Understanding car insurance rates

Car insurance is required in the United States if you drive a car. In the event of a collision, car insurance protects you, your vehicle, and others. After an accident, you could face massive medical and auto repair bills if you do not have adequate coverage. Each state has its own guidelines for the minimum amount of insurance that each driver must carry—but this may not be enough to provide you with the full protection you require. With so many insurance companies in the country, it may appear difficult to find the best car insurance quotes for your needs.

Don't simply accept the cheapest car insurance quote or the first offer you receive. You should compare rates from different providers to find the best coverage at the best price. You can save hundreds of dollars per year by shopping around. Consider how these factors can affect your pricing when starting your car insurance research, and use these tips to find the best car insurance companies.

Factors that determine car insurance rates

Car insurance companies will gladly provide you with a quote, often on their website, but it is rarely clear what factors they use to calculate your specific rate. Quotes can vary by hundreds of dollars between companies.

Your driving record and the make and model of your vehicle are two major factors that influence your insurance rate. However, there are numerous other factors that go into the final calculation.

While carriers weigh the factors that influence the quotes they provide in various ways, according to the Insurance Information Institute, the following are some of the elements that generally have the most influence:

Driving record

Individuals with fewer accidents and traffic violations have lower insurance premiums. If you get in trouble with the law or cause an at-fault accident, your premiums will almost certainly rise. Here's a look at how various types of infractions may affect your insurance costs.

Average annual premiums based on driving record

Location

The rate you receive is heavily influenced by where you live. Those who frequently drive in cities pay higher rates than those who drive in rural areas. And whether you park your car on the street or in a garage is also important. Parking your car in a more secure location may help you save money on insurance.

Due to location-specific driving conditions, local laws, and other risks, drivers in some states pay more for auto insurance than others. Here's a look at how much premiums can vary between states.

Average annual premiums based on location

Miles driven

The more you use your car, the more you'll probably pay. Driving fewer miles may result in lower insurance costs.

Age

When it comes to auto insurance premiums, your age plays a significant role. Younger drivers, particularly teenagers, tend to pay more because they have less driving experience and a statistically higher chance of being involved in an accident. If you maintain a clean driving record and other factors remain constant, your premiums should generally decrease as you get older. Here is the average rate decrease for drivers aged 16 to 60.

Average annual premiums based on age

Credit score

Your credit score is used by insurers to determine how likely you are to file a claim. Drivers with higher credit scores file fewer claims and, as a result, pay lower premiums on average. Based on national averages, a driver with poor credit may receive a quote that is double that of a driver with excellent credit.

It is important to note, however, that your credit score does not carry the same weight with every insurance company. Some may disregard your credit entirely (although most do).

Average annual premiums based on credit score

Vehicle

Some vehicles are more expensive to insure than others. The cost of your car, the cost of repairs, the safety record, engine size, and the likelihood of theft all factor into the final cost.

Coverages needed

Nearly every state requires drivers to have basic auto insurance, but you may require more than that. Liability insurance covers damage to someone else's property or damage to someone else's property caused by a collision you cause, whereas bodily injury insurance only covers injury or death to another person. You can add personal injury protection (PIP) insurance, which covers any bodily harm caused by a collision. While comprehensive insurance covers damage to your vehicle caused by a collision, weather, or theft, full coverage insurance includes comprehensive, liability, and bodily protection. The more coverage you require, the higher your auto insurance premium.

Deductible size

Raising your deductible can help you save money on insurance. You could save 15 to 30 percent on your insurance costs by raising your deductible from $200 to $500.

Gender

Auto insurance quotes for women are typically lower than those for men. This is due to the fact that women have fewer accidents than men. However, as one gets older, the difference becomes less noticeable. The table below compares the disparities in rates between men and women at various life stages.

Average annual premiums based on age and gender

What is not considered in your car insurance rate

When you request a quote from an insurance company, they ask for a variety of information, but a few details are off the table. In general, insurers are prohibited by law from setting rates that could be considered discriminatory. This means that your race and religion will never be considered when determining your insurance premiums.

Depending on where you live, state-specific regulations may also prohibit insurers from considering information widely used in other parts of the country. In California, Hawaii, Maryland, and Massachusetts, credit-based insurance premiums are either illegal or severely restricted. New Jersey became the latest state in early 2021 to prohibit insurers from considering credit scores in addition to education level and occupation.

How to collect car insurance rates

It is possible to find affordable quality insurance, but it takes some searching. Take the time to compare quotes from various insurers for the coverage you require. While the specific information required may vary, most insurance companies will request the following information, which will directly impact your auto insurance quotes:

• Driving record
• Location where car will be parked
• Driver information: age, gender, occupation, driver’s license and state of issuance
• Credit score
• Vehicle information: make, model, age and VIN
• Coverage needed
• Deductible

Frequently asked questions

What is the difference between liability and full coverage car insurance?

Liability insurance protects property and compensates others for damages caused by you or someone driving your car. Liability coverage also pays for bills related to another person's death or injury caused by you or someone driving your car. Full coverage car insurance, on the other hand, covers liability, collision damage, bodily injury coverage, and even damage to your vehicle caused by weather, vandalism, or a falling tree branch.

How do I get the best car insurance rates?

Shopping around and comparing car insurance rates from various companies will assist you in locating the best rate. Examine both large and small companies, and be prepared to provide your personal information, vehicle type, credit score, and driving record to receive the most accurate quote.

How can I make my car insurance cheaper?

Being a safe and cautious driver with no recent accidents or tickets on your record can help you lower and maintain your insurance. Another way to save money on car insurance is to reduce your coverage or raise your deductible, but make sure you understand your state's minimum requirements and the consequences if you have basic insurance and cause a collision.

Methodology

StrongInsurance analyzes 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. using Quadrant Information Services. Rates are calculated using a 40-year-old male and female driver with a clean driving record, good credit, and the following full coverage limits:

• $100,000 bodily injury liability per person
• $300,000 bodily injury liability per accident
• $50,000 property damage liability per accident
• $100,000 uninsured motorist bodily injury per person
• $300,000 uninsured motorist bodily injury per accident
• $500 collision deductible
• $500 comprehensive deductible

StrongInsurance used minimum coverage limits that meet each state's requirements to determine minimum coverage limits. Our typical driver owns a 2019 Toyota Camry, commutes five days a week, and drives 12,000 miles per year.