20 Factors That May Affect Your Car Insurance Rates and Cost

Car Insurance Costs are the amount you pay to an insurance company to offer you that insurance. In 2024, those insurance rates are higher than ever. In this article we examine the top 20 factors that may affect your car insurance cost - so you can be aware of what you can do to try and save yourself money on car insurance in 2024.

Car insurance rates also offer profit to the insurance company. The car insurance rates are a cost drivers must bear to own a premium. The factors that influence car insurance rates and costs are many. Age, coverage level, and car driver’s history are the top cost factors determining your insurance rate. Over time, some other factors will cause an increase or decrease in your insurance cost. Accidents, change of location, and including a family member in an auto insurance policy will increase the price of your car insurance. Coverage level reduction, bundled policies, deductible increase, and a better credit score will reduce car insurance costs. Other car insurance factors influencing insurance rates exist.

Here are the top 20 factors affecting car insurance rates and costs:

• Age of vehicle driver
• Gender of auto driver
• History of car driver
• Vehicle model and production year
• Marital status of a driver
• Yearly mileage of the vehicle
• Credit history and score of driver
• Requirements and regulations for car insurance
• High-risk driving violations
• Insurance history
• Car insurance claims history
• Coverage level of auto insurance
• Vehicle ownership type (Leased, owned, or financed)
• Insurance company policies
• Car insurance discount options
• Zip code
• Deductible amount
• Education of driver
• Occupation of driver
• Homeownership of the driver

1. Age of vehicle driver

Insurance companies consider a driver's age a yardstick to measure experience and accident exposure. Hence, there’s a massive gap in vehicle insurance costs between teenagers and adults. For example, teenagers pay the most expensive insurance premiums, while drivers above 50 years old pay the lowest insurance fees.

Insurers believe younger vehicle drivers are more reckless and prone to accidents. This is why teenagers pay up to three times more expensive quotes than drivers in their mid-30s and close to four times more than drivers in their mid-50s. However, as young drivers gain experience and reach age 25 and upwards, their insurance costs drop considerably by 33%.

2. Gender of auto driver

The gender of an auto driver plays a significant role in car insurance rates. However, the difference in car insurance costs is relevant mainly to young and single drivers. For example, men pay £121 more than women to insure their car, causing a 26% difference. Insurance companies believe young male drivers carry the highest risks of vehicle damage, accidents, etc. Consequently, young male adults pay higher vehicle insurance costs than young females.

3. History of car driver

History of car drivers gives insurers insights into a motorist’s experience and driving habits. With the history of the car driver, insurance companies can predict a driver’s future activities to determine insurance costs.

For example, tickets, sanctions, and violation history attract higher insurance fees. Also, a driver with a decent driving history may pay less for a premium. Primarily, car drivers' history is critical to determining future accidents, rates, damage, and safety, enabling insurers to determine applicable insurance rates to charge.

4. Vehicle model and production year

The vehicle model and production year are considered when Insurance companies give you a rate. Engine size, theft rates, vehicle cost, size, and type are factors insurers consider when allocating insurance rates based on vehicle model and production year.

For instance, vehicles with big engines often have higher speeds than smaller engines. Since drivers driving at higher speeds are more prone to accidents, insurance companies may charge more for cars with greater horsepower. In addition, expensive cars are costlier to repair and replace. Therefore, drivers with expensive vehicles pay more for insurance.

5. Marital status of a driver

The marital status of a driver determines how much they will pay for insurance. Married drivers are considered financially stable and likely to drive more safely than single drivers. As a result, they are charged less. For example, a married driver pays about $149 less per year than a single, divorced or widowed motorist. Therefore, insurance companies review the marital status of a driver to determine who pays more for safety based on their driving practices.

Insurers consider historical data and statistics to determine vehicle insurance rates. For example, data states that married drivers file fewer claims than single or divorced motorists. Studies show married female drivers around 30 years pay about £200 less than single women around the same age.

6. Yearly mileage of the vehicle

The yearly mileage of a vehicle determines vehicle insurance costs. Statistically, drivers who spend more time on the road are more prone to accidents. Therefore, cars with higher annual mileage attract increased insurance costs.

