, relocate, or switch careers to save on auto insurance.

Still, it's interesting to know how demographics like age, gender, and marital status affect your car insurance costs. Read on to find out.

3. Your age 

You'll pay more for car insurance if you are younger than 25 or older than 65.¹ 

4. Your gender 

Nerdwallet reports that California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania don't allow car insurance providers to consider gender when setting premiums.² 

In other states, men have historically paid more for car insurance than women -- but that dynamic appears to be changing. A study by The Zebra concludes that women are now paying higher premiums than men in 25 states.³

Higher rates for women are, admittedly, hard to explain. Insurance Institute for Highway Safety (IIHS) says men tend to be riskier drivers than women.⁴ In terms of crashes resulting in fatalities, men are at the wheel more often than women. Rising rates for women could indicate that insurers are starting to receive more claims for women than men. 

5. Marital status 

Married drivers pay less for car insurance than single drivers. According to Bankrate, the average annual cost of full coverage car insurance for a married driver is $1,625. Singles, on average, pay about $50 more, or $1,674.⁵

6. Home ownership status 

Owning a home often qualifies you for cheaper car insurance. A study from the nonprofit group Consumer Federation of America (CFA) finds that renters could pay up to 47% more than homeowners for minimum car insurance. On average, renters pay about 7% more than homeowners.⁶

7. Education 

A 2021 Consumer Reports study confirms that some auto insurance providers charge higher premiums for drivers without college degrees. The study collected quotes from nine carriers. Liberty Mutual, Geico, and Progressive quoted higher premiums for drivers with lesser education.⁷ 

Since not all carriers consider your education, you can sidestep this issue by shopping quotes from multiple carriers. 

8. Occupation 

The same Consumer Reports study referenced above also finds that some carriers charge more to insure drivers with lower-paying or blue-collar jobs.⁸ 

Again, shopping around is the answer. In the Consumer Reports study, Allstate, NJM Insurance, Plymouth Rock, State Farm, and Travelers did not ask drivers for education or occupation information in the application process.

9. Where do you live 

Your zip code can also affect your car insurance premium. If there's a high incidence of car thefts, vandalism, or hailstorms in your city, for example, you'll likely see higher rates for comprehensive insurance.⁹

Driving factors 

10. How long you've been driving 

If you've been a licensed driver for decades with few violations, you'll pay less for car insurance than a newly licensed 40-year-old. The more years of driving experience you have, the more information insurers have to understand how risky you are.  

11. Your driving record 

You also pay less for car insurance when you have no tickets or accidents, vs. someone who has several. The way insurance carriers see it, drivers with spotty records are accident-prone. If you have blemishes on your driving history, they'll expect you to have more claims. Your premiums will reflect that.

You can't undo past infractions and accidents, but you can take a driver safety class -- and, importantly, implement what you learn. Start building your clean driving record now and you'll enjoy lower premiums in a few years.

12. How much you drive 

The more time you spend on the road, the higher your chances of getting in an accident. If you work at home or otherwise don't drive much, tell your prospective insurers that. You might have to verify your mileage annually, but it's worth it if you can save a few bucks.

13. How long you've been insured 

Insurers like to see that you've been insured continuously. Insurance Panda reports that gaps in your coverage increase your premiums going forward by 9% on average.¹⁰

14. Driving habits

Usage-based insurance (UBI) policies link your rates to your driving habits. This happens by way of a smartphone app or device you install on your car. The application or device tracks when you drive, how fast you drive, and how often you brake hard, among other things.¹¹

Insurers use those data points along with your demographics and driving record to assess your risk level and set your rates.

About your car 

15. Car ownership status 

When your car is financed, your lender requires minimum coverage levels. Once you repay the loan in full, you can make your own coverage choices. If the lender's minimums are overkill for your financial situation, you can reduce coverage to lower your premiums.¹² 

16. Car make and model 

Switching cars can lower your car insurance costs significantly. Generally, new cars and high-performance cars cost more to insure. Slightly used SUVs and crossovers tend to have lower insurance rates. 

The cheapest new cars to insure, according to Insure.com, are the Subaru Forester 2.5i Wilderness, Hyundai Venue SE, and Honda CR-V LX.¹³

Other factors 

Now we're down to three influential factors that don't fit cleanly into another category -- so they get the descriptive name of "other factors." These are your credit history (in certain states), the insurer, and your eligibility for discounts.

17. Credit history in certain states 

In most states, car insurers use your credit history to set your rates. This happens because some data shows that drivers with poor credit scores file more car insurance claims.¹⁴  

California, Hawaii, and Massachusetts prohibit insurers from using credit history to set your rates, however. And in Utah, insurers can only use your credit history to lower your rate -- not to raise it.¹⁵

No matter where you live, we recommend paying your bills on time as a regular practice. You could get lower car insurance rates as a result. Better than that, you'll avoid interest charges and extra fees, too. 

18. The insurer 

Every insurer has its own system for setting premiums and its own definition of its ideal customer. Insurers that specialize in good drivers, for example, set their rates accordingly. This is another reason to compare shops for the best rates. 

19. Discounts 

Many insurers offer a long list of discounts. For example, your rates can drop when you bundle policies, when you stay with the same insurer for three years or more, or when you have automatic safety devices on your vehicle. 

Always ask prospective insurers about the discounts they offer. Some discounts may be readily available for the taking -- such as a discount for completing a defensive driver course or for setting up auto-pay. 

Managing the cost of auto insurance 

Auto insurance can be expensive, particularly if you have a spotty driving record. Quick ways to lower your rates include qualifying for discounts, raising your deductibles, and comparison shopping. Longer-term strategies include swapping out your car for a safer model, paying your bills on time, and driving less.

The best strategy for cheaper car insurance, though, is driving safely -- which is good for your well-being as well as your checkbook.