9 Components That Will Have an effect on Automobile Insurance Costs In 2021 – Kelley Blue Ebook

You may not have full access to how auto insurers set their rates. The process doesn't have to be mysterious, however. We break down the top nine factors that will affect your auto insurance rates.

Factors That Affect Your Car Insurance Rates

  1. Insurance coverage amount
  2. Deductible amount
  3. Previous auto insurance claims
  4. Demographics (including marital status)
  5. Credit history
  6. Driving history
  7. Annual mileage
  8. Car make and model
  9. Postal code

1. Amount of insurance coverage

When considering your auto insurance costs, the level of insurance you choose is one of the most important factors in determining the size of your payment. This is also something that drivers can control.

Drivers can choose between liability, collision, uninsured drivers or fully comprehensive insurance. If you choose higher insurance coverage, your insurance costs will increase. Conversely, reducing your insurance coverage can cut your costs, but this can mean you are taking on greater risk.

RELATED STORIES: 5 Common Types of Car Insurance Cover

According to Savvy, your average monthly cost with basic insurance can be as low as $ 98.16. However, the tariffs vary from company to company as you can see in the table below. Some companies, like MetLife, may charge up to $ 269.42 for a monthly policy.

Average monthly liability insurance cost
Exhibitors value
SafeAuto $ 98.16 best
Wawanesa $ 130.59
21st century $ 142.12
District farm $ 143.84
The Hartford $ 145.50
USAA $ 194.43 Most expensive
Safeco $ 196.24
Farmers $ 204.83
traveler $ 211.03
MetLife $ 269.42
AVERAGE $ 172.61

Source: Savvy

Overall, you can expect to pay an average of $ 172.61 for liability insurance. According to Savvy research, the average cost of all policies except liability insurance is $ 178.48.

Average monthly cost for all policies
Exhibitors value
Safe car $ 87.02 best
Southern California Automobile Club $ 114.58
District farm $ 126.28
Dairy country $ 143.61
The general $ 144.34
AAA NorCal $ 210.99 Most expensive
Bristol West Insurance $ 211.14
Farmers $ 213.03
MetLife $ 223.15
Bristol West $ 277.27
AVERAGE $ 178.48

Source: Savvy

Keep in mind that there are government requirements that can determine the types of coverage you will need.

2. The amount of your deductible

Car insurance rates are also influenced by your decision to choose a policy with a high deductible or a policy with a low deductible. Policies with higher deductibles have lower monthly costs. Conversely, policies with a low deductible have higher monthly rates.

In some cases, paying more for a low deductible policy is a smarter move. Learn how to choose your auto insurance deductible to find the sweet spot between cost and risk.

The most common deductible levels are $ 500 and $ 1,000, according to The Zebra. If you go for the lower of the two, you can expect your average six-month premium to average $ 744. However, if you choose a $ 1,000 deductible, you can expect to pay an average of $ 678 for the same policy, according to Zebra research.

3. Number of motor insurance claims

From the point of view of a motor insurer, drivers who previously made a motor insurance claim would be more likely to make a claim in the future.

On average, drivers with earlier damage can increase their tariffs by 42%. Switching providers won't help you avoid that rate hike as insurers search the industry-wide Claim Loss Underwriting Exchange (CLUE) to identify previous claims.

Many companies only look for claims made in the last three years. However, some look back five years and others can look back on 10 years of your driving history. If you have a previous motor insurance claim, Compare insurance rates and other companies to see how previous claims impacted your premium costs.

4. Demographics

Your demographics also affect your auto insurance rates. Insurance companies use statistical models to identify which characteristics are more likely to cause greater damage and set their rates accordingly.


Young drivers pay the highest car insurance rates. The influence of age is significant, with teenage drivers paying, on average, at least $ 400 more than other age groups. The lowest average insurance rates are for drivers between the ages of 25 and 34, and rates are rising again for older drivers over 50.

Average on an annual basis
Age group average value
18 to 24 $ 2,682.69
25 to 34 $ 2,136.87
35 to 49 $ 2,224.82
50 to 69 $ 2,252.31
70 or higher $ 2,282.10

Source: Savvy


The influence of gender on car insurance is significant. Women can expect to pay nearly $ 1,000 more for auto insurance annually than men as a whole. See the table below for more information.

Average on an annual basis
gender average value
Masculine $ 2,372.60
Feminine $ 3,397.26

Source: Savvy

According to The Zebra, the following states do not use gender when calculating premiums.

