Many Factors Drive Up Insurance Rates

But there are things you can do to save money

If you want to know why your car insurance rates are so darn high, one thing you can do is look in the mirror. Your driving record has something to do with what you pay, but before your bill is toted up several factors end up affecting your insurance rates. Some of them are within your ability to control and some of them you aren’t, but they all roll up to making your insurance costs what they are. A recent study from insuranceQuotes shed a little more light on the subject and gives you some hints on what you can do to limit the money you deliver to the insurance company each month. First, don’t expect to like a lot of what you hear.

“Life isn’t fair, and neither are auto insurance rates,” said Laura Adams, senior insurance analyst at insuranceQuotes. “While some factors that influence what you pay are in your control, such as the vehicle you drive and your annual mileage, many are not.”

Some things you can’t control

In the “not in your control category,” at least for most of us, is the issue of gender. The insuranceQuotes study found that men typically pay more than women. The difference isn’t gigantic – men pay an average of $124 per month, while women pay an average of $119 per month. That adds up to an average of $60 more per year for male drivers than female drivers. Further, it enables women to claim that on average they are better drivers than men, since the rates are based on in large part on insurance company experience with each of the genders. The study provided no information on what those “in transition” pay for their car insurance.

The study did, however, provide ample evidence that another “not in your control” factor has a big impact on your car insurance rates. It’s your age. Younger drivers pay more than those who are older, and the difference is stark. A 20-year-old pays $213 on average per month, the highest average rate for any age group by a significant margin. Those who are 25 years old pay just $126, and then the differences begin to level out. According to the study a 30-year-old pays $116 and a 50-year-old pays $107. Even those who are well past middle age at 60 years old are seen by insurance companies as the best bets so they pay the lowest rate at $103 per month. A combination of less driving and less risk-taking are key reasons the 60 year olds do so well. In contrast, younger male drivers find their insurance particularly expensive.

You can control these factors

Happily, you are not purely the victim of circumstance when it comes to insurance costs. One thing single drivers can do to lower their rates is get married. Married drivers pay $9 less per month than do single drivers. As with age, marriage apparently mellows many drivers out, making them less risky to insure. Whether lowering your insurance rates is reason enough to get married, though, is up to you.

Another factor that is within your control is what you drive. Drivers of coupes and, surprisingly, drivers of hybrids pay more. Two-doors are typically thought of as sportier than other vehicle types, and they often are driven by young men, so that runs up their risk factors and results in higher insurance rates. Hybrids are expensive to insure for different reasons, largely centering around the fact that they can be expensive to repair. Anecdotal evidence might also suggest that hybrid drivers aren’t always the most attentive. In any case drivers of hybrids and coupes pay an average of $131 per month, while those driving conventional sedans pay $126 and those driving trucks pay $117. By vehicle type SUV drivers are the safety champs. They pay least of all on average—$103 a month.

Pay your bills

The final factor that you can control is your credit. Paying your bills suggests that you won’t pay as much for car insurance. A handful of states outlaw the use of credit score in determining your insurance rates, but in most areas of the country it is a big factor. Those with a poor credit history typically pay more than those drivers who have a good credit score.

“According to our recent surveys as person with poor credit versus a person with excellent credit will pay over 100 percent more,” Adams said. “Even if you have median credit, you’re going to pay 28% more than someone with excellent credit.”

But you can shop around for better rates – Adams recommends you do it at least once a year – and you can drive safely every day.

“No matter what, drivers do have control over their safe driving habits,” Adams told us. “Having a clean driving history with few claims helps keep your rate low.”

By Eric C. Nerad for Driving Today



About Tom Ripley 52 Articles
Born in Boston, Tom Ripley has been writing about the automotive industry and the human condition for more than a decade. He's a frequent traveller but nominally resides in Villeperce, France.