Common Car Insurance Risk Factors

WRITTEN BY: Julia Matseikovich


Owning and maintaining a car is difficult as it is without having to worry about all of the car insurance risk factors that cause premiums to rise. Multiple factors play a role in deciding whether or not the policyholder will see a drastic price change.

For these reasons, it is vital to recognize these factors and understand that not all of them are under your control. Let’s start by talking about individual traits and personal financial details that significantly impact your monthly rate.

Main Car Insurance Risk Factors

Type of Car

The type of car you drive directly impacts your car insurance rates. Typically, newer cars are more expensive to repair and replace, so your auto insurance rates could be higher if you have one.

Vehicles seen as a high risk, like sports cars or those stolen frequently, are also more costly to insure.

Your Driving Record

Your driving record is one of the most clear-cut things that will impact your premium rate. Having a clean driving record is imperative to access low premium rates and qualify for a safe driver discount provided by some auto insurance companies.

In contrast to having a good driving record, if you have a driving record riddled with numerous incidents (accidents) or traffic violations (DUI, drowsy driving, speeding tickets, tinted mirrors, etc.), makes you high-risk, which affects your auto insurance premiums.


The likelihood of having a car accident is more pronounced with younger, inexperienced drivers. Why is this the case?

Younger drivers are typically more distracted and less conscious of the consequences their driving can have on the world around them. As a result, car insurance companies are more likely to increase premium costs for drivers under 25. 

Credit History 

A driver’s credit history is critical in determining whether your rates will go up or down. The general rule of thumb is that, on average, individuals with credit scores below 600 may see higher rates, file more claims, and possibly commit insurance fraud more often than those with higher credit scores.

In effect, it is of the utmost importance that individuals retain a high credit score to maintain confidence with these car insurance companies and obtain access to lower premium rates, especially since it’s really difficult to find car insurance without a credit check.


The car insurance rates policyholders pay can vary widely by the state in which they reside. Rates may differ as a consequence of different levels of regulations on car insurance found in each state.

Furthermore, drivers can also see fluctuations in their rate depending on their zip code and neighborhood. The logic is that rural commuters are less likely to experience vandalism or car accidents than their suburban or urban colleagues who live in more densely populated areas.

Consequently, rural drivers will pay much lower rates than those who typically tend to live in large urban centers. 

Driving Experience

As expected, driving history plays a massive role in whether an insurance company provides them a high or low premium rate.

Teen drivers, new drivers, older drivers, and those drivers who lack good driving habits are more prone to incidents and thus will have a high rate in the beginning.

However, as they accrue more experience and maturity, drivers will begin to see more excellent discount offers and lower premium rates provided by these insurance companies.

Insurance Claims

When seeking a lower premium rate, having a clean record regarding accidents is in your best interest. If an insurance company is paying for at-fault car accidents too often, then it is highly likely that they will raise your rates as a result.

Ultimately, when you file a claim, your premium could increase. The more claims you file, the more you’re seen as a risk.

Coverage Options

As expected, the more insurance coverage you wish for car insurance, the more you pay a higher premium. If you want to lowest price, consider a liability-only car insurance policy.

Now, when attempting to acquire a full-coverage insurance plan (which usually provides full collision and comprehensive coverage), the policyholder will end up with a safer plan. But they will have to pay a higher rate for comprehensive coverage. 

Chosen Deductible

The cost of your premium rate might sometimes be contingent on how much you’re initially paying on your car insurance deductible. If the policyholder pays a high deductible, they would automatically have a low premium rate.

The opposite is true if you’re paying a low deductible, and thus you would be left with a high premium rate on your insurance plan. 

Minor Car Insurance Risk Factors


Across the United States, many local laws allow car insurance companies to charge varying premium rates between male and female drivers.

These premium rates are determined on yearly statistical data demonstrating high incidence rates for members of both genders at different stages of their lives.

For example, data shows that males are more likely to cause accidents at a younger age because of impulsive, reckless behavior.

On the other hand, female drivers are more than likely to have higher premium rates at an older age. With this in mind, not all states will charge their insurance premiums on gender. 


Education is a surprising factor utilized in determining premium rates. The logic used by insurance companies is that highly educated drivers are far less likely to find themselves in a car accident and, thus, file fewer claims in the long run.

In effect, college-educated drivers may experience cheaper premiums than their less-educated colleagues. Nevertheless, basing rates on education is a practice coming under more scrutiny every year, so it may begin to change. 

Marital Status

How does marital status play a role in differing premium rates? Well, research conducted by both the National Institute of Health and the Consumer Federation of America showed that married couples are far less likely to find themselves in a car accident than their single counterparts. Married couples, generally, may see discount rates of 5 to 15 percent based on marital status.

Your Job

Depending on your occupation, car insurance companies may charge higher premiums due to the increased probability of claims being filed.

However, in recent years, there has been a pushback on behalf of states to consider ending or outright banning this practice. There are also discounts available in some areas for active or retired military persons, teachers, or people working in a specific union.

But these factors aren’t the only ones that will affect your final premium. Other important factors include how you drive and the specific type of vehicle you own. 


While homeownership isn’t a major car insurance risk factor, being a homeowner could affect your overall premiums. In many cases, insurance companies give discounts to policyholders who have both their auto and home insurance policies through them.

Insurance Company

Ultimately, the insurance company you choose will play a pivotal role in how much you pay. Premium rates vary drastically from company to company, and although other external factors affect these rates, the company you choose could be too expensive.

We highly recommend that you conduct your research by exploring as many companies as possible before ultimately deciding on the right company. 

Car Insurance Risk Factors That Lower Premiums

Since we know all the factors that could potentially increase your premium rates, it is essential to help you understand what can lower those premiums. There is a multitude of ways to lower your car insurance costs.

Company Discounts

Fortunately for you, some insurance companies out there provide discount opportunities for their policyholders. Some of these companies offer lots of discounts to help mitigate the costs of their premium rates.

To qualify for these discounts, it is advised that you have a clean driving record and be willing to pay an insurance premium upfront. 

Public Transportation

Rather than relying on or obtaining car insurance, you can always use your local area’s public transportation resources. Instead of paying vast amounts on a premium, that money can now be saved to cover other expenses.

Deductible Increase

Another intelligent way of reducing premium costs could be as simple as raising the deductible fees in your insurance plan. You are guaranteeing an overall lower premium rate on your car insurance by paying for a higher deductible.

Purchasing a Smaller Vehicle

For numerous reasons, buying a larger vehicle may inadvertently cause you to pay more on your car insurance. That’s why it is recommended that you buy a lower-cost commuter vehicle if possible. You save more money on gas and, more importantly, pay less on your insurance premium.

Improve Your Credit Rating

What better way to lower your premium rates than by improving your credit rating? Increasing your credit score shows your insurance company that you are less likely to file a claim, commit fraud, or get into an accident.

Become a Safe Driver

The most straightforward way of reducing an ever-increasing premium rate is by becoming a safe driver. You can reduce your car insurance premiums by driving safely through years of experience, a driving course, or becoming more aware of your surroundings. Not only do you reduce your accident frequency, but ultimately you end up filing fewer claims.

Find a Policy That Minimizes Your Car Insurance Risk Factors

Common car insurance risk factors affect everyone. To find a policy that suits your needs, you should get several car insurance quotes to compare the coverage levels and prices.