7 Factors That Affect Car Insurance Rates

Hitting the open road with the wind blowing in your hair feels relaxing and freeing. But getting hit with a huge car insurance bill can bring all that fun to a screeching halt.

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Before you think about selling your car and pedaling your bike everywhere, consider the factors that influence your auto insurance rates.

Common Factors That Can Influence Car Insurance Rates

Auto insurance rates take several variables into account. You can group them into two main categories related to the vehicle itself and to you. Knowing what affects car insurance rates can help you better understand the price you pay.

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1. Age

Your age can have a major impact on your auto insurance rates. Age can be used for the rates because it often affects driving. Younger drivers don't have as much experience, which increases their risk of having an accident. Therefore, insurance companies charge higher rates for young drivers. You can expect rates to gradually drop from ages 16 to 24, often with bigger drops at 19 and 21.

You could also see car insurance rates increase later in life, typically in your 70s. As you get older, certain factors could increase your risk of an accident. These factors include medications, health conditions, impaired vision and slower reaction times.

2. Marital Status

Whether you're married could impact how much you pay for auto insurance. Married drivers typically get lower rates because they tend to be less risky behind the wheel statistically. The price difference typically isn't much, but being married could save you a little on car insurance. You might also qualify for multi-policy discounts when you're married if you both have vehicles or you also own a home.

3. Driving Record

Having a clean driving record could lower your auto insurance rates. It shows a track record of careful driving with fewer risks that could lead to insurance claims. If it's been a few years since your last traffic violation, shopping around could find you lower rates.

4. Where You Live

Cities or neighborhoods with higher crime rates often result in higher insurance prices to account for the bigger risk of a car break-in. You might also pay more if you live in an area with bad traffic. That means people living in larger cities often pay more than those who live in smaller towns with less traffic and lower crime rates. If you're considering a move, get quotes for insurance rates before you decide on a location.

5. Type of Car

The type, age and features of your car affect its value, which directly impacts how much it costs to insure. Higher-end vehicles that cost more to replace naturally come with higher insurance rates than less expensive models. More expensive vehicles often have extra features and technology that are more difficult to repair or expensive to replace.

The riskiness of the vehicle also matters. Sports cars tend to be a higher risk than larger family vehicles, for example, so the rates are often higher. Vehicles with better safety ratings are typically more affordable to insure. Some makes and models also tend to get stolen more or receive more damage if they're in an accident, which could increase your rates. If you're considering a new vehicle, get an insurance quote to see how it might impact your rates.

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6. Coverage Types and Amounts

Liability insurance, which covers other drivers if you're at fault, is required for drivers. States have different minimum liability amounts, but you can opt for higher coverage amounts, which will increase your rates.

You can also add comprehensive and collision coverage, which pays for damage to your vehicle. Those coverages add to the cost and can vary based on how much coverage you get and your deductible amount. Choosing a higher deductible means you'll pay more out of pocket if you have a claim, but you'll pay lower premiums for the coverage.

7. Credit History

In most states, auto insurance companies can consider your credit history when determining your rates. Four states prohibit your credit from impacting your auto insurance rates: California, Hawaii, Massachusetts and Michigan.

In states where credit can be used, people with better credit typically get better car insurance rates than people with poor credit. Statistics show a low credit score comes with an increased chance of filing insurance claims. To protect its financial interests, the insurance company might charge more to insure people with not-so-great credit.