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What are the factors that determine the price of my auto insurance?

  • Cars Explained
  • Renee Martin
  • 11 minutes

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You may have heard that your age, gender, and marital status play a role in determining the cost of your auto insurance. But did you know that it also depends on the car you drive?

Do you have a friend or a family member that drives the same car as you? Have you asked them about their auto insurance premiums? Are they paying less than you? Is that making you wonder if car insurance companies set insurance rates at random? The truth is auto insurance companies rely on data compiled and tested over decades before setting each individual’s car insurance premiums.

If you’ve been following our blogs, you may recall reading that your car insurance rates vary on several factors. Generally speaking, the biggest factors that affect your auto insurance premiums are your age, gender, marital status, driving record, and credit history. However, the best car insurance companies also take into account other factors such as the make and model of your car and its features. Features include items like an anti-theft device, self-driving capability, and collision avoidance systems.

There’s no escaping the fact that car insurance is mandatory across the country. While it may seem like an unnecessary expense, it does come in handy if you have an accident on the road or your car gets stolen. So if you are on the lookout for the best car insurance coverage without breaking the bank, knowing the various factors that affect your rates may help you find a good deal. 

According to insurance companies such as Erie, your insurance rates ultimately depend on what you drive and how you drive, apart from the factors mentioned earlier. 

Do the make and model of my car affect car insurance rates?

Let’s assume you have a friend named John, and he drives the same car as you – a Honda CR-V. He even shares a similar driving record. While his insurance company might be charging him $2,356 for full coverage car insurance, yours might cost a little more to insure. This could be down to various factors, such as the age of your vehicle and the features onboard. Let’s take a closer look at how these might affect your auto insurance premiums.

Age of the vehicle

factors that affect auto insurance cost

Newer cars, almost always, cost more than an older model. While you may have paid $35,550 for a 2019 Honda CR-V, your friend John may have paid a lot less for his car that was bought in 2017. This is because newer cars have a higher Insured Declared Value (IDV). You inevitably pay more than the owner of an older model. Additionally, a brand new car costs more to repair, which directly affects your insurance rates.

Safety features

While you may think that a newer car is more expensive to insure, don’t rush to your nearest used car dealer just yet. As safety legislations get stricter every year, modern cars come equipped with advanced safety features that reduce the risk of accidents, thereby reducing the chances of repairing a car after a collision. Features such as lane keep assist, collision avoidance systems, radar-based cruise control, anti-theft devices, four or more airbags, and anti-lock brakes will help reduce the cost of your insurance rates significantly.

Size of the vehicle

Besides age and safety features, the size of your car also affects your annual premium. While it is easy to assume that a smaller one is cheaper to insure since it’ll require fewer repairs after a collision, that isn’t necessarily so. After comparing annual premiums of different cars across segments, our team of analysts found that SUVs and minivans are, on average, cheaper to insure than smaller vehicles. This could be down to the fact that a larger vehicle is more capable of keeping its occupants safer in the event of a collision.

Bonus tip: Try to get a hold of the average cost of maintenance and repairs of the cars you intend on buying. The cheaper it is to maintain or repair a car, the more affordable your insurance rates.

Does my driving record affect auto insurance cost?

Aside from the make and model of your car, how you drive can also have an impact on your annual car insurance rates.

Driving record

driving records

A clean driving record can significantly reduce your car insurance rates as it assures the insurance provider that you are a safe driver. Insurance firms have discovered that past performance frequently predicts future outcomes. Your car insurance rates could go up significantly if you have had parking tickets, speeding tickets, accidents, or other violations in the recent past. Speaking of parking tickets, check out the Way.com app to find the best parking spot in your city and airports across the country, and grab the best parking deals and discounts we offer!

Mileage per year

If you consider yourself a road warrior, embarking on long road trips on the weekend, then you should expect to pay higher car insurance. Car insurance companies charge more for someone who drives hundreds of miles a week when compared to someone who drives a few miles. It’s only natural that the more time you spend on the road, the more likely you are to be involved in a collision or have your vehicle damaged.

Other factors that affect your auto insurance cost

Your credit history

credit history for auto insurance cost

According to studies, excellent credit is linked to good driving — and vice versa. Car insurance companies can use certain credit data to forecast future car insurance claims. Many insurance companies utilize credit history to decide the cost of car insurance in states where it is legal. The bottom line? Having good credit can help you save money on auto insurance.

Your age, gender, and marital status – a factor for auto insurance cost

Drivers under the age of 25, particularly single males, have greater crash rates. In most states, insurance rates reflect these differences. You might be eligible for a discount if you’re a student. Most vehicle insurers offer student driver discounts if they complete a driver safety course and begin building a safe driving record.

age & gender factor

Where you reside

One of the most important factors that go into calculating your car insurance rate is something that is generally out of your control, and that’s where you live. In general, drivers in more densely populated locations may pay more for auto insurance due to increased incidences of vandalism, theft, and crashes. If you reside in a location where insurance is more expensive, focus on the other aspects you have control over.

