What Affects Car Insurance Rates?

Insurance is the transfer of risk from an individual to a pool of individuals. To make the math work, insurance companies need to understand the risk you represent relative to the pool. 

The following factors all play into your insurance score:

  • Credit
  • Driving history
  • Where you live
  • The type of car your drive
  • How many miles do you drive
  • Your driving experience
  • Gender
  • Age
  • Homeownership
  • Recent claim trends
  • Geographic trends like laws or weather in an area

Credit: For all main insurance kinds, insurance companies have discovered a link between credit ratings and the chance of a claim.

Tickets, accidents, DUI events, and reckless or careless driving offences are all part of your driving history. Insurers frequently consider incidents over the previous five years, as well as penalties or infractions from the previous three years.

Location: It’s more important than you might imagine where you live. There are more cars on the road in cities, which means there are more distractions.

The cost of repair or replacement may be higher depending on the manufacturer or model of the car. Some cars are more likely to be stolen or scrapped for parts than others. In addition, a car’s safety features or crash ratings have an impact.

Miles Traveled: Every mile you travel increases your chances of being involved in an accident. Low-mileage drivers may qualify for a discount from some insurers. Some insurers will charge you more if you drive a lot more than the average of 15,000 miles each year.

Experience: They believe that the finest teacher is experience, and if we don’t have much driving experience, insurance firms may charge us more. Some insurance companies will refuse to provide a policy for a driver who has less than three to five years of driving experience.

Gender: Males, on average, pay more than females, particularly if they are younger.

Drivers under the age of 25 will pay more than those over the age of 25. At various ages, different insurers begin to offer price cuts. Some people start when they are 21 years old.

Others begin when they are 25, or even 30, years old. Some insurers will charge drivers over the age of 70 a higher premium.

Homeownership: Insurance firms provide homeowners lower rates since they have discovered a link between homeownership and lower risk. You can also combine your homeowner’s and auto insurance policies.

Recent Claim Trends: It’s not uncommon for an insurer to boost rates in a state after a significant storm or other event that causes a spike in claims.

Geographic Location: In some circumstances, these discrepancies can be attributed to state regulations requiring specific types or degrees of coverage. In other circumstances, a location may be more expensive due to heavy traffic congestion on the highways. Weather occurrences can also have an impact on interest rates by region.

Hail, wind, and storms can cause car damage, accidents, and an increase in insurance claims.

What is Not Covered by Car Insurance?

Even the most comprehensive auto insurance policy will not cover everything. Some insurance companies provide choices to fill in some of the gaps. Other holes will almost certainly never be filled.

Illegal or criminal behavior: Your insurance will have various limitations that state that damage caused by illegal or criminal action will not be covered.

Rental automobiles: Your policy’s coverages will extend to rental cars, but only if they are used for business and for a period of less than 30 days. You may be covered for “loss of use” if the rented car is destroyed. You should contact your insurance agent or provider for more information.

Furthermore, you will not be protected if the rental automobile is destroyed.


if the rental car is damaged, you will not be covered for “loss of use,” which occurs when the rental business is unable to hire the car to another party while it is being fixed, or “diminution,” which occurs when the rented automobile loses value even after it has been repaired.

Also, unless you acquire separate insurance from the rental car agency, if you don’t have collision or comprehensive coverage on your own policy, the rental car will not have such coverages.

When you’re not “on the job” with a rideshare firm, your auto policy covers you, but coverage gets murky if you’re “available” to take a client or “in transit” to pick up a customer, or if you’re “in transit” to pick up a customer or even if you just dropped one-off.

The ridesharing company’s insurance kicks in once you have a passenger. A personal auto insurance policy is for the personal use of your vehicle, according to the basic principle. Some insurance companies may allow you to add a rideshare endorsement to your existing auto policy. To check if this is an option, speak with your insurance agent or insurer.

Your personal property:

Your auto insurance coverage may cover personal property (laptops, phones, etc.) that is damaged in an accident or stolen from your vehicle. A limited quantity of personal goods on the vehicle may be covered by some companies. You should check with your insurance provider. You might be able to file a claim with your homes or renters insurance coverage, depending on your deductible.

