What factors affect my auto insurance rates?

HomeWhat factors affect my auto insurance rates?

What factors affect my auto insurance rates?

Auto insurance is an important part of a motorist's life and is a requirement in 48 of 50 states in the United States. The financial safety net provided by auto insurance is an effective guard against accidents, theft, and vandalism, allowing an individual to pay only a fraction of the cost of these unpleasant events. Many different factors can affect the rates paid by a motorist, and being aware of these factors can help provide insight on how to reduce them.


One of the most significant factors in auto insurance rates is age, with younger drivers usually paying far higher premiums than older drivers. The average 6-month premium for a 16-year old motorist from major auto insurance providers ranges from $2,040 with State Farm to $5,268 with Progressive. In comparison, the average 50-year old motorist pays a premium ranging from $461 with USAA to $930 with All-State. Once a driver approaches 70 years of age rates usually begin to increase again although rarely getting near the rates of teenagers. It is important to note that 3 states, California, Hawaii, and Massachusetts, prohibit insurers within the state to base rates on age.

Driving History

Driving history also plays a major role in formulating an auto insurance premium, with violations such as speeding tickets or DUI's, as well as at-fault accidents significantly increasing rates. Even a minor traffic violation can increase rates by between 20% and 40%, so it is important to always drive as safely and responsibly as possible. Major traffic violations such as DUI's and DWI's can drastically increase premiums, increasing them by 100% or more depending on the specifics of the situation.


As a general rule, the less you drive the less you pay. In most states, this is a relatively minor factor in determining a premium, with the difference between a motorist who travels less than 7,500 miles per year and one who travels over 15,000 miles per year being about $92. However, in California, drivers who drive less are rewarded much more, with the difference between the two previous mileage groups being $557.

Insurance Coverage History

Auto insurance companies look very favorably on drivers who maintain a continuous level of coverage, without any previous gaps. A study of 7 major auto insurance providers showed that insurance rates dropped considerably for motorists who maintained 5 continuous years of coverage after previously not being covered, with a savings on average of $182 per year. As a result, it is important for newer drivers who were previously insured under their parents' policy to always let their new insurance company know about their previous coverage to avoid unnecessary rate increases.

Vehicle Type and Vehicle Factors

Newer, more expensive cars cost more money to insure than older cars, and sports cars almost always cost more to insure than regular vehicles. Ironically, cars that implement safety features such as collision-warning systems or electronic stability control systems do not necessarily receive lower rates. Many insurance companies view these features as adding to the value of the car, and thus increasing the expense to ensure, as well as considering them a potentially significant expense should they become damaged.