Surprising Factors That Affect What You Pay for Car Insurance

Let’s break down each of these categories to see how they may apply to you.

The Insurance Industry May Change: Economic Issues Out of Your Control

We can also call this category, "things you can’t control."

While many rating factors put you in the driver’s seat, so to speak, most of the changes here are bigger than you and your personal behavior. Instead, they’re driven by broader market conditions that increase the cost of doing business for insurance companies.

While it seems like insurance rates are universally rising, it’s not actually true. Our analysis of insurance rates across the U.S. found:

• Prices rose in 29 states last year
• In 6 of those states, the increase was a 50% or greater jump
• However, in 21 states and the District of Columbia, insurance rates actually decreased on average

See how much insurance prices rose (or fell) on average in your state:

So if you live in one of those states, insurance rates really could be going down. Here are some of the factors that impact rising rates in your area:

• Inflation & Rising Repair Costs
  • Vehicle parts and labor increase, making repairs or replacement more expensive
• Natural Disasters and Weather Trends
  • Living in a region prone to catastrophic events can raise rates for everyone
• Medical Costs
  • Auto insurance injury claims are tied closely to healthcare prices.
• Litigation and Legal Costs
  • Increases in lawsuit frequency or severity—particularly in auto bodily injury cases—may prompt rate hikes
• Reinsurance Market Changes
  • Insurers buy their own insurance, called reinsurance, to protect against massive losses. When reinsurance rates rise, those increases flow downstream to consumers.
• Overall Claim Frequency
  • If more claims occur across your region—even small ones—insurers adjust pricing to account for higher overall risk.
• Regulatory Changes
  • State insurance regulators must approve many rate changes. Once approved, those adjustments go into effect at your next renewal period.

You May Change: Life Events That Impact Your Rates

And then there are the things you can control. Well, some of them you can control anyway. As you age, your rates will change, which obviously you can't change, but here are some things you can: Of course, the way you drive and if you get tickets, but also less-driving-related things like your credit score, your gender, your marital status, etc. are all personal rating factors that affect your rates.

Here are some personal life events that might affect your rates:

• Driving Record and Tickets
  • Depending on the violation, you could double your insurance rates. But when a ticket falls off your record after 3 years, you might see rates drop. 
• Age and Experience
  • Young teen drivers are expensive to insure. Add one to your policy and you might see as much as a $8,000 jump per year. 
• Location
  • Your ZIP code is a factor in what you’ll pay for all the location-specific reasons listed above. Moving states or even moving from one ZIP code to another in the same city can see a big change in what you pay. 
• What You Drive
  • The make, model and age of your vehicle all affect what you’ll pay. Luxury vehicles are usually more expensive to insure. 
• Gender, Marital Status and Education Level
  • These personal rating factors all have an impact in most states. (Certain states don't allow personal rating factors to be used in insurance pricing). 

Your Policy May Change: Should You Compare Prices at Renewal?

You can cancel your insurance policy at any time (but only if you have another one lined up). However, most people only think about it during their renewal period. 

When you purchase car insurance, you typically get a policy with a fixed amount of protection over a set length of time. Most auto insurance policies last for either six months or one year from the date of policy purchase. Once that period of time is over, your car insurance plan is officially up for renewal. 

As your car insurance policy approaches its expiry date, you have two options.

• If you’re happy with the current plan (both the coverage and the rate), you can opt to continue with the same car insurance company.
• If you’re not happy with the coverage, the price, or both, then it’s time to shop around and compare rates. 

If your bill is going up, you can take these steps.  

• Ask Your Agent
  • Insurance prices go up for a lot of reasons (many of them listed above). Ask your agent to help you understand the factors that went into your specific increase.
• Check Your CLUE Report
  • Make sure your claims history is accurate. A CLUE report shows the claims filed for your vehicles for the past 7 years. 
• Ask About Discounts
  • Has anything changed in your life that might make you eligible for discounts offered by your insurance company? Perhaps you're driving less, or you haven't gotten any tickets. Make sure your insurance company is aware of any positive changes. 
• Compare Rates
  • Check your options. Even if you're happy with your insurance company, it's worth seeing what's out there. For the right price, you might be happy with another insurance company, too.