Age
As people mature, they tend to make smarter choices, including when it comes to driving. As a result, insurance companies see younger drivers as higher risks for coverage. Young drivers have less experience behind the wheel and are more likely to get into accidents, which would cost the insurance companies more money to cover. The average age rates start to drop is 25, which is often the age at which car rental companies also lower rates. However, this age concern comes back into play for senior drivers. Drivers over the age of 65 may see higher rates because they are more likely to get into accidents and incur injuries during a collision.
Driving history
When you apply for car insurance, one of the factors the company will consider is your driving history. If you have a record of getting speeding tickets or other infractions that would be deemed reckless, an insurance company will see you as high-risk. Because the company sees you as a potential increased cost, your rates will likely be affected by your previous history. Some companies only look back a few years, so if you got a speeding ticket at 16 and you are now 35, that will probably not have as much of an effect on your premium — as long as you don’t have any other infractions on your record. To help customers and the insurance company save money, many auto insurance companies have special programs for safe drivers that result in various discounts. By incentivizing safer driving habits with lower rates, insurance companies are also saving money due to covering fewer accidents.
Location
Where you live plays a big part in your auto insurance rate. Some states require certain levels of protection, which could increase your overall premium. For example, Michigan is considered a “no-fault” state and requires all drivers to have unlimited Personal Injury Protection (PIP) coverage by law. PIP insurance covers things like medical bills, surgical fees, lost wages, and more. Requiring this coverage is intended to limit the likelihood of lawsuits after a collision. Outside of state requirements, car insurance companies use zip code data to predict whether you are more likely to get into a collision or experience theft based on where you live. Because of this, rural areas with less property crime and less congested roads typically have lower auto insurance rates than large cities.
Vehicle type
The kind of car you drive can also play a role in how much you pay for insurance coverage. SUVs, sedans, and minivans are often cheaper to insure than trucks and sports cars, due to their common usage. Someone in a sports car is more likely to drive fast, while a truck driver is likely to take the vehicle off-road or into other more hazardous conditions. Additionally, if your vehicle has certain standard safety systems included, this could help lower your rates. Many auto insurance companies see features like blind-spot detection, collision warning, adaptive cruise control, and adaptive headlights as added benefits that will lower the likelihood of a collision, meaning they won’t spend as much money covering the customer.
Of course, the amount of coverage you decide on will also change how much you pay each month for auto insurance. The best way to find what works best for you is to shop around, check for discounts, and drive safely.