Also, low yearly mileage of vehicles lowers drivers' insurance premiums because driving fewer hours on the road reduces accident likelihood.

7. Credit history and score of driver

Drivers’ credit history and score contribute to the difference in insurance rates between drivers. Data shows drivers with poor credit file more claims than drivers with good credit. Also, these claims are more expensive than those of drivers with good credit. As a result, insurers tend to charge drivers with poor credit higher insurance rates than motorists with better credit scores.

8. Requirements and regulations for car insurance

The average cost of comprehensive car insurance in the UK is about £419 a year. Car insurance is mandatory in the UK. The only exception is when a vehicle is not on publicly owned land and is not being used. Driver’s age, occupation, address, and details of past claims are some requirements for acquiring auto insurance in the UK.

High-performance vehicles require drivers to provide additional details about their driving experience, past vehicles, and more. In addition, motorists are required to provide the car's intended use. The three intentions of use are:

• Social Domestic and Pleasure
• Social Domestic and Pleasure with Commuting to work
• Social Domestic and Pleasure with Commuting to work and Business Use

9. High-risk driving violations

Drivers with high-risk violations are motorists with poor driving records who tend to file more insurance claims than other drivers. Insurers check drivers’ records to confirm if they have high-risk driving violations. Insurance companies identify drivers with high-risk driving violations based on their DUI ( Driving Under the Influence) convictions, at-fault car accidents, and traffic violations.

Motorists with high-risk driving violations pay more expensive car insurance fees. They are considered to have higher liabilities, make late payments, or miss them altogether. Poor credit history, lapses in insurance coverage, and filing multiple claims in recent years are factors that identify drivers with high-risk driving violations.

Generally, teenage drivers are considered high-risk. In addition, drivers with high-risk driving violations pay higher premiums than motorists with low-risk driving violations. In addition, drivers with multiple accidents on their records pay more for insurance. Also, every speeding ticket a driver receives increases their insurance premiums. Insurance history

10. Insurance history

states how often drivers have been involved in a collision or made a claim. Insurance companies consider how long ago you made a claim when calculating your insurance premium fees. A driver's insurance history determines if or how often they will make a claim. Consequently, insurance companies review drivers' insurance histories to determine their insurance fees.

11. Car insurance claims history

Car insurance claim history states how frequently a driver makes claims. Insurance companies use this information to determine drivers’ insurance costs. Statistically, drivers with an increased history of insurance claims are likely to make insurance claims in the future. Therefore, insurers consider car insurance claim history to see if your insurance claims will increase over time and how much.

Drivers who have made an insurance claim against their insurance policy based on an accident that is their fault pay increased car insurance premiums. However, the increase varies from one insurer to the other.

12. Coverage level of auto insurance

The coverage level of auto insurance determines the number of insurance fees drivers will pay. The more coverage a vehicle carries, the more expensive the insurance rates. There are three levels of auto insurance coverage: Fully comprehensive, Third party, Third party, fire, and theft.

Generally, the difference between the lowest coverage level of car insurance and the highest is about $1000 monthly. Vehicles with a high coverage level of auto insurance make insurers pay more when there’s a claim. As a result, insurance companies charge vehicle owners with high coverage levels more for insurance.

13. Vehicle ownership type (Leased, owned, or Financed)

Auto insurance for drivers with financed vehicles requires them to maintain a minimal amount of car insurance. This may include liability coverage only, covering bodily injury or property damage drivers cause to other people in an accident. In addition, financed drivers may need additional insurance coverage to protect their lenders’ investments.

Leased car insurance is often stricter than insurance for financed cars. For example, drivers with leased vehicles must include comprehensive and collision insurance in their policies.

Finally, leasing or owning a vehicle does not significantly influence auto insurance rates. However, drivers must follow the state’s minimum requirements and their insurance company’s policies.

14. Insurance company policies

Insurance company policies differ; therefore, there are no fixed rates. Instead, insurers charge based on internal regulations, concerns, and other factors about the driver and vehicle type. Since insurance company policies largely influence insurance costs, a driver may pay expensive or affordable insurance premiums solely because their current insurance company is costly.

