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Why Are Car Insurance Rates So Different?

By February 16, 2021March 1st, 2021Car Insurance, Knowledge, Personal Insurance, Technology
Why are car insurance rates so different?

Why Are Car Insurance Rates Different?

Car insurance rates can be so aggravating. Shopping for car insurance is difficult and time-consuming as you compare car insurance companies, their rates, and their coverages. After becoming an expert in car insurance basics you feel like you finally understand what you are purchasing but get so many different insurance rates. Understanding the factors that impact your auto insurance can make it easier for you to determine which insurance company you want to go with.

What Determines The Price Of An Auto Insurance Policy?

Can’t I buy my car insurance the way I buy food? Technically no. There are factors that affect your car insurance rate because they are indicators of the likelihood of you getting into a car accident. 

Essentially car insurance companies use predictive tools to analyze a variety of factors. These factors help estimate your car insurance premium. If you are more expensive, then your car insurance premiums will increase.

Factors That Impact Your Car Insurance Rates

Below is a breakdown of the factors that can make your car insurance premium go up or down. We indicate which factors you can control to lower your car insurance.

1. Demographics: How Demographics Affect Your Car Insurance Rates

Most of these factors you cannot control. You can’t change your age or different aspects of your demographic. You can change where you live, or get married, but those will cost more than the change in your auto insurance rates. These demographics are used to determine your car insurance rate.

  • Age: Your age can play a major role in your car insurance. If you are young or old you will have higher insurance rates. Why does my age matter for car insurance?
    • If you are younger, you are less experienced and more likely to get into an accident. According to the CDC, 16 to 19-year-olds have the highest risk of a vehicle crash.
    • If you are older, due to health risks and medical factors you are also more likely to get into an accident. The CDC also indicates that drivers older than 75 are more at risk.
  • Gender: Statistically, males are more aggressive drivers while females are more defensive drivers. More aggressive drivers typically accrue more accidents.
  • Marital Status: There have been studies that indicated single people (unmarried, widowed, or divorced) are more likely to have a car accident. Male drivers see a large decrease in insurance premiums when they change their marital status.
  • Occupation: If you are a delivery driver or a taxi driver, there is a greater chance you will be in an auto accident since you are driving more. A flight attendant or person who works at home is less likely to get in an auto accident because they drive less.
  • Location: There are many location factors that can impact your car insurance. Insurance companies can look at your location’s theft rate, your state’s insurance minimum requirements among other factors. Schuylkill County has been rated the highest alcoholics per capita in the United States multiple times. This is a major factor and indicator which results in increased car insurance rates


2. Personal: How Your Personal Situation Can Affect Your Car Insurance Rates

Your personal history and information play a role in determining how much your insurance will cost. While you can technically control these things, many of them are more of a reflection of past driving experience.

  • Car Make & Model: Why would the type of car I have change my insurance premium? Is a Ferrari worth the same as a Volkswagen bug? Honda Accord? No. The value of the vehicle as well as how likely they are to get into an accident play a role in changing your car insurance rate. Why is my Honda Accord so expensive then? Because they are more likely to be stolen. Some vehicles are more likely to be stolen, others are more unsafe. 
  • Driving Record: Your speeding tickets and driving record is a clear indicator to insurance companies on how likely you are to get into an accident. Repeatedly getting speeding tickets, fender benders, and accidents add up quickly.
  • Claims History: The number of car insurance claims you have had in the past can also indicate how safe or unsafe of a driver you are.
  • Credit Score: Believe it or not, if you have a low credit score your insurance company will charge you more. There are a few states that don’t charge you more, but most states will charge you higher insurance premiums if you have bad credit scores.


3. Coverage: How Car Insurance Coverage Changes Your Car Insurance Premium

This is the most simple factor that changes your car insurance premium. The amount of coverage you get on your vehicle. If you get more insurance coverage, then you will have a higher insurance premium. If you get less insurance coverage on your car, then you will pay less.

4. Last Year: How Last Years Car Insurance Claims Affect Car Insurance Rates

Insurance is constantly using data from the previous year to guide car insurance rates. That is why they always seem to be increasing. Except for 2021. Because of fewer people driving, more people staying at home, and working from home, we may see car insurance costs decline this year.

5. Discounts: Auto Insurance Discounts And Savings

We all love discounts, especially when it comes to car insurance discounts. You can save money on your car insurance by having good grades, logging your driving, or allowing your insurance company to track your driving habits. Quick Tip: Your driving speed isn’t the lone factor or the largest factor in your driving discount through telematics. It is the change in speed. If you are constantly braking and accelerating, you are more likely to get into an accident.

6. Insurer: How Your Car Insurance Provider Can Determine Your Car Insurance Rate

Car insurance companies utilize different tools and processes to determine your auto insurance cost. While many of them use the above factors, some use different methodologies in determining the final insurance costs.

That is one of the reasons people get their auto insurance with us. We have multiple auto insurance carriers and we compare the prices to find you the best car insurance we can provide. Contact Strickler Insurance for a free quote!