  • California
  • Hawaii
  • Massachusetts
  • Montana
  • North Carolina
  • Pennsylvania

marital status

Marital status can also affect car insurance rates. According to The Zebra, insurers view married drivers as more financially stable and safer on the road. As a result, a married driver pays about $ 100 less per year for auto insurance on average than a single, widowed, or divorced driver, the Zebra says.

Average six month policy
marital status average value
Married $ 1,388
singles $ 1,484

Source: the zebra

5. Credit history

The data shows that drivers with poor credit ratings pay more for car insurance. A study by The Zebra analyzed 73 million auto insurance rates and found that those with very poor credit pay 115% more than those with exceptional credit or more than $ 1,500 a year.

In addition to financial creditworthiness, auto insurers can also consider a similar metric called a credit-based insurance rating. While a typical credit score predicts the likelihood that you will pay your bills on time, a credit-based insurance score predicts the likelihood that you will file an insurance claim for an amount greater than what you will pay in insurance premiums.

Some states have decided to restrict or prevent auto insurers from using credit history to determine insurance rates.

States where credit history is not used for offers:

  • California
  • Hawaii
  • Maryland
  • Massachusetts
  • Michigan
  • Utah

6. Driving history

A clean driving log will help you get the lowest rates possible, and many auto insurance companies offer a safe driver discount that could cut the cost of your policy by 40%.

Insurers review vehicle records to look for warning signs such as high risk traffic violations. Patterns of behavior like repeated parking tickets can cause rates to double. The spike can be worse with a DUI or reckless driving fee.

Defensive driving classes can also help to mitigate tariff increases in connection with previous traffic fines or traffic violations.

7. Annual mileage

Car insurers take your annual mileage and commute distance into account when setting their tariffs. Low mileage drivers can get lower tariffs as they are less likely to make a claim.

As you can see in the table below, the more you drive, the more car insurance you need to expect. For example, drivers with State Farm auto insurance who travel less than 3,000 miles per year can expect to pay just $ 1,066.54. On the other hand, if you travel between 15,000 and 20,000 miles per year, you'll pay $ 5,124.28 per year if you live in places like Alaska, Arizona, California, Montana, Nevada, Utah, or Wyoming and have an AAA Norcal policy Select.

Miles bucket Average annual price per vehicle Issuer with the lowest interest rate Lowest rate Issuer with the highest interest rate Highest rate
0 to 2,999 $ 2,033.35 District farm $ 1,066.54 Nationwide $ 3,163.08
3,000 to 5,999 $ 2,029.88 The Southern California Auto Club $ 674.00 AAA Norcal $ 4,549.15
6,000 to 9,999 $ 2,073.86 Erie $ 1,320.11 AAA Norcal $ 3,448.83
10,000 to 11,999 $ 2,135.19 District farm $ 1,602.35 Bristol West $ 3,437.38
12,000 to 14,999 $ 2,197.89 insurance $ 1,528.50 Bristol West $ 5,624.00
15,000 to 19,999 $ 2,620.13 The general $ 1,756.35 AAA Norcal $ 5,124.28
20,000 or higher $ 2,101.60 Allstate $ 1,619.20 Farmers $ 2,969.43

Source: Savvy

The Federal Highway Administration reports in their latest 2019 study that the average driver covers approximately 14,263 miles per year. You can use your average annual mileage in the state and then compare prices from different companies.

It can help you find the best plan for your annual mileage. For comparison, a 50-mile round-trip trip to work adds up to 13,000 miles per year, which likely indicates a driver with many miles after adding other miles driven.

8. Car make and model

Auto insurance companies use the make and model of a car information to determine the cost of your car. This helps them know how much money is at stake if the car is totaled and they need to replace it.

Drivers have higher prices for flashy or expensive vehicles such as sports cars, or luxury vehicles electric cars. In one scenario, an 18% increase in the list price resulted in a 6% increase in the car insurance premium rates. Insurance could also be higher for cars, which are the most common target of crime.

Find out how much is your car worth to see how your insurer considers your car.

9. Post code

The pricing models for auto insurance can be very granular. Insurers use your zip code to check crime rates where you park your car at night. They also use location information to investigate environmental threats like floods or forest fires. Low-crime or rural areas typically mean lower car insurance rates than urban or other high-risk neighborhoods.

If you want to lower your car insurance premiums, start with deductibles and discounts. Then you can try other strategies like telematics which allow an insurer to keep track of your driving habits and if they are good they will give you a discount.

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