Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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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

UPDATED: Nov 7, 2020

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Here's what you need to know...

  • Auto insurance rates are calculated via a formula
  • Several factors, like your credit score, age, marital status and the miles you drive, are taken into consideration when you request a car insurance policy
  • Different insurance carriers have different formulas for calculating insurance rates
  • A comparison tool can help you compare the rates and policies of multiple insurance carriers

When you fill out a comparison tool quote form or apply for auto insurance with a car insurance carrier, they calculate your risk according to certain factors, which may include your credit score, driving records and the type and style of car you drive.

Each insurance company creates their own personal formula, which is why shopping around for car insurance pays. Often times, you can find the same policy for a lower monthly premium.

Enter your zip code above to compare car insurance rates from multiple companies at once!

Items that Factor into Your Insurance Rate

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There are lots of items that factor into your car insurance rates. Some of those factors you can control, like your credit score and the car you drive.

Other factors may be difficult to control or beyond your ability to control, like your age and gender.

  • Credit Score – While not all insurance companies use your credit score, the vast majority of them do look at your credit report. Car insurance companies believe that individuals with low credit scores are more likely to file a claim because they do not have the funds to repair their cars themselves, even if the repair is only a few hundred dollars.
  • Gender – Male drivers are typically charged more than female drivers. Statistics have shown that men tend to get into more car accidents than women on average. Part of this reasoning is that men tend to have more accidents while driving under the influence, according to the Insurance Information Institute.
  • AgeYounger drivers tend to pay more than older drivers. This is because they have less driving experience and are deemed to be more of an accident risk. The good news is that insurance rates tend to decrease around the age of 25, and seniors typically receive car insurance discounts.
  • Driving Record – If you’ve gotten a lot of speeding tickets or into a lot of car accidents over the last few years, your rates will be higher than someone who has remained accident and infraction free. This is because car insurance companies consider you a higher accident risk, and thus, a greater liability.
  • Location – Where you live and park your car at night impacts your car insurance rates. If you live in an urban area or an area with a high crime rate, you will pay more than a similar driver who happens to live in a rural area.
  • How Much You Drive – If you have a long commute or drive over a certain number of miles each year, you may pay more for your car insurance. This is because logging long hours on the road increases your risk for getting into a car accident.
  • Whether or Not You Make Car Payments – Newer cars tend to cost more to insure than older cars. This is especially true if you still owe money to a financial institution for your vehicle. Individuals with car payments must purchase liability, comprehensive and collision car insurance while individuals with older cars that are paid off only have to purchase liability to drive legally.
  • The Make and Model of Your Vehicle – Certain vehicles cost more to insure. This is due to several factors, including your car’s estimated risk of being stolen, whether or not it’s deemed a sports car and if you’ve made any major modifications to your vehicle that drastically increase its performance or alter the way it drives.
  • The Risk You Are Willing to Assume – If you choose an insurance policy that has a deductible, increasing that deductible to the maximum you can afford if you were to get into a car accident can decrease your car insurance rates. This is because you are assuming more of the risk if you get into an accident.

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Car Insurance Discounts

To further decrease your monthly premiums, you should make sure you are getting all the discounts that you are eligible to receive. This may mean examining your potential car insurance company to see which discounts they offer.

  • Multi-Line – Having more than one insurance policy with the same insurance carrier can result in paying less for both policies than you would if you had the same policies with different carriers.
  • Multi-Car – Insurance more than one car with the same company can result in paying less overall.
  • Good Student – If you maintain a certain GPA while in high school and college, you’ll receive a discount on your monthly premiums if you show your agent your report card.
  • Safe Car – Air bags and other safety features reduce the likelihood of serious injuries, which translates into car insurance savings.
  • Electric or Hybrid Car Discounts – Some insurance carriers are offering discounts for drivers that drive hybrid or electric vehicles due to driving data that says they get into fewer car accidents.

Shopping Around for Lower Rates

Using a comparison tool and shopping around for lower rates can help you save money on your monthly auto insurance rates. This is because different insurance companies calculate risk differently and weight certain components differently than their rivals.

In order to get the best rates, you should always compare the quotes and policies of multiple carriers. This will help ensure that you are getting a good deal on your car insurance while still meeting your needs.

Enter your zip code below for the best rates on car insurance in your area!