Insurance company policies also influence the factors considered when allocating insurance costs. For example, while an insurer may prioritise vehicle ownership type when determining insurance rates, others may put insurance claim history first.

Most standard car insurance policies are annual, but you can get short term car insurance as well, which can even be as short a time period as temporary car insurance for 1 hour.

15. Car insurance discount options

Car insurance discount options are based on the driver's location and insurance institution. Drivers with clean driving records often qualify for car insurance discount options. Good driver discounts, low mileage discounts, and anti-theft device discounts are examples of car insurance discount options.

16. Zip code

Insurers consider location when allocating insurance premiums. Insurance companies review zip codes to identify weather claims, accidents, and car theft events in drivers’ locations. For example, vehicle owners living in metropolitan areas pay more insurance premiums than those who live in suburban areas based on increased incidents of thefts and car accidents in urban areas. Other location-related factors insurers consider are car repair costs, medical care expenses, and vehicle accident lawsuits.

17. Deductible amount

A deductible amount is what drivers pay out of pocket on a claim before the insurance company handles the rest of the payment. For example, collision, comprehensive, and personal injury protection coverages have car insurance deductibles. Increasing or reducing car deductibles significantly impacts drivers’ insurance premiums. The higher the deductible a driver accepts, the lower the fees will be.

However, motorists with lower deductibles pay higher insurance fees. However, other factors may affect insurance premiums despite a high deductible amount. For example, purchasing a more expensive vehicle leads to a higher premium regardless of a high deductible amount.

18. Education of driver

Insurers consider the education of drivers when issuing insurance rates. Studies show that drivers with advanced education levels are less likely to issue claims than drivers without advanced degrees. Consequently, twelfth-grade drivers pay more insurance premiums than motorists with higher degrees.

For example, studies show drivers can save between $300 to $600 on insurance costs by acquiring post-secondary education. Conversely, a high school dropout may earn about $300 more annually for car insurance than someone with high school insurance rates.

19. Occupation of driver

Insurers review the occupation of drivers to reduce or increase insurance rates. Drivers with low-risk occupations enjoy low insurance discounts, while motorists with high-risk occupations may not obtain insurance discounts depending on the insurance company policy. Insurers consider the occupation of drivers when allocating insurance rates because drivers' jobs determine their exposure to risks.

For example, Uber drivers are prone to more risks because they spend more time on the road. Since this occupation is considered high-risk, the professional driver may likely pay higher insurance premiums.

However, occupations of low-risk drivers, like medical assistants, may enjoy occupation discounts and low coverage rates. On the other hand, DJs, bartenders, and waitpersons are high-risk jobs because they work late into the night. However, teachers and federal government officials are often considered low-risk jobs and may qualify for discounts and low occupation premiums.

20. Homeownership of the driver

Auto insurance is strictly based on motorists driving records and other factors relating to drivers’ activities. However, home ownership of drivers can influence auto insurance rates if it’s the same company handling both services.

Auto insurance companies offer discounts and other incentives to their customers. In addition, auto insurance companies may consider homeownership of drivers and provide insurance premiums at discounted rates. Insurers consider homeowners more stable drivers, so they are likely to enjoy lower insurance premiums than drivers, depending on the insurance company’s policy.

How to calculate the insurance rate for a car?

The best way to calculate the insurance rate for a car is to identify the coverage you need and then use a car insurance calculator. To identify the coverage you need, consider your budget, the car’s value, and the protection you need. Broadly speaking, young adults pay the most for car insurance. A young adult can expect to pay £1000 for comprehensive car insurance. On average, car insurance for individuals is £471 per year, with older citizens with extensive experience and a good history paying below £300.

When calculating how much your car insurance premium will cost, your insurance provider considers many things, most importantly your age, coverage level, car driver’s history, location, and car's make and model.

What determines the price of an auto insurance policy?

