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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Key takeaways...

  • Auto insurance premiums are strongly influenced by the person driving the vehicle and the type of vehicle covered
  • The vehicle type, make, model, specifications, and ISO rating will all have a serious impact on your insurance rate
  • If you have any violations or accidents and you’re rated as a primary driver, it will change the vehicle’s rate
  • When your rates are calculated, the total that’s charged is organized by vehicle and not by person
  • Adding additional operators who drive occasionally may not have a major impact on your rates

So much focus is put on finding the best auto insurance rates. In fact, one of the main reasons that people shop around is to find what they consider a deal.

Unfortunately, there’s so much attention placed on the total policy premium that some consumers don’t take the time to learn how their personalized quotes are actually calculated.

How your personalized rate is calculated is extremely important. It’s the process that’s used that enables you to save money in the end. It’s not solely the car or the person that is charged a rate, it’s both.

In fact, it’s more than just the drivers and the cars that are on a single policy that influence the final rate. Individual policies can be crafted, if the standard comprehensive coverage that most insurers provide doesn’t work out.

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Do all insurance companies charge the same rate?

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Here’s some more good news – as a consumer you have access to the broadest coverage across the car insurance industry. If all insurance companies charged consumers the same rate, it wouldn’t be a competitive marketplace. Licensed companies have the freedom to set their own rates.

As long as the rates that the company sets are not discriminatory in nature, the premiums will be approved.

The reason that experts tell you that you should shop around for the best rate is that companies use different methods to calculate how much each unit of insurance should cost each driver in each rating class.

As a driver and an insurance consumer, give yourself the power and shop around to find the insurance company with the fairest rate, instead of going with the first one that you come across.

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How does the type of car you own influence the rate?

You’d think that when you’re buying car insurance, the rate charged would only be affected by the car. After all, the coverage that’s provided protects you when you’re driving the covered auto that you list on the policy. However, it goes a bit deeper than that.

The type of car that you drive will play a role in your personal rate factoring.

There are a few different ways that your vehicle type is going to dictate what you’ll spend each month for coverage. It’s not uncommon to pay more to insure a sports car than a standard compact car because it costs more to fix a sports car and it travels at faster speeds. Owning a used car can give you benefits that a brand new sports car might not.

The most common method to rate a vehicle is to use the car’s ISO rating.

What is an ISO rating?


Insurance companies wouldn’t be able to decide how much to charge their customers if they didn’t have data and statistics to review. There are so many different numbers that have to be crunched to assess how likely each group and subgroup is to have a loss.

When it comes to your car, all of the data is compiled and this is how an ISO rating is compiled.

A risk solutions company called VeriRisk is responsible for setting the ISO rating system. It’s called the ISO rating because it stands for Insurance Service Office. By compiling information about each model, the company can create a symbol.

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There is a physical damage symbol and a liability symbol. Here’s what’s used to create the symbols for each individual make and model:

Liability and Medical Payments Symbols

Cars that cause more damage to other vehicles or injuries to vehicle occupants need to carry a higher premium because there’s a higher risk of loss in the car, and the risk that the payment will be high goes up because of past claims that have been filed.

Here are some pieces of information used to come up with a liability symbol:

  • Vehicle size and construction
  • Related characteristics
  • Vehicle’s insurance loss experience for liability claims
  • Vehicle’s insurance loss experience for medical payments and Personal Injury Protection claims
  • Predicted future loss-ratio

Physical Damage Symbol

When a car is first manufactured, all they have to go off of is the vehicle’s MSRP. It’s the suggested retail price that all preliminary scores are based on.

After there’s time to compile data, adjustments are made and the actual Physical Damage rating symbol is adjusted and the price can go upward or downward.

Some of the factors that determine this include:

  • The vehicle has a high theft rate and it’s attractive to thieves
  • The vehicle is involved in more collisions than the average car
  • The vehicle costs more to repair because of the parts of the labor
  • The vehicle’s loss experience for physical damage claims

How does the driver on the policy affect the rate?


Your vehicle can affect how much you pay for liability, comprehensive, collision, and medical payments coverage. If you buy a safer vehicle, it could help you keep your premiums low, but that doesn’t mean that the driver on the policy has no bearing.

In fact, who is listed as the primary driver can really impact the rates.

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What type of impact does a primary driver have?

Primary drivers are individuals who are rated on the policy and who have regular access to the car. Typically they are the car owner as well. Since they are the ones who will be using the vehicle the most, they will have the biggest impact on how much the named insured pays to insure the car.

Here are some of the factors that are considered when rating a driver:

  • The driver’s age
  • How long the driver has been licensed
  • The driver’s gender and marital status
  • If the driver has any violations in the last three years
  • If the driver has any at-fault accidents

As you can see, it’s a combination of factors that helps the company determine what is the best rate. How you use the car and where it is stored can also be considered.

Now that you have a basic understanding of how rates are set, you can shop around online to compare instant quotes and get the best deal. Enter your zip code into our free tool below to begin comparing.