Gianetta Palmer is a writer for CarInsurance101.com, copywriter, and essayist. Her work has appeared in EverydayHealth.com, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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Several factors are involved in computing car insurance rates. Once you obtain a policy, your rates are constantly subject to change; at each policy renewal, your insurance company will review your policy to see if any changes must be made to your rates. This means that every six months to a year, your car insurance policy may increase or decrease in price even if the coverage stays the same. Ideally, you will want your car insurance to slowly decrease or remain stable over time.

In order to keep your premiums low, you will want to engage in safe driving practices. Any accidents or traffic violations will count against your driving history and potentially cause your rates to increase. You can also save money on car insurance by taking advantage of any discount programs your insurance company might offer.

What causes my car insurance rates to increase?

Generally, car insurance companies base their rates on a driver’s likelihood of being involved in an accident. The higher the chances a person has of being in a car accident, the higher his rates will be. This is because insurance companies must balance the premiums against any potential claims they will need to pay while insuring an individual. There are several factors of your driving history that apply toward determining your insurance premiums:

  • Whether you have ever been convicted of a DUI
  • Any history of traffic violations
  • Speeding tickets
  • Any previous accidents you’ve been involved in

In addition to your driving history, car insurance companies will review a number of demographic factors. Insurance companies rely heavily on statistics to determine rates; statistics are especially important for young drivers or those who don’t have much driving history to review. While there are several statistical factors involved in car insurance, some are much more common than others:

  • Your age
  • Your marital status
  • Your credit score
  • Where you live

The type of vehicle you drive also plays an important role in determining your rates. The more expensive a vehicle is to repair or replace, the more it will cost to insure that vehicle. Vehicles with low safety ratings also cost more to insure.

The area where you live also plays a role in determining your policy cost. Areas with a higher crime rate will cost more than safer neighborhoods, due to the rise of theft and vandalism. Areas prone to harsh weather will also see higher insurance rates than other places.

How to lower your car insurance rates

You can reduce your car insurance premiums by engaging in low-risk behaviors. While some elements of your insurance, such as your age, cannot be changed, you do have direct control over other factors. You can purchase a safe and inexpensive vehicle and install an anti-theft device. You could also work on repairing your credit, as good credit will lead to lower insurance premiums.

You can also improve your car insurance rates by relocating where your vehicle is kept. While you may not be able to move to a new city or neighborhood, you might be able to store your vehicle in a garage or covered carport rather than out on the street. This will cause a decrease in your rates.

If you are involved in an auto accident, you can reduce the impact on your policy by paying more out of pocket for your claim. You can opt to pay for your own repairs or even settle with the other party. The less your company needs to pay to settle a claim, the less effect it will have on your policy. Paying for a claim out of pocket isn’t always an option, but for minor accidents it can help prevent your rates from increasing dramatically.

The most important thing you can do to keep your rates from increasing is to engage in safe driving habits. Each year that you carry insurance without needing to use it your rates will decrease. In addition to avoiding accidents, be sure to avoid obtaining any traffic violations or speeding tickets. Also don’t engage in other dangerous activities like driving under the influence.

You can also speak to your insurance company to see if there are any discounts you could take advantage of. In addition to safe driving discounts, many companies also provide reduced rates to people who take advanced driver’s education courses or discounts to customers with multiple policies through the company.