If you set fire to your car on purpose, your insurance company will not pay to repair or replace it. If you have comprehensive coverage, you are covered if someone else performs such items to your automobile as an act of vandalism, subject to your deductible.

Deliberate damage: If you set fire to your car, the insurance company won’t pay to repair or replace your car. However, if someone else does those things to your car as an act of vandalism, you are covered if you have comprehensive coverage, subject to your deductible.

Riots, civil unrest, conflict, or terrorist acts: These scenarios may seem far-fetched, and you’re far more likely to be involved in a minor collision, but your insurance policy most certainly covers all of these risks if they occur.

What is Car Insurance and How Does It Work?

An vehicle insurance coverage policy, like most insurance plans, is a contract between you and the insurer. The car insurance business provides financial protection for you and your vehicle in particular situations and under specified terms and conditions in exchange for your payment, known as a monthly premium.

Varying states have different minimum coverage mandates, thus car insurance normally offers three categories of coverage, or protection.

3 Types of Protection in a Car Insurance Policy

  • Property coverage: protects you against things like theft and car damage in the event of an accident.
  • Medical: This provides financial coverage for medical expenses incurred by you or others as a result of an accident or event while operating your car.
  • Liability: protects you from any legal liability you may have for bodily injury or property damage caused by others.

The cost of your automobile insurance is determined by a number of factors, which you can learn more about below. Alternatively, if you’re ready to compare plans, have a look at some of our top picks below.

Car Insurance and Medical Payments: An Overview

As previously stated, medical coverage for your auto insurance policy is a crucial topic to discuss. If your policy isn’t comprehensive enough to cover medical bills, there are several possible dangers.

If you live in a state that employs Personal Injury Protection to provide medical coverage on your auto insurance policy, for example, you may be able to get coverage for as little as $15,000 in some cases. Premiums will be lower if the quantity of PIP coverage is reduced. To keep costs low, an agent or producer can propose a greater deductible for your PIP.

Deductibles for PIP can go as high as $2500. This combination of a high deductible and lower coverage amount can keep your monthly costs low, but you could find yourself with hefty medical bills not covered by insurance if you don’t have enough PIP coverage.

In the example above, here’s an example of what can happen if you are injured in a car accident with a policy that includes a $15,000 PIP coverage amount:

  1. You’ll have to pay $2,500 for your deductible.
  2. Your PIP coverage will cover up to $15,000 in medical expenses.
  3. However, in many cases, there is a copay of 20 percent up to the first $5,000 (after your deductible).
  4. This leaves you paying $3,000 out-of-pocket just for medical expenses.
PIP CoverageCopay Amount
$5,000 – $2,500$2,500 subject to Copay
$2,500 x 20% $500 Copay

At some point, you may reach the limit of your $15,000 PIP coverage. From here:

  1. Your coverage usually rolls over to your existing health insurance if you have some.
  2. You may have to pay another deductible and co-pay.
  3. Even if your deductible is only $500 with no co-pay, you’re still paying $3,500 out-of-pocket at this point.

As you can see, the savings available through lower coverage limits and higher deductibles may be tempting, but also may not be worth the financial risk depending on your individual financial situation.

Ask your agent for quotes with different coverage limits, if available, and different deductibles so you can make a better-informed decision.

Car Insurance Quotes

Many businesses treat insurance as if it were a commodity, readily available and with few differences in terms of features and alternatives. Customers are buying service, not just insurance, according to Amica and our Special Mention pick, USAA.

Because insurance premiums are unique to each person, it’s critical for customers to shop around. In terms of price, one company may treat you better than another. But don’t forget to think about service and policy options, and talk to your agent about coverage types and restrictions.

An insurance policy sits on the shelf, waiting for a claim to be filed. When a claim occurs, we want to know that our policy is correctly structured to safeguard our finances and that the service we’ve paid for will be available when we need it most.