Shop around and compare rates for auto insurance cost

It’s never fun to get a bill for insurance that you didn’t expect. You can make more informed choices and better understand why your rates rise or fall if you do some preliminary research on car insurance rates. 

The best way to obtain affordable car insurance quotes is to shop around. We recommend getting quotes from at least three different car insurance firms before purchasing auto insurance. You could do this by visiting each company’s website and using their online tools by calling your local insurance agent.

Alternatively, you tap the banner below to use Way.com’s car insurance tool to obtain the best quotes, as well as discounts and offers, from the country’s largest insurance firms for free!

Save up to $1000 a year

Who gets the cheapest insurance rates?

 In general, insurers providers offer low rates to drivers who are

  • Female
  • Over the age of 25
  • Married.
  • Driving a car that is older and less expensive.
  • Driving a car that has a solid safety record.
  • From rural areas.
  • Having a clean driving record.
  • Not having any moving violations.
  • Meeting their state’s low-mileage insurance requirements.
  • Having good credit rating.

Studies have shown that drivers who exhibit these characteristics cause fewer accidents, file fewer claims, and cost the insurance company less money. As a result, those who fall into the majority of these categories pay less for car insurance than other drivers.

However, it is important to note that insurers do not consider all of these criteria equally. Your driving record, age, and gender, for example, are more significant than your marital status or credit score.

Read: Why using dish soap for your car is way scarier than clowns

How do these factors work together?

Car insurance rates are much more difficult to calculate than your credit score! We do know a few of the heavyweight elements that influence auto insurance premiums, such as age, driving history, and location. At the very least, we know how much of a role each component has in your credit score! However, for those of us on the outside, calculating car insurance rates can be a bit of a mystery.

 This is why, before picking a car insurance company, you should always get several car insurance quotes. One firm may slap you with a hefty rate for an old fender bender you don’t even remember having taken place, while another overlooks it entirely.

Some businesses examine your credit history, while others do not. That doesn’t even take into account the plethora of discounts that various businesses offer.

Does the insurance provider I choose affect my rates?

Yes, the way an insurance company conducts business has an impact on the cost of insurance. Is the business privately held or publicly traded? What is the total number of employees? How much do the workers get paid? And, most importantly, how much has been paid out in claims? These are some factors that could indirectly affect your car insurance rates. 

Read: 6 tips on how to improve your Tesla’s battery life

Profitability is something that every insurance company strives for. When it comes to your rates, the bottom line of a corporation is crucial. Natural calamities, firm investments, other lines of business, and underwriting are all factors that affect profitability.

Some companies provide discounts if you pay your premiums annually. Some businesses may give you a discount if you set up automatic payments. Many insurance firms provide cheaper rates to consumers who have been with them for a long time as an added incentive to keep your business. 

They may also give credits toward your deductible for each insurance period in which you do not file a claim. This can save you money in addition to loyalty savings. Finally, insurance companies also need to follow the laws of the state where you live. You must buy a policy that meets the minimum standards in your state, which influences your car insurance rate.

Read: Why minimum car insurance coverage is a bad idea

Ways to save money on car insurance

There are a variety of options to consider when it comes to minimizing your premiums. Although not all of the following may be practical for you, they can all help you save money on insurance:

  • Raising your deductibles.
  • Reducing the amount of coverage
  • Maintaining good grades for student discounts
  • Bundling your insurance policies
  • Asking for discounts you may be eligible for

Do the type of car I drive affect auto insurance cost?

Did you assume that a compact hatchback may be cheaper to insure than a big SUV? Our research suggests otherwise. Our team of analysts found that small pickup trucks and minivans are the cheapest vehicles to insure in any state.

auto insurance

Minivans such as the Dodge Grand Caravan, Chrysler Pacifica, and the Honda Odyssey have an average yearly rate of $2,600. Small pickup trucks, such as the Ford Ranger and Toyota Tacoma, have an average annual insurance rate of $2,650. They’re followed by small SUVs such as the Honda CR-V, Hyundai Tucson, and Subaru Forester, at $2,750.

The most expensive cars to insure are large sedans. The list includes cars such as the Tesla Model S, Toyota Avalon, Genesis G80, the Audi A8, etc., at over $3,500 a year. If you’re looking for the best coverage for your car, we suggest getting car insurance quotes online. Here’s why.


Check out our blogs for info on finding top-rated airport parking, the best parking spots in your city, and affordable car washes near you.


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