10 Things That Affect Your Auto Insurance

Auto insurance can be confusing and frustrating, but it doesn’t have to be. Here are the 10 most important things you need to know about auto insurance, from liability coverage and SR-22s to underinsured/uninsured motorist coverage and filing an auto insurance claim. Plus, you’ll learn how to determine your car insurance rate based on your driving record, your state and how old you are when you get behind the wheel of your first vehicle!

1) Location

Where you live and work can affect your auto insurance. If you drive a lot or live in an area that is prone to crime, then it’s likely your premiums will be higher than someone who lives in a safer neighborhood. Where you live also factors into which type of car insurance policy you purchase. In some areas, an umbrella or personal liability policy may be necessary for liability protection. Those living on farms often buy different types of farm auto insurance policies.

2) Age

The older you are, generally speaking, the more expensive your insurance will be. But, once you hit a certain age, some companies will stop offering coverage all together. AARP and Esurance are two big auto insurers that no longer cover drivers after they turn 80 years old. This doesn’t mean they can’t; they just don’t want to anymore.

3) Driving Record

In order to qualify for reduced rates and discounts, your driving record must be in good standing. The fewer accidents you have, and points on your license, then, generally speaking, you will receive a lower rate on your auto insurance policy. If you are at fault in an accident that caused damages and injuries, those claims will appear on your driving record. This will affect your premium negatively by raising it for three years from the date of accident.

4) Car Maintenance

While auto insurance will vary based on numerous factors, it’s important to understand that some things can have a direct impact on your rates. For example, if you keep your car in poor condition, or let safety features like headlights and seatbelts fall into disrepair, your insurance could be impacted. Regularly servicing your vehicle is not only essential for keeping it running safely and efficiently; it’s also important for reducing costs in case of an accident or other situation that may call for auto repairs.

5) Deductibles

The amount you pay out of pocket before your insurance company starts picking up costs. If you have a $250 deductible, you’ll pay for all repairs until your total damage reaches $250, at which point your insurer will start chipping in. There are pros and cons to having a high or low deductible. If you decide on a higher one, you’ll save money on monthly premiums, but if an accident happens (knock on wood) it could end up costing more in total expenses.

6) Coverage Type

There are many different types of coverage available with most major auto insurance companies. Some of these include liability, comprehensive, collision, personal injury protection (PIP), medical payments coverage (Med Pay), uninsured and underinsured motorist coverage and comprehensive physical damage coverage with a deductible. The more you choose to purchase in coverage, generally speaking, will raise your premiums. It is always advisable to know what you want from your auto insurance policy and ensure that you are getting exactly what you pay for.

7) Claims History

If you’ve had a few claims on your auto insurance, that is likely to affect your premium. This doesn’t necessarily mean it will be astronomical, but it may cost more. The best way to avoid such a situation is to drive safely and carefully. If you do have a few claims, call up your provider and make sure they are aware of them. You might get lucky and not see any difference at all!

8) Gender

Gender is one of several factors that goes into determining car insurance rates. Overall, women tend to have better driving records than men and are less likely to file a claim. As a result, they typically pay less for auto insurance.

9) Lifestyle

Where you live and your lifestyle can affect how much you pay for car insurance. Generally, if you live in a rural area, drive less than 10,000 miles per year and have little to no accidents or tickets on your record, it’s likely that your auto insurance premiums will be low. For example, if you live in New York City or Boston—urban areas with high traffic—your premium is most likely higher because of heavy traffic.

10) Number of Vehicles

The number of vehicles you own plays a role in your auto insurance rates. If you’re insuring three cars, for example, and you have one infraction or accident in a car that was driven by someone else, it could affect your premiums for all three vehicles.


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