What Affects Car Insurance Rates?

Various elements factor into your car insurance costs.

1. Coverages: Each state has different mandatory 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. You can check out our auto insurance guide to learn the minimum coverage in your state, but you may want full coverage, which would add on coverages such as comprehensive and collision insurance, medical payments coverage, or 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 take into account the type of car you drive, including your vehicle’s make, model, year, price, type of car, and vehicle safety ratings, when determining your rates.
4. Mileage and commuting: People who drive more, whether for commuting or pleasure, pay more for insurance than people who only drive their cars occasionally, as they have a higher risk of accidents.
5. State and ZIP code: Not only do states have differing auto insurance requirements, but rates tend to be higher in large cities versus suburban or rural areas due to factors like increased crime, vandalism, theft, and denser populations.

Here is what U.S. households paid for car insurance from 2007 to 2020:

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 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 your insurance. You can save money on auto insurance by bundling it with other types of insurance, like homeowners insurance.

Those are all of the factors that affect car insurance rates. For more information, read our auto insurance FAQs or learn about the process of filing a claim.