Auto Insurance
Understanding your auto insurance premium
Insurance companies use dozens of factors to calculate your rate. Here's what has the biggest impact—and what you can do about it.
Understanding your premium
What affects your auto insurance rate
Insurance companies use several factors to calculate your auto insurance premium. Some you can control, others you can't—but understanding them helps you find the best rate.
Ways to lower your rate
Driving Record
Accidents and violations can increase your premium by 20-40% or more. A clean record for 3-5 years often qualifies you for discounts.
Tip: Take a defensive driving course to offset minor violations and qualify for discounts.
Credit Score
In most states, a lower credit score means higher premiums. The difference can be 50% or more between excellent and poor credit.
Tip: Improve your credit score over time. Pay bills on time and reduce credit utilization.
Location (ZIP Code)
Urban areas with more traffic and crime have higher rates. Your specific ZIP code matters—rates can vary significantly within the same city.
Tip: When moving, check insurance rates in your new area. Some neighborhoods cost significantly more.
Vehicle Type
Sports cars, luxury vehicles, and cars with poor safety ratings cost more to insure. Safety features and theft deterrents can help.
Tip: Before buying a car, get insurance quotes. A car that costs slightly more might save you on insurance.
Annual Mileage
The less you drive, the less likely you are to have an accident. Low-mileage drivers often qualify for significant discounts.
Tip: Ask about low-mileage or pay-per-mile programs if you drive under 7,500 miles annually.
Coverage Levels
Higher coverage limits and lower deductibles mean higher premiums. But skimping on coverage can cost you more after an accident.
Tip: Raise your deductible to lower your premium, but make sure you can afford the deductible if needed.
Age & Experience
Young drivers (under 25) and seniors (75+) pay more due to higher accident rates. Rates typically drop significantly at age 25.
Marital Status
Married drivers statistically have fewer accidents. Getting married often reduces your rate by 5-10%.
Gender
Young men pay more than young women due to higher accident rates. The gap narrows with age and disappears in some states.
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