When it comes to car insurance, the safer and lower-risk you appear to insurers, the better your chances of scoring affordable rates. While some factors have a huge impact—like your driving history or the car you drive—others, such as gender or marital status, play a smaller role.

Here are nine key factors that insurance companies consider when calculating your premium:

1. Age

Your age is one of the biggest influences on your car insurance costs. Young drivers, especially teenagers, tend to pay the highest premiums. This is because data shows they are more prone to accidents and risky driving behaviors. As you gain experience behind the wheel, your rates generally improve, with the most affordable rates often seen for drivers in their 50s. However, premiums can start to climb again for seniors.

Imagine this: Alex, a 17-year-old who just got his driver’s license, was excited to hit the road. However, when his family added him to their car insurance policy, their premium jumped significantly. Because teenagers are statistically more prone to accidents, insurers viewed Alex as a higher risk.

Fast forward a few years—by the time Alex turned 25 with a clean driving record, his insurance rates had noticeably dropped. Now in his 50s, Alex enjoys some of the most affordable rates thanks to his years of safe driving experience. However, he’s mindful that as he gets older, his premiums may gradually increase again as insurers account for age-related risk factors.

This example highlights how age directly impacts insurance rates—and how maintaining a good driving record can help offset those costs over time.

2. Driving History

Your track record on the road plays a major role in determining your premium. Tickets, violations, or past claims signal higher risk to insurers, which can lead to increased rates. Serious offenses like DUIs or reckless driving can significantly inflate your costs. Additionally, a history of frequent claims may also push your rates higher.

Meet Jordan, a 32-year-old driver who commutes daily for work. A couple of years ago, Jordan received a speeding ticket for driving 15 mph over the limit. Shortly after, a minor fender bender resulted in an insurance claim. While both incidents seemed small at the time, Jordan noticed his car insurance rates spiked significantly at his next renewal.

To make matters worse, when Jordan was involved in another minor accident the following year — one he wasn’t even at fault for — his premiums increased again. The insurance company viewed the combination of his ticket, claim history, and recent accident as indicators of higher risk.

Determined to lower his rates, Jordan completed a defensive driving course and maintained a clean record for several years. Gradually, his insurance costs improved, showing that safe driving habits can help offset past mistakes.

3. Credit Score

In many states, your credit score can impact your insurance rates. Studies show that drivers with lower credit scores tend to file more claims, and those claims often cost more. Improving your credit score can help you secure better rates. However, if you live in California, Hawaii, Massachusetts, or Michigan, your credit score won’t affect your car insurance premium, as its use is restricted or banned in those states.

When Marcus moved to Texas, he was shocked to see his car insurance rates were higher than expected. After speaking with his agent, he learned that his low credit score was a key factor. Determined to improve his finances, Marcus focused on paying down credit card debt and consistently making on-time payments.

Over time, his credit score improved, and when he requested a policy review the following year, his insurer lowered his premium significantly. By working to boost his credit, Marcus not only improved his financial health but also saved money on his car insurance.

4. Location

Where you live plays a big role in what you pay for coverage. States have different insurance regulations, and some areas are more prone to accidents, theft, or severe weather, all of which can raise rates. Even your ZIP code can influence your premium, with urban areas generally costing more than rural regions.

5. Personal Demographics

While less influential than other factors, details like your gender, marital status, and occupation can still impact your rates. For instance, young male drivers often face higher premiums than their female counterparts due to higher accident rates. Married individuals may enjoy slightly lower rates since insurers associate marriage with shared driving duties and fewer claims.

6. Coverage Levels and Deductibles

The more coverage you choose, the higher your premium will be. Opting for full coverage with lower deductibles offers greater protection but comes at a higher cost. Conversely, liability-only coverage or higher deductibles can help reduce your insurance bill.

Imagine Sarah, a 28-year-old who recently purchased a brand-new SUV. Wanting to protect her investment, she opted for full coverage with a low $500 deductible. While this provided her with excellent protection in case of an accident, Sarah noticed her monthly insurance premium was quite high.