The price of an auto insurance policy is determined by the cost of the car, driving record, mileage, location, and other factors like age and gender. An auto insurance policy is a contract between a driver and the insurance company safeguarding the driver against financial loss in theft or accidents. Here are the top factors that affect the price of an auto insurance policy:

• Type of car: The type of vehicle a driver owns determines the price of an auto insurance policy. Some cars are costlier to maintain and repair. This type of car often attracts higher premium rates. Conversely, less affordable cars may attract fewer insurance costs.
• Location: Vehicle location determines insurance rates. For example, densely populated areas have higher accident rates, thefts, vandalism, etc.
• Driver activities: Driving record, sex, age, and credit history determine the price of an auto insurance company. Drivers with clean driving records pay fewer insurance fees than those with driving violations. In addition, younger drivers are likely to pay more for insurance fees because they are considered inexperienced. So, they are predicted to get into more crashes than older, experienced drivers. As a result, they pay more for insurance fees.
• Coverage: The amount of vehicle coverage determines the price of an auto insurance policy. While some coverage, like liability, is compulsory in some states, collision, comprehensive, and deductibles are optional for drivers.

What are the 3 main factors for a car insurance policy?

The three main factors for the car insurance policy are age, Coverage level, limits and deductibles, and driver’s history.

• Age: Reports show older drivers are safer and less involved in accidents. However, younger drivers are considered reckless and prone to accidents and other risks. Due to the increased risks, younger drivers are charged more for insurance rates than older motorists. Age is among the three main factors for a car insurance policy because insurers use age as a yardstick to measure a driver’s experience and risk exposure.
• Coverage level, limits, and deductibles: Selected coverage influences insurance rates. For example, a typical auto insurance policy covers collision, personal injury protection, etc. However, a driver may include additional coverages like labour costs and rental reimbursement, increasing insurance policy. In addition, every coverage has a limit, and motorists can pay for coverage based on their needs. Finally, increasing their deductible means paying less for auto insurance.
• Driver’s history: Driver’s history is a top factor for car insurance because insurance companies use a person's driving record to predict the type of claim they may make. In addition, drivers’ records indicate future driver activities. For example, drivers with previous driving violations are likely to violate more regulations in the future. As a result, motorists with fewer traffic sanctions pay less insurance than motorists with more violations.

How to rate a driver for car insurance price?

The three main ways to rate a driver for car insurance price are years of driving experience, insurance company, and annual mileage.

• Years of driving experience: Insurance companies consider a driver’s experience level to predict future risks. For instance, the more experienced drivers are, the less likely they are to violate regulations or experience accidents. Consequently, drivers with longer years of driving experience pay less for premiums. However, new drivers are more prone to accidents, claims, and violations. Therefore, drivers who fall into this category pay a higher premium than experienced motorists.
• Claims history: Claims history is a common yardstick for drivers to measure car insurance prices. It gives insurers insights into drivers’ past behaviour and what can be expected in the future. Hence, insurance companies look into drivers’ claim histories to determine the most appropriate fees. Typically, a driver’s insurance claim may increase if they’ve filed an insurance claim or a claim has been filed against them.
• Annual mileage: Insurers consider a review of a vehicle’s annual mileage a necessity when rating a driver for a car insurance price. Primarily, drivers who stay longer on the road are charged a higher premium rate. Additionally, drivers who cover fewer miles annually pay lower insurance fees. Annual mileage is a top priority for insurance companies because the more time a vehicle spends on the road, the higher the risk of accidents or theft, and vice versa. Therefore, insurance companies prioritise annual mileage to increase or reduce drivers’ insurance costs.

What raises and decreases the price of car insurance?

Accidents, change of location, and including a family member in an auto insurance policy will increase the price of your car insurance. Coverage level reduction, bundled policies, deductible increase, and a better credit score will reduce insurance costs. Additionally, these factors may vary from one insurance company to the other. For example, the Big American Family, a famous American auto insurance company, offers decent rates and discounts to drivers based on different factors. Other insurance companies also provide rates and incentives and increase costs based on specific conditions. Here are the most common conditions that raise the price of car insurance:

• Accidents or ticket issuance: Drivers who have had or issued tickets are considered high-risk. High-risk drivers are mostly charged more for insurance fees. So, accidents and ticket records increase insurance premiums.
• Location: High-risk locations increase insurance costs. Therefore, drivers are likely to be charged more for insurance if they live in an area where thefts, accidents, and other risky activities occur.
• New family member: Including a new family member in an insurance policy increases the price of car insurance. New addition attracts more risks. Therefore, a driver is required to pay more on premiums. However, the precise increase is based on the age of the new family member.

