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: Sep 26, 2020

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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


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.

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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

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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


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

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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.


  1. https://www.edmunds.com/auto-insurance/10-steps-to-buying-auto-insurance.html
  2. https://www.investopedia.com/terms/i/insurance-risk-class.asp
  3. https://www.casact.org/pubs/proceed/proceed81/81001.pdf
  4. https://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. https://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. https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  10. https://www.rmiia.org/auto/teens/Buying_Auto_Insurance.asp
  11. https://www.in.gov/bmv/files/Driver_Guide_for_Parents_and_Teens.pdf
  12. https://www.iihs.org/iihs/ratings
  13. https://www.dfs.ny.gov/consumer/auto/auto1210.htm
  14. https://www.dmv.ca.gov/portal/dmv/detail/online/dr