Many of you wonder how insurance companies come up with the rates of a policy. There are numerous factors that come into play that will play a role in your specific premium. This includes actuaries, risk managers, underwriters, and more, which all contribute to determining your auto insurance rates, along with many other factors. Here are 10 of the biggest factors that will determine the rates you will pay to insure your vehicle. If you’re ready for an instant quote, enter your zip code, and Insurance On The Spot will show you the lowest direct rates. 

car insurance rate factors

  1. Your Age: Your age plays a large part in determining your premium cost, especially if you are between the ages of 16 and 25. Driving experience takes time and comes with age. Statistics show that young men motorists have more accidents than any other age group. In recent years, with distracted driving on the rise, younger female drivers are also getting into a large number of accidents. In fact, young drivers are pushing up rates for all motorists.   

However, there is another group that is starting to see their rates increase, and that is our senior citizens over the age of 75. Some companies now require medical exams before issuing permanent coverage. More insurers require seniors to prove that their driving skills have not deteriorated because of age or health.

Note: If you are between 18 and 40, you should shop around for cheaper rates at least once a year, especially safe drivers. 

  1. Marital Status: You will be rated based on your marital status. The categories are as follows:

a.) Single: Singles are charged the highest premiums. Some companies will adjust your premium once you reach the age of 30, single or married. Statistics show that single people without children drive more, meaning they spend less time at home. Because they are exposed to traffic more often, this group gets into more accidents.  

b.) Single with Children: You can qualify for a lower rate, providing you can verify legal documentation of having custody of your children. Single parents often spend more time at home with their children and have a tendency to drive slower and more carefully if children are in the car. This, of course, means lower rates for drivers who fall into this category.

c.) Married: This is the lowest premium category. Because married people typically have children, they’re known to be more stable and likely to stay at home with their family.

d.) Separated: Most insurers will rate separated individuals as single. This will result in a higher rate. If you are still legally married, it may be an advantage to you not to use “separated” as a status. Exclude them from the policy if your spouse does not live with you or drive your vehicle. Ask your insurance representative for exclusion and save some money.

e.) Divorced: Most carriers consider divorced individuals as single. Unlike the person that is only separated, divorce is legally separated. You can expect to pay a lower premium if you are divorced with children.

f.) Widowed: Insurers will consider widows as single. Use your married status as long as possible and take advantage of better rates.  

  1. Residency: Where you live can be another major factor in determining your premium. Your zip code will provide key metrics, such as accidents, crimes, lawsuits, and other information, to determine if one area is riskier than another.

Note: Some zip codes in California have much lower auto insurance rates than other zip codes. Check rates for yourself and get quoted with Insurance On The Spot.   

  1.  Credit: Credit scores play a big role in determining your policy cost.  It’s also used to determine your likelihood of submitting claims. This, of course, has a big outcome on your premiums.

Note: When applying for auto insurance, married couples should use a spouse with better overall credit. Make this spouse the primary driver.  

  1. Car Type: The type of car you drive directly affects your premiums. If you are buying liability-only coverage, it’s less of a factor, except for the discounts you get for airbags and seat belts. For those who need physical damage coverage, the car type is a major factor. The value of the car and how much it costs to repair or replace it plays a large part in the premium cost. 
    Certain cars are in high demand by thieves. Sports cars and coups are still the leading types of cars that are in high demand by auto thieves. Domestic cars are usually cheaper to insure than foreign cars.
  1. Driving Mileage: The number of miles you drive a year can increase your premium. The more miles you drive, the greater the possibility of an accident.
  1. Where You Drive: insurance on The Spot will surcharge you if you drive to work in the city or to another state, especially if the city has serious accidents and theft occurrences. 
  1. Classification: Carriers have several classifications based on the use of your vehicle.

a.) Pleasure: This category means you do not drive your car to work or school. The use of the car is for shopping and other social uses. This is the lowest class available. It’s usually okay to drive to work occasionally.

b.) Work and School: This class is a higher premium because the vehicle is used more often than with pleasure. Insurance On The Spot will ask you how many actual miles you drive to work or school. The less you drive, the lower your cost of insuring your vehicle will be. 

c.) Business: This class is also higher in coverage because the car is not only used for work or business-related but also the car is driven after business hours. An example might be a salesperson or a caseworker driving to an appointment and then driving home.  

d.) Contractors: Most providers have a special class for contractors. The reason is many contractors, such as electricians, plumbers, and painters, only drive to one or more work sites per day. This is almost equal to driving to work. The type of light truck or van also determines the rates. Commercial vehicle policies are cheaper if more than two cars are being insured.  

  1. Driving Record: Your driving record consists of your claims history, motor vehicle report, and how many years you have had continuous auto insurance coverage. Those who have a clean driving record and maintain auto insurance yearly will have lower rates.
  1. How Much Coverage Is Needed: The more coverage you have. And the higher your limits will usually result in increased premiums. 

 Let Insurance On The Spot help you get your automobile or truck insured for the lowest rate possible. Get a free quote now and save hundreds on the coverage you need. To get started, fill out a free quote application and start comparing rates online in minutes.