How Car Insurance Companies Determine Insurance Rates

Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
Car insurance companies focus on repair costs, how likely a car is to be stolen, and, primarily, on the make of the car when setting premiums.
In addition to the car itself, there are other factors that will influence your rates, such as your driving history, age, location, and credit score.
Jerry’s compiled everything you need to know about the factors influencing car insurance rates below.
RECOMMENDED
Compare auto insurance policies
No spam or unwanted phone calls · No long forms · No fees, ever

How the make and model of your car affects insurance rates

The make and model of your vehicle is one of the biggest factors that influences your car insurance rates. Certain vehicles have more safety features, which makes them less expensive to insure. Other vehicles are made of expensive materials, which makes them more expensive to insure.
Even the type of vehicle can affect your rates, as some vehicles are bigger than others and could cause more damage. A van vs an SUV will have different insurance rates based on their size alone and how likely they are to get in an accident.

Owning a “most stolen” car

When setting insurance rates, insurers also consider how attractive your car is to thieves and it’s odds of being stolen.
Every year, certain cars end up in the hands of thieves, leading to higher insurance rates for those particular makes and models. The top states for stolen cars are Washington D.C., the state of Washington, and California. The rates for insurance policies in these states reflect that data.
Some makes and models of cars are also more likely to be stolen than others. The Honda Accord, the Honda Civic, and the Ford F-Series full-size pickup top the list.

How safety ratings affect insurance premiums

Car safety is another huge factor in the calculation of insurance rates, with cars that have lower safety ratings costing more to insure.
On the flip side, cars with a high safety rating can save insurers on property and personal injury costs, garnering cheaper rates.

How coverage options affect insurance rates

Your personal policy is going to be the biggest factor affecting your car insurance rates. If you decide to only use the minimum insurance required in your state, you won’t have to pay as much. However, you also won’t have many protections.
If you decide to add more coverage, such as comprehensive coverage or collision coverage, you will see higher rates. If you can afford it, this is a better deal, as you’ll be covered in more situations than the minimum liability coverage.

How your driving record affects insurance rates

Your driving record has a huge impact on your car insurance premiums.
Insurers assessing your record may deem you likelier than other drivers to get into an accident or cause traffic violations. If you’re deemed a risky driver, your premiums will rise. This can happen if you’ve had recent traffic violations or at-fault accidents.

How your location affects insurance rates

Your zip code is another factor affecting your insurance rates. If your area is historically known for having more car accidents, you’ll have a higher insurance premium.
Additionally, your parking location affects rates . If you park in a garage, your car is safer, so your insurance will be lower than if your car is parked outside.

How your credit score affects insurance rates

People with bad credit scores will have higher insurance than people with good credit scores.
Insurance companies believe that people with poor credit scores are more likely to file a claim. Because of this, they can charge higher premiums. However, some states have outlawed this practice. California, Hawaii, and Massachusetts have all made it illegal for car insurance companies to charge you higher rates based on your credit score.

How age affects insurance rates

If you’re a young driver, your age will be the biggest personal factor affecting your insurance rates.
It’s just a fact that younger drivers are less experienced on the road than older drivers. Younger drivers are more likely to be in an accident, so they’re more likely to file a claim. To offset this increased risk, car insurance companies charge higher rates for young drivers.

Get coverage with Jerry

If you’re worried that your rates are going to be high based on the factors above, give Jerry a try.
A licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even help you cancel your old policy.
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price. This level of service is why Jerry earned a 4.6/5 rating on the App Store and made it the top insurance app in the country.
RECOMMENDED
Haven’t shopped for insurance in the last six months? There might be hundreds $$$ in savings waiting for you.
avatar
Judith switched to Progressive
icon savingsSaved $725 annually
avatar
Alexander switched to Travelers
icon savingsSaved $834 annually
avatar
Annie switched to Nationwide
icon savingsSaved $668 annually

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free