5 Factors That May Impact Your Car Insurance Rate

5 Factors That May Impact Your Car Insurance Rate

April 12, 2023

According to a study conducted by the U.S. News & World Report, the average annual cost of car insurance is $1,553. If you've ever shopped around for car insurance, it’s likely you already know that rates can vary greatly depending on the provider, the coverage options, where you live, and more. While a clean driving record could lower your premium, a few other factors could also have an impact on your rates.

If you’re looking to get the best deal on car insurance, it’s important to take into consideration these five critical factors that could affect what you’re paying:

Factor #1: Make & Model of Your Car

The type of car you drive can have an impact on how much you’re required to pay for coverage. For example, luxury vehicles or exotic cars tend to cost more to cover. That’s because foreign or high-end vehicles can be more costly to repair or replace. In addition, the more desirable a car is, the more prone it may be to theft. Cars with a greater probability of being stolen may require higher insurance rates.

While it may be tempting to save up and splurge on a high-end car, it’s important to remember the ramifications this purchase may have on your monthly or yearly insurance payments.

Factor #2: Zip Code

In addition to your state of residency, insurance companies tend to look at your zip code. That’s because more densely populated areas (such as larger cities) tend to experience more theft, vandalism, and accidents than their rural counterparts. In addition, those living in larger cities are often limited to street parking—another factor that could up your rates.

Factor #3: Your Car’s Age

Not only have cars become more sophisticated and technologically advanced over the years, but they’ve also gotten safer. Vehicle safety standards are at an all-time high, and more protocols are in place now to protect the driver and passengers during a collision than ever before.

This means that the age of your car may have an impact on your insurance rates. While older cars are typically less expensive to purchase, they may hike up your insurance premiums. Some insurance companies will offer discounts if you’re looking to insure a brand new vehicle.

Factor #4: Your Driving Record

Your driving record will definitely impact how high your insurance rates are. If you have previous accidents to report, they’ll almost always drive up the cost of your premiums. A clean driving record is rewarded with better rates by insurance companies. Why? Because they believe they’re taking less of a chance on insuring you. When you have numerous traffic tickets, fender benders, and points on your license, insurance companies see you as a greater risk to cover. If your record is especially dicey, you may even have to work a little harder to find an insurance company that will insure you at all.2

Factor #5: Marital Status & New Drivers

When you want to add your spouse or a dependent to your policy, you’ll almost always see increased rates. Keep in mind, however, that many major insurance companies typically offer married couples discounted rates. This means that if you’ve recently tied the knot, reassessing your car insurance policy should be at the top of your to-do list.

Another time you may be adding a new driver to your policy is if you have teenage children at home. Adding a teen driver to your policy will make your rate go up. Young drivers with limited experience are more prone to accidents, and insurance rates will reflect that risk with higher premiums for you as their parent or guardian.

You may not be able to control every factor that affects your car insurance rate, but it’s important to be aware of those that you can. Drive safe, choose the make, model, and year of your car wisely, and shop around to find the right policy for you and your family.