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.

Full Bio →

Written by

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.

Full Bio →

Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 26, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right car insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.

Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Key takeaways...

  • You always need to get quotes when shopping for auto insurance because rates are extremely personalized
  • Companies will look at several risk factors to predict whether or not a policyholder or listed driver will have a loss
  • There are 3 different insurance risk classes that you can be assigned to preferred, standard, or high-risk
  • You’re a high-risk driver if you have a major traffic violation, tickets, bad credit, or several lapses in insurance
  • If you’re an inexperienced driver, you’ll pay more than other consumers for your coverage until you gain experience

If you’re on a mission to become a vehicle owner, you should put all of your focus on setting a strict budget.

Your budget shouldn’t only factor in how much you can afford to spend each month on your loan payments, it should also include an allowance to cover regular expenses including the following:

  • Fuel
  • Vehicle maintenance
  • Car insurance

Some vehicle owners spend just as much per month on their car insurance as they do to finance their vehicle. When you get a quote for insurance and you’re not expecting such a high estimate, it can leave you in a panic.

Compare car insurance quotes today because you may be able to save a lot of money on your monthly premiums!

Before you assume that all insurers will charge you high rates for coverage, you should do your homework. We’ve outlined some of the main reasons why drivers are given high auto insurance quotes below.

Your Insurance Rates Are Dependent on Risk

adobestock_42729341-1600x1600

Insurance companies don’t just pull the rate quotes that you’re given out of thin air.

A lot of time and money is spent assessing loss experience records, vehicle safety ratings, operational costs, and claims trends so that a company is better able to collect the appropriate amount of money to stay in business.

The whole purpose of doing the research is to identify risk and place applicants into the right risk class.

In the insurance industry, risk refers to how likely a household is to have a loss that leads to a financial obligation for the insurer.

Since the contract between you and your insurer says the carrier promises to pay for your covered losses, it’s crucial that the company collects enough money throughout the term to cover a pool of projected losses.

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

Understanding the Risk Classes and How They Affect Your Premiums

One way to determine whether or not a company’s rates are competitive is to determine your driving risk category.

It’s standard for auto insurance companies to use three different classes that all carry their own base rates. Once you are placed into a risk group, the carrier will then use other personal information to come up with your personal quote.

Your driving record, experience, credit, insurance history, and driving record can all affect your classification. After you provide answers to the questions that are asked to give a quote, the system will sift through the answers and compare them to the carrier’s classification guidelines.

Here are the characteristics of policyholders in each class:

  • Preferred Risk – A preferred driver will get the best rates because they have clean driving record, little to no not-at-fault claims, no at-fault accidents, a good credit history, and prior insurance for at least 6 months
  • Standard Risk – A standard driver will pay more than a preferred driver but not as much as a high-risk driver. You may be in this class if you have a minor traffic infraction, one at-fault accident, prior insurance, and a moderate credit score
  • High Risk – Not all carriers sell to high-risk drivers because they are statistically very likely to file a claim. When you find a carrier, you should expect to pay more than drivers in both other classes because of a major traffic violation, no driving experience, several tickets and accidents, no prior insurance, and a poor credit score

Compare Car Insurance Companies

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

How does driving experience affect your insurance rates?

Age and driving experience are related rating factors that can quickly place you in a high-cost box.

Most people know that teens can cost twice or three times as much as adults to insure but you don’t have to be young for your experience behind the wheel to affect your rate quotes.

In some states, age is just a discriminatory number. Instead of allowing insurers to use an applicant’s age, the state may require an insurer to consider only the driver’s licensing history.

If you were licensed later in life, this could work against you. It typically takes a full nine years of established driving history to go from inexperienced to experienced.

Know How the Type of Vehicle You Drive Affects Your Rates

Dollarphotoclub_51900798-1600x1600

Another major rating factor that’s going to be considered calculating any rate quote is the type of vehicle that you drive.

Since vehicle types can affect how likely you are to get into an accident, how much the carrier could have to pay other parties, and how much the carrier could have to pay for repairs, a lot of different factors are used to classify the vehicle.

One of the first things insurers will reference is the car’s Insurance Institute for Highway Safety rating. Cars will be tested by the agency and then different data will be recorded based on how the car performs. This helps to show the insurer how the car performs after a collision.

In addition to IIHS ratings, insurance companies use a car’s ISO symbol to calculate liability premiums and physical damage premiums.

To come up with a symbol, companies look at loss experience records, safety records, repair costs, and injury claims to determine how much to charge for the following:

  • Bodily Injury
  • Property Damage
  • Comprehensive
  • Collision
  • Medical Payments

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

Verify Your Record Before You Get Quotes

Tickets and accidents won’t stay on your record forever. When you’re getting quotes, you have to give the agent an idea of when your infractions occurred. If you disclose a ticket and put the wrong date, it could have more of an impact than it should on your premiums.

Be sure to order your Motor Vehicle Report to see what the exact dates were for accurate quotes.

Sometimes your quotes are just high because you’re soliciting them through the wrong carriers. If you want to find coverage that you can fit into your limited budget, be sure to do a thorough comparison.

Enter your personal details into our quoting tool and get instant premium estimates in minutes.

References:

  1. http://www.edmunds.com/auto-insurance/10-steps-to-buying-auto-insurance.html
  2. http://www.investopedia.com/terms/i/insurance-risk-class.asp
  3. https://www.casact.org/pubs/proceed/proceed81/81001.pdf
  4. http://www.naic.org/documents/consumer_alert_understanding_your_ins_policy.htm
  5. https://www.thebalance.com/what-type-of-driver-risk-are-you-527282
  6. http://www.investopedia.com/terms/p/preferred-auto-coverage.asp
  7. https://www.thebalance.com/what-is-a-high-risk-driver-527253
  8. https://www.thebalance.com/ways-to-improve-your-credit-score-1289631
  9. http://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  10. http://www.rmiia.org/auto/teens/Buying_Auto_Insurance.asp
  11. https://www.in.gov/bmv/files/Driver_Guide_for_Parents_and_Teens.pdf
  12. http://www.iihs.org/iihs/ratings
  13. http://www.dfs.ny.gov/consumer/auto/auto1210.htm
  14. https://www.dmv.ca.gov/portal/dmv/detail/online/dr