With over 269 million cars on American roads, car insurance is both essential and difficult to understand.
None of us want to pay more than we have to. That's why it's important to understand the many different factors of car insurance.
For example, what factor affects car insurance premiums the most? What are the average car insurance rates by age?
In this post, we'll discuss all that and more. Here are 10 car insurance factors that affect how much you'll pay.
Did you know that where you live is one of the main determining factors for car insurance premiums?
North Carolina, for instance, has some of the cheapest insurance rates in the country. Massachusetts, Hawaii, and Alaska are also on the list.
If you happen to live in Michigan, Louisiana, or Kentucky, bad news. Residents of these states can expect to pay much higher rates to cover their vehicles.
Your zip code provides an agent with a starting point for the average rates in your area. Drivers who live in highly populated cities usually pay more than their neighbors in smaller rural towns.
In most states, your gender also affects your car insurance premium. In general, women pay less than men.
Why? Statistics show that male drivers (especially young ones) engage in riskier behavior behind the wheel. This includes speeding, driving under the influence, and not wearing a seatbelt.
Men also tend to drive more miles than women, making them more likely to encounter an accident. The good news is that as men get older, their insurance premiums tend to drop (more on that next).
With age comes experience--and few companies know that as well as auto insurance agencies.
When inexperienced teens first get their license to drive, they're prone to speeding and distracted driving. For this reason, teens and young adults almost always pay the highest insurance premiums.
By the time a young driver turns 25, they can expect to see their insurance rates drop significantly. Provided they keep a clean driving record, there shouldn't be much change in rates throughout adulthood.
Depending on the insurance company, rates for both genders may increase again after the age of 65 or 70. Why? Senior drivers tend to have slower reflexes, which can increase their chance of an accident.
4. Driving Record
This one is a no-brainer. The fewer accidents and other violations you have on your driving record, the less you'll pay for car insurance.
Major violations, such as a DUI, can more than double your insurance premiums. You're seen as a higher risk and therefore are expected to pay more for coverage. If you rack up enough serious violations, you can even become "uninsurable."
Even a few speeding tickets can drive up your rates, though, so be mindful behind the wheel. Most companies offer safe driver discounts for drivers with a clean history.
None of us can control our age and not everyone can choose where they live. But being a safe driver is fully in your control--and insurance companies are eager to reward good behavior.
5. Marital Status
Would you be surprised to learn that your marital status also affects your car insurance rate?
Research suggests that married people practice safer driving habits than their single counterparts. A 20-year-old married individual, for example, may pay up to 21% less than a single 20-year-old.
Are married people truly more responsible behind the wheel than singles? It all depends on the individual, of course, but it's another key insurance factor to be aware of.
6. Credit History
While not as major a factor as your age or location, your credit score also plays a role in determining your insurance premium.
As you might expect, a better credit score generally means a better insurance rate. It makes you appear more responsible and reliable in the eyes of the insurer.
All the more reason to work on improving your credit score, right?
7. Claims History
In addition to your driving history, insurers will also consider your claims history.
Let's say you were involved in an accident last year. Was it your fault? If so, your rate may increase. If you weren't at fault, your rate could stay the same.
They'll also consider the number of claims you've had over the years. If you've filed four insurance claims in four years, insurers will see you as a high-risk driver. For that reason, you can expect to pay more than a driver who hasn't filed a claim in twenty years.
8. Type of Vehicle
Yes, your choice of vehicle also determines how much you'll pay to insure it.
Insurers will look at a number of factors, including purchase price, safety ratings, and current theft rate. If your car's model makes it to the top of the most stolen list, you'll likely have to pay a higher premium.
Surprisingly, your profession can also factor into your insurance rates.
How long is your daily commute? How often are you on the road for work? If you're a delivery driver or reporter who's constantly driving, you have more chances to get into an accident.
On the other hand, people such as paramedics, police officers, and nuns often receive lower insurance rates. Why? They're perceived as more careful and cautious than the average driver.
10. Driving Habits
A final factor that affects your insurance rates is your daily driving habits.
Do you work from home, or do you have a 100-mile commute every day? Are you driving through a rural community or a major metropolis? Do you put 2,000 miles on your car in a given year, or 20,000?
Insurance companies have to consider these factors when determining how much you'll pay.
Final Thoughts on Car Insurance Factors
As you can see, there are many different car insurance factors to be aware of.
If you still have questions about how car insurance works and what type of coverage is best for you, we're here to help.