Surprising Factors Drive Up Car Insurance Rates

4 Surprising Factors Driving Up Your Car Insurance Rates

Everyone wants to pay the least amount of money for car insurance. The challenge is to do so while maintaining reliable and adequate coverage. So, where do you begin? Understanding what factors influence your auto insurance premium is a good starting point.

Much of what you pay for auto insurance each month is determined by factors beyond your control, such as whether you're a man or woman and your age.

Of course, you have more control over some things, such as your driving record. If you have a history of accident-free driving, you will pay far less than if you have a history of accident claims.

Factors determining your auto premiums

Here are some of the more important factors that influence your rate. To get the best prices and coverage for your needs, you should always shop for car insurance from multiple insurance companies.

Gender: Whether you are a man or a woman can make a significant difference in the amount of auto insurance you pay each month. We discovered that men pay $124 per month on average for auto insurance, while women pay $119 per month.

That $5 difference may not seem like much, but over the course of a year, it amounts to an average of $60 more than male drivers pay.

Marital status: You may believe that whether you are married or single is unimportant to insurers. However, we discovered that single drivers pay about $9 more per month for car insurance.

Why? According to insurers, married drivers are more responsible and thus have fewer traffic accidents.

Auto insurance costs an average of $126 per month for single drivers and $117 for married drivers.

That $9 per month adds up to $108 more in annual costs for single drivers.

Your credit: You're probably aware that your three-digit FICO credit score plays a significant role in determining whether you qualify for a mortgage or auto loan, as well as the interest rate you'll receive.

But did you know that a subset of your credit score can influence how much you pay for auto insurance? Many insurers use a credit-based insurance score to determine how dangerous a driver you are.

Drivers with lower insurance scores file more claims, making them more expensive to insure.

According to Eric Klein, senior attorney at Boca Raton, Florida-based Klein Law Group, this frequently surprises customers.

It is critical for consumers to understand that anything that harms their credit may cause their auto rates to rise.

"If you have a $25 medical bill that you refuse to pay because of how the doctor's staff treated you, your account will go to collections, and the negative information will be reported to the credit-scoring company, resulting in a higher insurance premium," Klein explains.

According to John Espenschied, agency principal with Insurance Brokers Group in St. Charles, Missouri, credit issues can cause drivers' scores to rise even if they have never filed a claim.

"It's becoming more common for insurance companies to rescore your policy on your creditworthiness on an annual basis," Espenschied says.

"Yes, credit plays a significant role in determining insurance premiums for new and renewed policies."

Age: Your age is one of the most important factors in how much you pay for auto insurance. Insuroma found that younger drivers tend to pay significantly more. This isn’t a surprise; younger drivers are less experienced and tend to get into more accidents. This makes them a higher risk, and insurers charge them more because of this.

A 20-year-old will pay an average of $213 per year for auto insurance, according to Insuroma. When drivers reach their 25th birthday, the average drops significantly, with Insuroma reporting that drivers at this age pay an average of $126 per month.

When drivers reach 30, their rates fall to an average of $116 per month, and they remain in that range until they reach 50.

Drivers at that age pay an average of $107 per month. At the age of 60, drivers pay an average of $103 per month, rising to $106 when they reach their 65th birthday.Of course, you have more control over some things, such as your driving record. If you have a history of accident-free driving, you will pay far less than if you have a history of accident claims.

"Data show that male teenagers are more likely than female teenagers to have accidents." As a result, young males typically face higher rates," explains Natasha Rachel Smith, a personal finance expert. "However, age has the greatest impact on your rate because young drivers with no experience have been shown statistically to be immature behind the wheel, making them risky drivers to insure."

Vehicle type: The car you drive has an impact on your insurance rates. According to Insuroma research, those who drive coupes and hybrids pay an average of $131 per month, sedans pay an average of $126 per month, and trucks pay an average of $117 per month.

SUV owners pay less, on average, $103 per month.

"Your insurance rate is determined by factors such as size, repair cost, and safety ratings," Smith says. "In an accident, smaller vehicles are more dangerous than larger vehicles." Large cars with high safety ratings have lower insurance rates than small cars.

"High safety ratings indicate a lower likelihood of medical bills in the event of an accident, which results in lower premium rates."

A newer car will generally cost less to insure than an older one that lacks certain safety features.

"Newer cars have a wide range of safety features, such as lane departure warning, backup cameras, and blind-spot monitoring," says Travis Biggert, chief sales officer at Tulsa, Oklahoma-based insurance company HUB International Mid-America. "Most carriers provide discounts for these additional features."