driving safely like this white car on the road is one of many factors that impact car insurance rates

Important Factors That Affect Car Insurance Rates

Two factors determine what you pay for auto insurance: the insurance companies’ underwriting process and rating system.

Auto Insurance Underwriting

Insurance companies underwrite to assess the risk associated with an applicant, group the applicant with other similar risks and decide if the company will accept the application. Based on the results of the underwriting process, the rating assigns a price based on what the insurer believes it will cost to assume the financial responsibility for the applicant’s potential claim.

Auto Insurance Rating Systems

Each company adopts its own rating system. Although there are general guidelines that all insurance companies follow, the single greatest influence on the rating process is claim frequency. This does not mean how many times you specifically have made an insurance claim, although that will have an additional effect. Claim frequency measures how often an insured event occurs within a group relative to the number of policies contained in that group. Persons sharing characteristics with high claims groups will be charged more for insurance coverage.


  • Your driving record – drivers with previous violations or accidents are seen as a higher risk to the insurer
  • Where you live – urban areas have more claims than rural areas
  • Your gender and age – males have more accidents; certain age groups have more claims
  • Your marital status – married people show lower rates of claims
  • Previous insurance coverage – if you have been canceled for non-payment of premiums
  • Vehicle usage – higher annual mileage results in higher exposure to risk
  • Make and model of your vehicle – luxury and sports cars average a higher number of claims


Discounts are awarded because the insurance company sees you as a “better risk.” Here are some discounts you should look for: multiple vehicles, driver education courses, good student, safety devices, anti-theft devices, low mileage, good driver, loyalty/renewal, and multipolicy bundles.


The most commonly recognized coverages, in addition to the basic liability package, are collision and comprehensive coverages. Collision coverage pays for physical damage to your car as a result of your auto colliding with an object such as a tree or another car. This is relatively expensive coverage and is not required by law. Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. This coverage will also cover broken glass and windshield damage. Comprehensive coverage is less expensive than collision but is also optional. Other optional coverages include medical payments coverage, rental reimbursement coverage and towing and labor coverage.


Information is available to consumers from several unbiased sources. These sources include public libraries, state insurance departments, online resources, consumer groups and consumer publications. Every state insurance department has personnel available to answer questions regarding auto insurance coverage and many departments publish premium comparisons to make shopping around easier.


As independent insurance advisors, we work for you and not the insurance companies. This allows us to tailor your coverage to your specific needs and compare coverage and prices to find you the best possible combination. Through our connection and partnership with Baldwin Risk Partners (BRP), we are one of the largest insurance firms in the country and have access to 150+ companies so we can find your right coverage at the right price.

Previous Post
Newer Post