These 5 Things Dictate How Much Your Car Insurance Costs

By: Bridget Clerkin March 16, 2018
Find out more about the factors that determine your car insurance.
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Car insurance has never been a fun bill to pay—and it’s never been more expensive.

On average, rates are currently 20% higher nationwide than they were in 2011, with a 6% markup since last fall alone, according to a report recently released by Texas-based insurance website The Zebra.

All told, the upward creep has brought the average motorist’s bill to a whopping $1,427 annually, and with no report of a single price decrease in the past seven years, the trend shows no sign of slowing.

Still, depending on where you live, that incline may be have been much more gentle—or severe—with some states seeing prices spike by 60% over that time period, while others marked a 1% raise.

But even within those regions, what individuals pay varies widely. There are currently more than 650 insurance companies operating in the country, using more than 43,500 variables to determine the total due from their customers, creating literally millions of different possible sums.

In an attempt to boil that monumental number down to the most probable outcomes, Zebra analyzed more than 50 million insurance rates from across the entire country. And what they found was a number of recurring themes playing outsized roles in determining how much a customer pays.

Below, the top five factors the survey uncovered, and how they may impact your auto insurance bill.

Where You Live

Despite its bad weather, New England has some of the country's lowest car insurance rates.

Location, location, location.

Where a customer lives plays a big role in his or her auto insurance rate for a number of reasons, from the size and density of the population there to the weather patterns affecting the area.

Strangely, snow-bound New England achieved the country’s lowest average coverage cost by region last year, with residents in Maine, New Hampshire, Vermont, Massachusetts, Connecticut, and Rhode Island paying an average of $1,186 last year. The “far west” region—including California, Nevada, Oregon, Washington State, Alaska, and Hawaii—ranked as the most expensive, at an average rate of $1,516.

Of course, car insurance policy is also dictated on a state-by-state basis, so varying laws across the land are also a huge factor in determining price. North Carolina won the battle of the bargain, at an average of $865 last year, while Michiganders were asked to pay the most—$2,610.

(Still, those numbers could be drilled down even further, to determine the most expensive cities for car insurance nationwide.)

What You Drive

The Mercedes-Benz E-Class CLS is the most expensive vehicle to insure, according to online insurance site The Zebra.

The type of vehicle you choose doesn’t just make a statement about your personal taste—it could also be an indicator of how much money shows up on your personal bank statement after paying off your car insurance bill.

Of the country’s top 10 most popular cars, the Toyota Corolla was the most expensive to insure, with an average annual cost of $1,641—although the Honda Civic and Toyota Camry weren’t far behind, demanding yearly payments of $1,632 and $1,615 respectively.

Still, those totals pale in comparison to the country’s most expensive car to insure overall: that honor goes to the Mercedes-Benz E-Class CLS, for which drivers must cough up an astounding $3,541 per year to cover.

Those who don’t have quite that much money to spend may consider a Jeep—five of the company’s models turned up in the top 10 least expensive to insure, including the Wrangler, Renegade, Patriot, Compass, and Cherokee. Yet the two least expensive models of all were both Hondas, with the CR-V costing an average of $1,317 and the Odyssey coming in close second at $1,333.

Note that once the amount of technology a car is utilizing is factored in, the calculations take on an entirely different dynamic.

What You’ve Done

Everyone knows tickets can spike your insurance rates up, but certain tickets—like reckless speeding and leaving the scene of an accident—can send them skyrocketing.

If insurance exists to cover costs incurred from an accident, it’s only natural for companies to consider how likely it is for a policyholder to cause one. One of the main tools they use to do so is your driving history—both past and present.

Previous involvement in an accident will cause rates to rise sharply, depending on the severity of the incident and how much damage was sustained. A not-at-fault accident typically leading to a 7% rate increase, while a hit-and-run pushes that surge up to 85%—or $1,218 per year, on average. (In some states, hit-and-runs could skyrocket rates by up to 405%.)

Speeding tickets also hasten the pace at which a driver will be throwing money at their auto insurance bill, with increases rising in tandem with how much faster he or she went above the limit. One of the lowest infractions—driving between 6-10 miles per hour over the posted limit—also warrants the lowest increase, at 20%, while speeding in a 65 MPH zone could bump up the annual cost by 28%.

Still, nearly every instance that results in a violation will also result in a higher car insurance bill. Perhaps not surprisingly, the top offenses are signs of truly reckless behavior, including DUI, racing, and leaving the accident scene, but insurance companies have also recently cracked down on a new plague of the roadway: distracted driving.

While the average cost for a distracted driving ticket is a 16% increase in a car insurance bill, that amount is 40 times higher than it was just two years ago.

What You’ve Paid For

Auto insurance is mandatory in nearly every state and territory in America, so many companies may be interested in how well a potential customer handles their finances.

A poor credit rating could lead to customer paying twice as much for car insurance.

While credit score is not a factor considered in every state, it could make a huge impact in those that do: A poor credit rating could lead to a customer paying twice as much for car insurance, compared to those who have been rated "exceptional." The jump from the low- to the high-end represents an average difference of more than $1,400 per year.

Still, incremental progress is rewarded, with drivers angling to save up to 17% annually for each credit tier improvement they make. The concept may be tied to the fact that drivers with lower credit scores are more likely to make a claim than those with higher ratings.

Who You Are

Filling out an auto insurance application may almost feel like signing up for a dating site: the companies ask for tons of personal information—and most of those factors are used to help determine how risky he or she will be to insure.

Experience goes a long way in the calculation, with those who are younger costing much more to cover than older drivers. Teens routinely rank as the most expensive clients, and 16-year-olds specifically are the priciest to insure, costing an average of $6,473 annually. (Overall, those in their 50s have the cheapest rates.)

Marital status also plays a role, as legally-bound couples have been found not to file claims as frequently. Tying the knot alone could save someone an average of $80 per year on their insurance bill.

Homeowner status also comes into play, with renters paying slightly more, on average, than those who have purchased their house or condo.

And occupation and education are also determinants. Members of the military, on average, get the lowest rates—typically charged about $1,370 annually—while those who are unemployed fare far worse, with average car insurance bills hovering around $1,430.

A similar gulf occurs between the most and least educated, with Ph.D. holders typically paying $44 less per year than those with no high school diploma.

Car insurance rates may be difficult to predict, but it seems there’s at least one client who can bet on a good deal: a 50-something, Ph.D.-holding, married homeowner in the military. (And at that point, they deserve the break!)

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