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What Goes Into Car Insurance Rate Decisions?

Most of us currently face rising car insurance rates, but we do not understand the circumstances that surround those increases. There are several factors that affect average car insurance rates. The best way to receive a low auto insurance premium is to be a responsible driver who presents little financial risk to the insurer. Here are ways that auto insurance companies assess your potential risk.

Driving History

Your driving history is the single biggest factor that determines you car insurance rate. If you have been involved in many accidents, your insurance rate will increase.

Or, if you were the recipient of several traffic tickets, your car insurance rate will be higher than drivers who have good driving records.

Higher premiums are established for high risk drivers. To get the best car insurance rates, individuals must show that they are responsible while driving. People who drive irresponsibly and pose a large financial risk for the insurer may even have their car insurance policy cancelled.

Your Car

Your car is another important part of the puzzle. If you drive an expensive car, such as a fancy sports car or large Sports Utility Vehicle, your premium will be more expensive than that of someone driving a modest sedan. Expensive cars have costly parts, and if damaged, cost more to fix. Insurers protect themselves from these expenses by increasing car insurance premiums for drivers with expensive vehicles.

A car’s safety features also impacts car insurance rates. Vehicles with such features as airbags and Anti-Lock brakes generally have lower auto insurance premiums. The more safety features, the less likely the driver or passenger will be injured in an accident. Additionally, if your car has an alarm, it is less likely to be stolen or vandalized.

Credit History

Like your driving history, your credit history also affects your car insurance rate. Auto insurers run your credit report to determine if you are in good financial standing. If you pay your bills on time and do not have too much debt, your credit history should be in good shape. This proves to the insurer that you are a good risk for them, because you are responsible with your finances.

Age and Driving Experience

Younger drivers generally have higher car insurance rates. because they pose more risk behind the wheel. Their lack of driving experience does not always lead to wise choices

Regardless of age, however, you can find the best car insurance rates by comparison shopping large companies and asking each insurer about possible discounts.


If you live in a highly populated, urban area, you are a higher risk to an insurance company. Urban areas are known to have more traffic and pose a higher risk of traffic accidents than rural areas. Insurers charge more for premiums in populated areas. Also, urban areas also have more incidents of car theft and vandalism than rural areas.