Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 13, 2022

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Here's what you need to know...

  • Factors used to determine your auto policy rates include age, gender, credit score and history, driving record, the type of car you drive, how much you drive, where your car is parked. and where you live
  • In the near future, your voting records, including if you are registered to vote and if you have recently voted, may even help determine how much you pay for your premiums
  • You can decrease your premium by increasing your deductibles, asking for additional discounts, bundling multiple insurance policies with one company, working to increase your credit score, increasing your deductible, and being wise and doing research with the type of car that you purchase

Auto insurance is an expense that we all must make room for in our budgets.

Whether you are paying on a monthly, yearly, or bi-annual basis, keeping your car insurance policy current is not only a legal requirement in most states, but it protects you and your assets as well.

If you need to decrease the amount that you spend on your auto policy, there are several different ways you can do so. In addition, there are many different factors that contribute to the calculation of your policy rate.

However, comparing insurance policies and companies online can help decrease the amount that you pay.

Start comparing car insurance rates now by using our FREE tool above! Enter your zip code to get started!

Factors that Affect Your Rates

Most drivers can expect to pay around $800 per year on their auto insurance policy. However, this number can vary widely, dependent upon several factors.

These factors all add up to how likely your insurance company believes you are to be involved in an accident.

Unfortunately for some people, more than simply your driving record gets used in this calculation.

Different auto insurance companies can use different factors, and some may not even use all of these.

However, here are the most widely used factors in determining the rate of your auto insurance policy, in no particular order:

Driving Record

This is the most obvious consideration that auto insurance companies examine to determine your policy rate. The better your driving record is, the less you will pay for your policy.

People who have a clean driving record will pay less than those who have had serious traffic offenses and major accidents.

If you are a new driver who has not been driving for long, you will more than likely pay a higher rate than someone who has a well-established driving record.

When you obtain an insurance quote, you will usually be asked what you use your car for and how much you drive.

Drivers who drive more miles are at an increased risk of being involved in an accident than those who do not drive as much.

Drivers who have a short work commute or who only drive their cars for what car insurance companies generally call “pleasure use” will pay less than people who rely heavily on their cars for transportation.

–Location and Parking

If you live in a rural area or a smaller town, you will likely pay less than drivers who live in urban areas.

This is because those who live in an urban area are at an increased risk of being the victim of theft or vandalism, and for being involved in an auto accident.

Cars that are parked in a garage will generally have lower rates as they are at a decreased risk for theft and vandalism, as well as weather damage, such as hail.

In addition, the cost of healthcare, car repair and replacement, and litigation, as well as weather trends and auto insurance fraud in your state can drive your insurance premium up or down.

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Age and Gender

Unfortunately, many factors, such as your age and gender cannot be changed. More mature drivers will pay less on their policy than teen drivers.

Additionally, on a whole, women tend to have fewer accidents and are less likely to have accidents related to drinking and driving.

This means that, in general, women will pay lower rates than men for their car insurance policies.

Although individual driving records will have a bigger impact on insurance premiums, age and gender do hold weight in the calculations of most car insurance companies.

The Type of Car You Drive

Some cars are more likely to be stolen or cost more to repair and replace. If you own one of these cars, it will be reflected in the amount of your insurance premium.

Engine size and the overall safety records and ratings of a vehicle can also impact the rate that you will pay.

Your Credit Score and History
More recently, car insurance companies are using your credit score and your credit history to help determine the rates that you will pay for your premium.

Information such as your payment history, the length of your credit history, collections accounts, bankruptcies, and any outstanding debts will be taken into account when determining your rate for auto insurance.

Regular and on-time mortgage and credit card payments will help ensure a lower premium while late payments and accounts in collections will negatively affect your rate.

–Types and Amounts of Auto Insurance Coverage

In nearly every state in America, drivers are required by law to carry at least liability coverage on their vehicle.

The more coverage you get, the higher policy limits, and the lower your deductibles are, the higher your premium will be.

If you have a loan or a lease on your vehicle, you will likely be required to carry collision and comprehensive coverage, which are additional policies that will cost you more money.

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Factors Not Considered in Your Premium Rates

Although many factors are taken into consideration when determining your rates, it is important to note that there are some that are not used.

For instance, race and religion cannot be used to determine your eligibility for auto insurance or the premiums that you pay. In fact, such practices are against the law.

Consumers should also be aware that each state can determine what factors car insurance companies can utilize when deciding on your rate.

For instance, in California, Hawaii, and Massachusetts, credit information may not be used as a deciding factor.

