Car Insurance Reviews

How Is Car Insurance Calculated?

How is car insurance calculated? According to State Farm, Esurance, the Insurance Information Institute, and Hartford Insurance, your auto insurance rate varies based on how likely you are to file an insurance claim and whether that claim will be expensive for the company. Some factors that come into play include:

  • your policy deductible amount
  • coverage limits
  • coverage types
  • vehicle type
  • driving history
  • how many miles your vehicle normally drives
  • where you park your vehicle

Each insurance company has its own formula for determining coverage costs, but exploring the general factors can help you better understand your rates and maybe even save on your auto insurance premiums.


According to state farm, esurance, the insurance information institute, and hartford insurance, age is one of the biggest factors contributing to the price of your auto insurance. Young drivers are at higher risk due to their inexperience, so rates tend to be much higher for drivers under the age of 25. Teen drivers may be able to access a lower rate by joining the parent’s policy or by seeking quotes from companies that offer student discounts. Older drivers are less at risk for expensive claims, so their policy rates are typically lower than younger drivers.

geographic location

According to State Farm, Esurance, the Insurance Information Institute,, and Hartford Insurance, the state, city, and even zip code you live in influence how much you pay for auto insurance. In general, those who live in urban areas pay higher rates than drivers in more rural locations because cities have a higher incidence of car accidents, vehicle theft, and vandalism that result in expensive claims. If you live in a busy or high-crime area, be prepared to shop around for affordable auto insurance.

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vehicle type

The more expensive your car is, the more expensive it will be to insure the vehicle. State Farm, Esurance, the Insurance Information Institute,, and Hartford Insurance note that some wanted vehicles are at higher risk of being stolen, which also increases the costs of your insurance premiums. this is also true for vehicles that are more susceptible to injury and damage to passengers.

The safety features of your car also factor in the cost of insurance. Vehicle safety ratings come from both industry safety data and customer complaints. The safer a car is, the less likely drivers are to sustain serious injuries resulting in expensive medical claims. anti-theft systems like immobilizers and alarms may also qualify you for lower insurance rates.

for example, state farm, esurance, the insurance information institute, and all point out that one of the most expensive vehicles to insure is a two-door honda civic. These popular vehicles are common targets for auto theft and have lower than average security scores.

driving record

when you get a quote, state farm, esurance, the insurance information institute, and hartford insurance note that the insurance company will also review your auto insurance claim history and check for points on your record of conduction. You must provide information on all claims you have made to your auto policy in the last five years.

If you’ve had accidents or serious traffic violations, you’ll experience a higher car insurance premium, even if you weren’t at fault for these incidents. After several years go by without a claim or accident, you will see the cost of your policy decrease. Many insurance companies also provide an additional discount for each year that goes by without making a claim on your policy.

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In addition to these factors, you may qualify for special discounts from your insurance provider. ask for lower rates for:

  • claim-free driving
  • bundling policies for multiple vehicles
  • getting good grades in high school or college

driving frequency

state farm, esurance, the insurance information institute and note that when you get a quote, the insurance company will ask you for an estimate of how many miles you drive each year. Those who drive far and often are more likely to have costly accidents than people who drive infrequently. If you work from home or babysit and leave your car parked in the garage all week, your insurance rates will be lower. Similarly, a person who drives just 5 miles to work will pay lower premiums than someone who drives 50 miles to work.


According to State Farm, Esurance, the Insurance Information Institute and Hartford Insurance, whether you’re male or female influences how much you expect to pay for auto insurance. Women tend to pay lower premiums because data shows they have fewer car accidents overall, as well as fewer accidents in which they are arrested for driving under the influence of drugs or alcohol. Men, especially single men, have higher rates of serious car accidents and DUI incidents, so they often pay more for auto insurance.

Similarly, State Farm, Esurance and Hartford Insurance note that marital status can influence the price of your auto insurance. That’s because married drivers tend to have fewer accidents than single drivers, and therefore coupled drivers are less expensive to insure.

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credit history

According to State Farm, Esurance and the Insurance Information Institute, companies also consider your credit history when determining your auto insurance rates. That’s because a poor credit history is statistically correlated with a higher likelihood of filing future insurance claims. Some companies use a different type of score called a credit-based insurance score. Although this score is similar to your credit score, it predicts the likelihood that the insurance company will suffer a loss due to a future claim. conversely, when your credit score improves, your auto insurance rates will likely improve as well.

cover type, hartford and the insurance information institute point out that your policy options, limits and deductibles take into account how much you’ll pay for auto insurance. Be sure to compare similar policies when looking for quotes from different auto insurance companies.


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