Many states require drivers to purchase auto insurance. Thus, finding affordable insurance is a huge priority for many car owners. But did you know that your auto insurance premium is heavily influenced by factors outside of your driving record? If you’re frustrated when trying to find low insurance rates; you may be a victim of one of the factors listed below.

Factors Affecting your Auto Insurance Premium


Zip Code

“Location, location, location.” Not only is that phrase important in real estate but it can make a huge difference in your auto premium. Many companies provide quotes from data pertaining to your zip code-not necessarily your exact address. In other words, even if you live in a safe neighborhood your zip code may still trigger extremely high rates. One survey analyzed quotes for a thousand zip codes and saw that rates within a given zip code varied (on average) by 154% (nerdwallet.com). The general trend is that the closer you live to a major city/urban area the higher your insurance premium. 

Age

This should not come as a surprise but the younger you are the higher your quote will be. Statistically younger drivers are more likely to get into accidents than older drivers. Thus driving while young makes auto insurance companies cringe. You can lower your premium with discounts based on your grade point average or by joining a parent’s plan. Unfortunately, if neither apply to your situation then you may just have to wait until you enter a different age threshold for your rates to drop.

Marital Status

Marriage is a great thing…especially through the eyes of an insurance company. If you are married it is assumed that you are less of a risk than someone that is single. The reasoning behind this is pretty subjective. Maybe they assume someone’s spouse or child(ren) would be in the car causing him/her to drive more cautiously. Or that if you’re married you would pay your premiums on time. Who knows. Regardless of the reason being married generally grants you a lower premium.

Sex

Who are the better drivers men or women? Well the results are in and it looks like insurance companies lean more towards women as men tend to pay higher premiums than their female counterparts. This trend; however, does not last forever as older men tend to pay lower premiums than older women. Unfortunately the phrase “older” is not really defined so it’s difficult to tell when the switch happens. So as far as who are the better drivers…let’s just call this a tie.

Credit Score

Your credit score affects virtually everything related to your finances and your insurance premium is no different. The general trend is that the lower your credit score the higher your premium. Why? According to data, individuals with lower credit scores are not only more likely to get into accidents but also struggle to pay their premiums on time. Yes you read that correctly. Insurance companies actually have data that suggest your credit score could lead to more accidents (we’ll discuss this in more detail in a future post). So, if you needed another reason to raise your credit score…it can lower your auto premium.

Education Level

Are people with Master degrees more responsible when paying their bills than those with Bachelor’s degrees? How about compared to those with a high school diploma? Are they better drivers? Of course not, but that does not stop many insurance companies from rewarding those with higher education with discounts. If you are looking for insurance without a college degree; there is a chance you will pay more for your insurance.

Shop Around

If some of the categories listed above seem a little unfair don’t worry they are! The insurance industry is driven by statistics and risk. Thus, if you fall in a category that is statistically “risky” you will unfortunately pay more for your premium. Since virtually every state requires auto insurance the only thing you can do is continuously shop around for the best rates. Remember: you are not stuck in your insurance contract so you have the freedom to leave at anytime.

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