On the Horizon

Voter registration and voting history may be utilized starting in 2016 to help determine the premiums that you pay for your car insurance.

According to NASDAQ, people who have voted at least once are statistically less likely to be involved in an auto accident or file a claim for an accident.

Insurance companies may also look at how you voted, such as in person or by mail, how frequently you vote and how long you have been registered to vote when determining your premium price.

Options for Saving Money

While there are many financial aspects of driving that we have no control over, such as the price of gasoline, or how much car repairs cost, we can control our car insurance premiums, to some extent.

If you need to shop for a lower policy premium, consider using an online shopping tool or price comparison calculator.

This is a quick and easy way to ensure you are getting the best rates. Shopping around for different auto insurance companies can help ensure that you get the lowest rate possible.

Experts recommend you get quotes from at least three different companies before making a final decision.

You should get quotes from companies that use individual agents, as well as those who do not.

In addition, there are many different changes you can make to your policy to help control the cost.

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Start Saving When Buying Your Car

When purchasing a new or a used car, it is important to keep in mind that the type of car you drive will impact how much you pay for auto insurance.

Factors such as how likely your particular vehicle is to be stolen and its safety ratings can increase or decrease insurance policy premiums.

You can research this information before buying a vehicle by checking with the Insurance Institute for Highway Safety Highway Loss Data Institute.

Inquire about Discounts

No matter what car insurance company you are getting quotes from, you should always ask for additional discounts that you may qualify for.

Many teens can qualify for a discount for excellent grades in school or if they have taken a driver’s education or safety course.

With some car insurance companies, college students who are going to school more than 100 miles away from home will get a discount, as well as people who are accident-free or have impeccable driving records.

Seniors or people who are retired can also sometimes qualify for additional discounts.

Depending on the car insurance company, you may also receive a discount for being a part of an alumnus or business group or if you belong to a professional association.

It never hurts to ask about additional discounts that you may qualify for.

You may also want to check with your employer or your spouse’s employer to see if they are contracted with an auto insurance company.

Some employers are and you can receive deep discounts and group rates that will help you save money on your auto insurance premiums.

Consider Increasing Your Deductibles

You can spend less on your auto insurance premiums by increasing your set deductibles. However, be aware that this can increase your financial risk in the event of an accident or another unforeseen event.

Drivers can expect to save between 15 percent and 30 percent on their collision and comprehensive coverage when they increase their deductible from $200 to $500.

If you are interested in going even higher, a $1,000 deductible may save you as much as 40 percent on your monthly auto insurance premiums.

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Bundle Your Policies

Another way to save money on your auto policy is to check on bundling your insurance policies.

This means possibly purchasing your auto insurance from the same company you have your homeowners, renters, or life insurance.

Purchasing two or more types of insurance policies from the same insurance company can provide you with significant multi-policy discounts.

In addition, some insurance companies will provide you with a discount for being a long-time customer.

Work on Your Credit Score

While this change won’t happen overnight, you can work towards improving your credit score to reduce your auto insurance rates. The first step to doing this is to get a copy of your credit report.

Consumers should know that they are legally entitled to a free credit report annually from each of the three major credit reporting bureaus.

You can receive your report by going to annualcreditreport.com. You should go through the reports thoroughly to look for any errors or discrepancies.

If you find any, report them as soon as possible to get them corrected or removed from your report.

You can raise your credit score by paying your bills on time and slowly paying off any balances you have.

Simply taking those two steps can affect about 35 percent of your credit score.

Show your auto insurance company that you have a history of personal accountability to help decrease your insurance premiums.

While the world of insurance premiums and policies can be quite confusing and overwhelming, you can save money on your auto insurance policy by being an educated and proactive consumer.

It is important to understand the factors used in determining how much you pay for auto insurance and the steps you can take to lower your premiums.

Start comparing car insurance rates now by entering your zip code in our FREE tool below!


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  2. https://www.nasdaq.com/article/a-car-insurance-discount-for-voting-cm184892
  3. https://www.iii.org/article/how-can-i-save-money-auto-insurance
  4. https://www.naic.org/documents/consumer_alert_credit_based_insurance_scores.htm
  5. https://www.iii.org/article/what-does-my-credit-rating-have-do-purchasing-insurance-1
  6. https://www.allstate.com/auto-insurance/liability-coverage.aspx
  7. https://www.iii.org/article/nine-ways-to-lower-your-auto-insurance-costs
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  13. https://www.progressive.com/homeowners/
  14. https://www.libertymutual.com/life-insurance
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