Everything You Need To Know

All driver’s insurance rates are different, and they can vary between companies and states. This means two different insurance companies will charge different premiums for the same car and driver. Comparing car insurance companies and their rates is the best way to make sure you get the best price. Even though every insurer considers similar factors, each company has its own way of calculating and setting rates.

Because auto premiums can go up over time, look at your policy every year and shop around to make sure you’re still getting the best rate.

What Do Insurance Companies Use to Calculate Rates?

Insurance companies use a variety of information to calculate their rates, including:

  • ZIP code
  • Marital status
  • Annual mileage
  • Driving history
  • Vehicle make, year, and model
  • Gender
  • Credit history

    Because every company has a unique method of calculating rates, it’s impossible to determine how much value each company puts into each factor. This is why it’s important to look at several companies side by side to compare their rates.

    Car Insurance for 25-Year-Old Drivers

    Insurance companies typically charge drivers in the 25-year-old age range higher insurance rates because, statistically, they get into more accidents than older drivers.

    Average car insurance premiums for a 25-year-old driver vary from state to state. Some New England states, such as Maine and Vermont, have average rates under $1200 a year for full coverage. Other states, such as California, have higher rates — up to $2000 a year. According to Bankrate, the average across the U.S. is $1989.

    Car Insurance After a DUI

    If you get charged with a DUI, your car insurance rate will go up significantly. Depending on your insurance company and your driving history, your premiums can increase as much as 75 percent, and some companies won’t insure a driver with a DUI on their record. Because a DUI can affect your rates for up to 10 years, the best way to save money is to shop around.

    The average annual premium after a DUI for a 40-year-old can increase by:

    • $1104 for full coverage
    • $473 for the minimum required coverage

      Where you live can make a significant difference in how much your rates go up after a DUI. Some states, such as Oregon and Nebraska, have an average increase that’s less than 50 percent. Other states, such as California, Hawaii, and Michigan, average an increase of more than 50 percent.

      Car Insurance for Drivers with Poor Credit

      Every state except California, Hawaii, and Massachusetts uses credit history as one of the main factors for determining all driver’s insurance rates. Insurers look at your credit to determine how much of a risk they are taking with you. A low credit score could show you don’t take responsibility for your finances, which tells the insurer you could also be irresponsible in other ways, making you more of a risk on the road.

      Some states prohibit insurers from using credit to set rates, while other states allow more room for insurers to use credit history. For example:

      • In North Carolina, drivers with poor credit can pay up to 33 percent more than drivers with good credit.
      • In Utah, the average premium doubles for drivers with poor credit compared to drivers with good credit.
      • In Michigan, the rates for poor credit drivers are about 2.4 times the average rates for drivers with good credit.

        According to MoneyGeek, the best way to get the best insurance is to get quotes from several companies. Doing this could save you up to $2500 a year.

        Comparing Insurance Rates for Drivers with Traffic Tickets

        Speeding tickets are another factor that can affect your insurance rates. The typical increase is about 25 percent, but it depends on the state where you live and your insurance company. Some insurers increase premiums by only a small amount. American Family, for example, only charges 5 percent more. Other insurance companies, such as Liberty Mutual, charge up to 34 percent more for drivers with tickets than drivers with clean records. Depending on the type of ticket, it can stay on your driving record for up to three years, so shopping around for a different company might help you find cheaper rates.

        You can also compare car insurance rates after a ticket by state. Premium rates increase more in some states than others after you get a traffic ticket. On the low end, you could see up to a 12 percent increase, while other states increase rates by up to 50 and 74 percent for drivers with speeding tickets.

        Comparing Insurance Rates for Drivers with Accidents

        A history of accidents can affect your auto insurance rates. You can research companies to see how their rates stack up against each other for drivers with accidents on their record. Your comparison should also include quotes for one, three, and five years after an accident to see if the rates go down or stay the same. In many cases, the premium increase can last up to five years, but the rate will go down as long as you are not at fault for any other accidents. Some companies offer accident forgiveness. This means they won’t increase your rate for just one accident.

        It’s important to get quotes after an accident because the company that offers the lowest rates for drivers with a clean driving history might not offer the lowest rates after an at-fault accident. If you are not at fault for an accident, it most likely will not count against you, although this can vary by state and insurance company. Twelve states have no-fault insurance, meaning your premiums can still go up even if you were not at fault for an accident.

        Some states don’t allow insurance companies to raise premiums after an accident that wasn’t your fault, and others set limits. In Massachusetts, for example, insurers can only add a surcharge if you were more than 50 percent at fault for the accident.

        The best way to make sure you get the best rate for your insurance is to compare companies. All driver’s insurance rates can change after an accident, ticket, or DUI, so shop around after any type of incident.

        Check this out if you need additional information, resources, or guidance on car insurance.

        Sources:

        Car Insurance for 25-Year-Olds

        DUI Insurance Rates: Everything You Need to Know

        The Best Car Insurance for Drivers With Bad Credit

        How Often Do Car Insurance Companies Check Your Driving Record?

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