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: Sep 19, 2020

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Here's what you need to know...

  • Car insurance premiums vary from one driver to another
  • Driving history, credit, and age all play a role when determining your rates
  • Taking a defensive driving class can lower your premiums

Automobile insurance is a requirement for anyone who wants to drive. Most of the time it seems like a nuisance, but anyone who has ever been in a collision or suffered a car break-in quickly discovered that having the right insurance coverage is a must.

Because car insurance is a necessity, one that typically results in a monthly bill, it is a good idea to choose and purchase a policy only after careful consideration.

Most consumers are on the lookout for car insurance that provides the best possible coverage at the lowest possible price.

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Table of Contents

A Competitive Industry

Fortunately for consumers, the insurance industry is a very competitive one. Each company is determined to outdo the others in factors like price, coverage, and service.

In this kind of competitive climate, it is the consumer who truly wins. They can afford to be choosy and shopping around usually nets them a better overall deal.

Generally speaking, there is no single car insurance company that offers affordable pricing for every driver on the road.

Insurance premiums are determined based on a number of different factors, meaning that each policy is unique.

Accordingly, insurance premiums quoted by one insurer for a particular driver can vary vastly from the quote received by another driver.

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How an Insurer Determines Premiums

Some of the factors that insurers use to determine policy pricing are:

  • The age of the driver
  • The driver’s marital status
  • The level of education completed by the driver
  • The driver’s history of accidents and insurance claims
  • Whether or not the driver has completed a defensive driving course
  • The types of cars covered by the policy

Insurance agents rely upon statistics to arrive at most of their conclusions regarding how to price policies.

They look at historical data for drivers with similar profiles to determine how much risk the prospective policyholder poses to the company.

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Drivers Perceived as High Risk

A driver that is considered higher risk will almost always receive a higher premium quote.

These types of drivers tend to be:

  • Younger than thirty years of age
  • Single
  • Considered a credit risk
  • A driver with a history of tickets or accidents
  • Drivers of sportier, more expensive cars

A driver who fits into anyone, a few or even all of these categories will typically have to pay more for insurance than will a driver who is older, married and drives a sedate car.

It may seem like consumers are completely at the mercy of insurance agents and can do little to improve their chances of getting affordable coverage.

Ways to Make Insurance More Affordable

Although there is no one insurance agency that will offer an affordable policy for every driver, there are still many things drivers can do to achieve a better rate on their policy.

The first is to shop around for car insurance. The consumer can visit websites and make phone calls to accomplish this. It takes time, but the significant savings available are definitely worth the effort.

It is also important to combine insurance policies whenever possible.

Bringing a policy for cars, home, life and other assets to a single agent usually means getting a substantial discount on premiums.

Since most insurance agents today check the credit reports of their prospective clients, it is a good idea to obtain a credit report before applying to an agency.

Clear up any mistakes or outdated information so that the credit report looks as favorable as possible. This can certainly help the consumer to obtain a better premium rate.

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Proceed with Caution

Simply being a responsible driver is another way to save some serious money. Follow the rules of the road in an effort to avoid both tickets and accidents.

Taking a defensive driving course is also a good idea as many insurers recognize the completion of such a course as designating the individual as a superior driver who is unlikely to cause an accident.

Deciding to purchase a different car can make a huge difference in insurance rates. 

Look at published safety ratings to find an automobile with a high ranking. The safer the car is perceived to be, the lower the insurance premiums are likely to be.

Equip a car with an anti-theft device to further lower premiums.

This does not have to be a state-of-the-art, incredibly expensive model. Even a more utilitarian audible alarm system may result in reduced insurance rates.

Driving less may also help lower car insurance risk. Drivers who spend fewer miles behind the wheel on average each year are involved in fewer accidents.

Statistically, this makes the driver a more attractive risk to the insurer.

Some policies come with several extras like rental car coverage. Drivers who don’t feel they need such extras can cut them out of their policy, thereby saving lots of money over the years.

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References:

  1. https://www.usaa.com/inet/ent_logon/Logon?redirectjsp=true
  2. https://www.allstate.com/tools-and-resources/car-insurance/ask-agent-premium-deductible-limit.aspx
  3. https://www.cnbc.com/2015/03/27/car-insurance-is-cheaper-if-youre-married-new-study-shows.html
  4. https://www.thebalance.com/how-to-get-your-driving-record-527249
  5. https://www.acceptanceinsurance.com/our-products/auto-insurance/teenager-auto-insurance/
  6. https://www.acceptanceinsurance.com/our-products/auto-insurance/high-risk-auto-insurance/
  7. https://www.allstate.com/home-insurance/homeowners-insurance-basics.aspx
  8. https://www.annualcreditreport.com/index.action
  9. https://www.aarp.org/auto/driver-safety/info-2010/why-take-a-driver-safety-course.html
  10. http://blog.esurance.com/safety-discounts-on-car-insurance/