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Auto insurance companies use a long list of risk factors to calculate your insurance rate. They include things like how long you've been driving, your driving record including any tickets or accidents, where you live, the type of car you drive and, in most states, even your credit history.

How much each factor affects rates depends on the company; each company determines what weight it gives to each factor. That said, you can be sure that a DUI will impact rates more than whether or not your car has a sunroof.

Key takeaways

  • Auto insurance providers use multiple risk factors to calculate your premium.
  • The main risk factors are: age, gender, driving experience, driving record, marital status, geographical location, credit history and annual mileage.
  • Some states limit which rating factors insurers can use, including credit and gender.

What are the risk factors used to calculate car insurance rates?

The most common factors that are used to decide how much you pay for car insurance are:

  • Age
  • Gender
  • Years of driving experience
  • Driving record
  • Marital status
  • Geographical location
  • Credit history
  • Geographical location
  • Annual mileage
  • Vehicle type
  • Vehicle use
  • Coverage types and limits
  • Previous insurance

Some states don't allow the use of non-driving related factors for car insurance rates, including gender, credit history and age (although years of driving experience can still be considered). Rules vary by state; California, Hawaii and Massachusetts, for example, don’t allow insurance companies to use your credit information. Hawaii doesn’t allow driver age as a rating factor.

Why you need to compare car insurance companies

And not every factor has equal weight. Your ZIP code probably has more impact on your rates than, say, your gender.

In addition, not every insurance company will use every allowable rating factor, and each will weigh the ones it does use differently. That’s why the rates you see for the same driver might vary by hundreds or even thousands of dollars.

Some of the risk factors are under your control while others are not.You can’t control your age or gender.  But, to some extent, you can control the following items, for better or worse:

  • Driving record. Drive safely and do your best to avoid tickets and accidents.
  • Location. An area with lower crime and fewer claims will get you lower rates. It's not a reason to move, but if you are looking to move, it's worth considering.
  • Marital status. Again, not a reason to get married, but married people do see lower rates.
  • Credit history. Keep a good credit history to see lower rates.
  • Vehicle. When you're car shopping, compare insurance quotes too so you know how much each option will cost to insure.
  • Type of use. Driving less means lower rates; if you can work at home or use public transportation, you may qualify for a low mileage discount.
  • Coverage types, limits and deductibles. The coverage you choose will affect your rates, but rather than lowering limits, consider a higher deductible.
  • Previous insurance. Avoid a lapse in coverage to keep your rates low.

Your car insurance rates change over time

Rates change over time for a variety of reasons, including age, changes in your credit history and general rate changes caused by inflation or accident statistics.

When your car insurance renewal arrives is the best time to review your rates and coverage and to compare car insurance quotes from other companies to see if you can get a better deal. It's not quick or easy to change any of your rate factors, but shopping around can be done any time and is the best way to get cheaper car insurance.

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