What Affects Car Insurance Rates?

Various elements factor into your car insurance costs. 

1. Types of Coverage: States have different minimum auto insurance coverage limits. For example, in New York, the minimum coverage is $10,000 for property damage liability per accident, $25,000 for bodily injury liability for one person, and $50,000 for bodily injury liability for everyone involved in the accident. The more coverages you get, the more expensive your policy will be.  We recommend full coverage, which would add on coverages such as comprehensive and collision insurance, medical payments coverage, and uninsured/underinsured motorist coverage. 
2. Deductible: The higher your deductible, the lower your premiums, and vice versa. Decide if you want to have high premiums and pay less later for covered claims, or have low premiums and risk paying a high deductible toward covered claims. 
3. Vehicle: Car insurance companies consider the type of car you drive, including your vehicle’s make, model, year, price, type of car, and vehicle safety ratings. Expensive and high performance cars typically cost more to insure. 
4. Mileage and commuting: Many providers offer usage-based insurance, meaning people who drive more pay more for insurance than people who only drive their cars occasionally. This is because those who drive more frequently have a higher risk of accidents. 
5. State and ZIP code: Insurance rates vary by location. Rates tend to be higher in large cities versus suburban or rural areas due to factors like increased crime, vandalism, theft, and denser populations. 

Regardless of your personal driving history or location, the cost of auto insurance has increased over time. Factors such as inflation, climate change (more extreme weather events resulting in more regular claims), supply chain shortages, and increased vehicle theft, have all contributed to rising costs over the last three years.The below table shows the auto insurance consumer price index increase since 2020. The value metric represents price inflation over time.

In 2020 and 2021 the CPI for auto insurance stayed between 512 and 568. In the two years between June 2022 and June 2024 the CPI value rose from 604 to 844, and between June 2024 and January 2025 it rose to 888.

While you probably won’t get married, move states, or buy a home solely to lower your auto insurance rates, here are some reasonable ways that you can get better car insurance premiums: 

1. Use discounts. Check out your auto insurance provider’s discounts. You might be able to save money on simple actions like paying for a year of coverage at once or enrolling in paperless billing. You can also get discounts if you have a car with safety features like GPS tracking, or other products and services. 
2. Drop unnecessary coverage. You can drop supplemental coverage that your state’s laws don’t require, such as rental car coverage. 
3. Increase your deductible. While you’ll have to pay more for car insurance claims, your premiums will be lower with a higher deductible. 
4. Bundle insurance policies. You can save money on auto insurance by bundling it with other types of insurance, like homeowners or renters insurance. 
5. Shop Around: You will likely find the cost of auto insurance varies significantly depending on the provider. We recommend comparing quotes from at least two insurers to help find the most cost effective auto insurance. 

There are many factors that contribute to your car insurance rates, including your coverage choices, driving history, location, and even your credit score. While some of these factors are out of your control, others, like increasing your deductible, using discounts, or bundling policies, can help you save money. Be sure to shop around and compare rates to find the most affordable options for your situation.