Here are factors that decrease the price of car insurance:

• Coverage level reduction: Decreasing coverage level saves insurance costs. However, it means lower coverage for drivers during accidents, theft, or damages.
• Bundled policy: Bundled policy decreases the price of insurance when drivers work with specific insurers. For example, some auto insurance companies offer discounts for drivers who purchase multiple insurances from them.
• Deductible increase: Increasing deductible decreases insurance costs. However, drivers must set aside enough funds for deductibles.
• Good credit score: An excellent credit score is a crucial factor influencing a decrease in insurance rates. A favourable credit score signifies safe driving habits, attracting low insurance premiums.

What does not affect car insurance costs?

Race, religion, and other activities like having a dog in the car while driving do not affect car insurance rates. But, first, using race and religion to determine car insurance rates is considered discriminatory and illegal.

Therefore, although insurance companies can access drivers’ data, they can’t consider race and religion when allocating insurance premiums for drivers. In addition, having a dog inside the car does not affect insurance fees.

However, driving with an unrestrained pet can influence insurance fees if the pet causes an accident or damages or puts lives and properties at risk. So, it’s crucial to consider safety when driving with a pet.

What are the myths about car insurance price factors?

The myths about car insurance price factors are many. Here are some of them:

• New cars are more expensive to insure: How new a car is doesn’t affect car insurance prices. Instead, it has some safety attributes that may result in low insurance car rates. Since its features are in the best condition, there’s likely to be reduced accident rates or a need for repair. However, newer cars are more expensive to fix or replace. They also require comprehension and collision coverage than older cars, leading to higher premium rates. Therefore, although the age of the vehicle influences car insurance prices, insuring new cars could raise or reduce car insurance premiums. Thus, the misunderstanding lies where it is solely believed new vehicles are more expensive to insure.
• All car insurance companies have the same policy: Another myth about car insurance cost factors is that all car insurance companies are the same. Although many insurance companies offer the same coverage, they consider different factors when determining car insurance prices. Moreover, discounts and incentives differ. In addition, some companies provide unique saving benefits while others don’t. Also, financial strength and customer services vary.
• Minimum coverage is the only requirement: Minimum coverage as the only requirement for auto insurance is a popular myth among car insurance price factors. Although minimum coverage is required to comply with state laws, drivers need more for other unexpected events. Therefore, obtaining full coverage and expanding coverage limits give motorists optimal protection.
• Not-at-fault accidents don’t affect rates: Ideally, not-at-fault accidents shouldn’t affect car insurance prices. However, whether the driver is responsible for the accident or not, reporting an accident to the insurance company can increase premium fees. Therefore, the assumption that not-at-fault accidents won’t affect premium payments is a misunderstanding.

What companies have the best car insurance rate?

Direct line, Admiral, and Aviva have the best car insurance rate in the UK. However, Direct Line is one of the best car insurance companies with the best car insurance rate.

• Direct Line: Direct line is a top car insurance company offering excellent customer service, discounts, and comprehensive policies in the UK. In addition, it offers drivers various options to protect their cars, businesses, homes, etc. Fair claim commitment and guaranteed hire car are some of the unique perks of its high-quality insurance policy.
• Admiral: Admiral car insurance policies are comprehensive, third-party only, and third-party fire and theft. Its comprehensive plan covers theft, third-party, vehicle repair, and replacement. Windscreen coverage and a courtesy car are some of the perks Admiral offers. It is rated among the best insurance companies in the UK for its range of coverage policy options.
• Aviva: Aviva offers a 10% discount for users. Although the discount does not cover optional additions, drivers can insure up to five vehicles registered at the same address under one policy. Third-party, fire, and theft insurance are some of the levels of car insurance coverage Aviva offers. Generally, its comprehensive insurance policy covers liability, uninsured drivers, motor injury, liability, no claim discount, etc. These unique coverage offerings are why Aviva is among the best car insurance companies in the UK.