A year later, Sarah’s financial situation changed, and she needed to cut expenses. Since her SUV had depreciated slightly and she felt confident in her driving habits, she decided to raise her deductible to $1,000 and adjusted her coverage limits to better fit her needs. As a result, her premium dropped significantly, saving her over $40 per month.

By balancing her coverage with her financial comfort level, Sarah found a solution that kept her protected while lowering her insurance costs.

7. Vehicle Type

Your car itself can have a big impact on insurance rates. Luxury models, sports cars, and vehicles prone to theft or expensive repairs often come with higher premiums. On the other hand, safe, affordable, and easy-to-repair cars typically cost less to insure. Choosing a vehicle with solid safety ratings may also qualify you for discounts.

When Chris decided to upgrade his car, he had his eye on a sleek sports car with powerful performance. Excited about his purchase, he was surprised when his insurance premium jumped significantly. The car’s higher value, costly repair parts, and increased risk of theft made it more expensive to insure.

A year later, Chris traded the sports car for a reliable sedan with top safety ratings. Not only did his new car provide peace of mind, but his insurance premium dropped by nearly 30%. The sedan’s lower repair costs, enhanced safety features, and reduced theft risk made it a more budget-friendly choice for insurance.

8. Annual Mileage

The more you drive, the higher your risk of an accident—and insurers adjust your rates accordingly. Drivers who log fewer miles each year often enjoy lower premiums. For example, someone who only drives a few miles to work each day or primarily uses their vehicle for weekend errands may pay less than a commuter who racks up long highway miles daily. 

Insurance companies view lower-mileage drivers as less likely to encounter accidents, making them a lower risk to insure. If you’re driving less than usual, updating your insurer about your reduced mileage could help you save money.

After retiring, Linda no longer had to commute to work every day. Instead, she only used her car for quick grocery runs and occasional visits to her grandkids. Noticing her reduced driving, Linda contacted her insurance provider to update her estimated annual mileage.

To her surprise, her insurer adjusted her policy, lowering her premium by nearly 15%. Since she now drove far less than before, her reduced risk of accidents translated into savings. By simply updating her insurer about her lifestyle change, Linda kept more money in her pocket without sacrificing coverage.

9. Ownership Status

Whether you own, lease, or finance your vehicle can also impact your rates. Generally, leased and financed cars may require more comprehensive coverage, which can increase costs. Once you fully own your car, you may have more flexibility to adjust coverage levels and reduce your premium.

When Maria financed her new SUV, her lender required her to carry full coverage, including comprehensive and collision insurance. This added protection increased her monthly premium. A few years later, after she paid off her loan, Maria reviewed her policy and decided to drop some optional coverages since her SUV had depreciated in value. By adjusting her coverage, she lowered her insurance costs while still maintaining essential protection.

How to Lower Your Car Insurance Rates

While some factors are out of your control, there are smart strategies you can use to reduce your costs:

• Compare quotes: Insurance rates vary widely between providers. Shopping around can help you find the best deal for your coverage needs.
• Drive safely: Maintaining a clean driving record is one of the best ways to keep your rates low.
• Be mindful of claims: Filing small claims can sometimes cost you more in the long run by raising your rates. If possible, consider paying for minor repairs out-of-pocket.
• Maintain continuous coverage: Gaps in coverage can result in higher premiums when you reinstate your policy. If you’re selling your vehicle, consider a non-owner policy to maintain coverage.
• Ask about discounts: Many insurers offer savings for bundling policies, maintaining good grades (for students), going paperless, or driving safely with telematics programs.

By understanding the factors that influence your car insurance rates, you can make informed choices to secure better coverage at a price that fits your budget.

At Alexander Agency of St. Charles, we know that navigating car insurance can feel overwhelming—but we’re here to make it simple. As a trusted part of our community, we understand the unique challenges drivers face in today’s market. Whether you’re a new driver looking to save, a family adjusting coverage as kids start driving, or a retiree seeking smarter options, we’re committed to finding the right plan for you. 

Our experienced team takes the time to understand your needs, educate you on your options, and uncover discounts that can maximize your savings. Let us help you stay protected without overpaying—because you deserve coverage that puts you in the driver’s seat. Contact us today to get started!