What Factors Determine Your Auto Insurance Cost?

Auto Insurance Cost Comes in Many Flavors, Some Sweet, Some Sour

You’ve saved and researched and shopped around to finally buy your dream car and you feel great! But then you go buy auto insurance and that new car smell vanishes faster than the air goes out of your balloon. Why are your premiums so high? What determines auto insurance rates, anyway?

The answer is simple—it just depends on many complex factors. And while you may think paying more on your insurance premiums than on your car note is unfair, your dilemma correlates to one thing: Risk.

No, not your favorite board game of world conquest, but your risk of having an accident, getting your car stolen, running out of oil on the highway, or losing your car in a storm. Insurance is always about betting against bad things happening, and the likelihood of bad things happening is the simplest definition of risk that we know.

Auto Insurance Cost Equals Your Personal Risk Factors, Say Leading Scientists

We can hear you saying that you’re a good person, a safe driver, a conscientious car owner, and we believe you. But insurance companies have an almost unnatural obsession with determining risk. For decades, they’ve studied all the factors they use to determine your most likely risk factors, and from there, they determine your auto insurance premiums. So your high premiums are not a personal judgment, but rather a statistical calculation.

These Big Four Factors most determine your auto insurance rate:

  • The type of policy you need
  • Your age and gender
  • The kind of car you drive
  • Where you live and drive

Other factors come into play as well, but these are the most common and important.

  • Some minimum amount of auto insurance is required by law in every state but New Hampshire, so most drivers only purchase this minimum coverage. But state regulations vary widely: some are no-fault states (your insurer only pays for repairs to your car), some require only liability coverage (pays for damage caused by you), and some guarantee personal injury protection (PIP). You may also want to purchase more insurance protection than the minimum, especially for that new dream car of yours.
  • Your age and gender come into play because statistics consistently show that young, male drivers get more speeding tickets and have more accidents than all other drivers. On the other hand, older drivers have fewer accidents or violations (one of the benefits of getting older, kids). More accidents and car thefts occur in urban areas, so your rates will be higher if you live in a large city.
  • Finally, some kinds of cars cost more to insure than others. High-performance sports cars present more risk to an insurer than a Dodge minivan. But if your car is a frequently stolen model, your premiums will be higher. Ironically, that minivan is on the list of commonly stolen cars, as are popular models like the Nissan Maxima, Toyota Camry, Honda Accord, and Ford F-250. These cars are the most frequently stolen because they are also among the most popular and best-selling cars.

Your Auto Insurance Cost Can Be Lower If You Shop Around and Compare

Some insurers use other factors, such as your occupation, marital status, and education, to determine rates. And the insurance industry invests a lot of resources in crash-testing new car models. The Insurance Institute for Highway Safety (IIHS) awards Top Safety Pick ratings that you can browse here.

But for the most part, the Big Four Factors above are the primary indicators of how much you will pay to insure that new dream car. Visit EINSURANCE Auto today to compare free quotes and find out who can help you lower your auto insurance cost.


EINSURANCE is a one stop shop for insurance quotes comparison. Our writers, researchers, and industry experts all work together to inform consumers about online insurance marketplace. Whether you’re buying your first car insurance policy or finding health insurance for your families, EINSURANCE always provides latest relevant information to your choices.