Key takeaways:
- Your driving record, age, location and credit-based insurance score have the biggest impact on your car insurance rate. Coverage levels, deductible and the car you drive also matter.
- Every insurer uses its own formula to calculate your rate, which is why the same driver can get quotes that are hundreds of dollars apart from different companies.
- You can lower your rate by maintaining a clean driving record, improving your credit, raising your deductible, reducing your mileage and stacking available discounts.
- Comparing quotes from multiple insurers is the most effective way to make sure you are not overpaying for the coverage you need.
Car insurance is calculated based on how likely you are to file a claim and how much that claim would cost. Insurers use a combination of personal factors like your age, driving record, location and credit history, along with vehicle-specific details and the coverage levels you choose, to determine your premium.
Jerry has helped over 1,207,380 drivers compare car insurance quotes, and we know that understanding how your rate is calculated can help you make smarter choices about coverage. Here is what goes into your rate and how to pay less for the protection you need.
Jerry pulls up to 20 quotes from top rated carriers.
How insurers calculate your rate
There are two steps every insurer follows before quoting you a price. According to the National Association of Insurance Commissioners, the first step is underwriting, where the insurer evaluates your risk profile by looking at your driving history, the car you drive, where you live and other personal details. The second step is rating, where the insurer assigns a price based on what it expects it would cost to cover your potential claims.
Every insurer weighs these factors differently using its own proprietary formula. That is why two companies can look at the exact same driver and quote prices that are hundreds of dollars apart. This is also why comparing car insurance quotes from multiple insurers is so valuable.
Key takeaway: Insurers calculate your rate in two steps: underwriting evaluates your risk to file a claim, and rating assigns a price. Each company weighs factors differently, so quotes for the same coverage can vary.
Factors that affect your car insurance rate
According to the Insurance Information Institute (III), your car insurance premium is shaped by a wide range of factors. Some are within your control and others are not. Here is what insurers look at and what is happening with each factor right now.
Key takeaway: Your car insurance rate is shaped by factors like your driving record, age, location, credit score, vehicle type, coverage levels, mileage and claims history. Some, like your deductible and coverage, are within your control, while others, like age and location, are not.
Learn more: Types of car insurance
When it’s important to understand how your rate is calculated
Understanding the factors behind your rate helps you make informed decisions about your coverage and find ways to save. Here is when it matters most.
| Situation | Why it matters |
|---|---|
| You are shopping for a new policy | Knowing what affects your rate helps you compare quotes and adjust coverage for savings. |
| Your rate went up at renewal | Understanding your rate factors lets you identify what changed and whether switching makes sense. |
| You are a young or new driver | Your age and experience are major pricing factors, but there are ways to offset higher premiums. |
| You recently moved to a new state | Location is one of the biggest rate factors, and state laws affect what coverage is required. |
| You have a recent accident or ticket | Violations increase your rate, but the impact fades over time and varies by insurer. |
| You want to lower your current premium | Understanding what you can control, like your deductible or mileage, lets you find savings. |
| You are buying or leasing a new car | The type of vehicle you drive directly affects your insurance cost. |
Key takeaway: Understanding how your rate is calculated matters most when you’re shopping for a new policy, dealing with a rate increase, moving to a new state, adding a new car or looking for ways to lower your current premium.
How to get a lower rate with Jerry
You do not need to spend hours calling insurance companies to find a lower rate. Jerry makes it easy to compare quotes from 100+ insurers in minutes.
Jerry’s licensed agents are available seven days a week if you need help understanding how much car insurance you need or choosing the right coverage levels.
Find insurance in your state
Factors you can control to lower your rate
While you cannot change your age or where an accident happened three years ago, there are several factors within your control that can meaningfully reduce what you pay.
Your driving record
Your driving record is the single most influential factor you have control over. Accidents, speeding tickets, DUIs and other violations signal higher risk to insurers. According to the NAIC Consumer Shopping Tool, insurers look at your driving record over the past three to five years when calculating your rate.
The good news: a clean driving record over time will bring your rate back down. Some insurers also offer accident forgiveness, which prevents your first at-fault accident from raising your premium. You can also enroll in a telematics program, which uses an app or plug-in device to track your real-time driving habits and can earn you a discount for safe driving.
Jerry recommends: If you have a violation on your record, do not assume your current insurer is still your cheapest option. Different companies penalize violations differently, so comparing quotes could save you hundreds.
Your credit-based insurance score
According to the NAIC, approximately 95% of auto insurers use credit-based insurance scores in states where it is legally allowed. Your credit-based insurance score is different from your regular credit score. It predicts how likely you are to file a claim, not how likely you are to repay a loan.
Improving your credit can lead to lower insurance rates in most states. However, eight states currently ban the use of credit-based insurance scores: California, Hawaii, Maryland, Massachusetts, Michigan, Nevada, Oregon and Utah.
Why it matters: Your credit-based insurance score weighs payment history most heavily, followed by outstanding debt. Paying bills on time is the most effective way to improve this score.
Your coverage levels and deductible
The coverage types you choose, the limits you set and your deductible all directly affect your premium. Higher coverage limits mean more protection but a higher monthly cost. A higher deductible means you pay more out of pocket if you file a claim, but your monthly premium goes down. Most Jerry customers choose a deductible between $501 to $1,000.
Drivers who carry full coverage car insurance pay more than those with state minimum liability insurance, but they also have far more financial protection if something goes wrong.
Jerry recommends: Choose the highest deductible you could comfortably afford to pay if you had to file a claim. Jerry lets you preview how different deductibles affect your total premium before you buy.
Your annual mileage and available discounts
The more miles you drive each year, the more you will pay for insurance. If you work from home or have a short commute, let your insurer know. Some companies also offer telematics programs that track your driving habits and reward safe behavior with lower rates.
Do not forget to check for car insurance discounts you may qualify for. Common discounts include bundling home and car insurance, paying your premium in full, having anti-theft devices, being a good student or completing a defensive driving course.
Key takeaway: You can lower your rate by maintaining a clean driving record, improving your credit, raising your deductible, driving fewer miles and stacking available discounts.
The car you drive
The make, model and year of your car all factor into your rate. Insurers look at the cost to repair or replace your vehicle, its safety record, the likelihood it will be stolen and how much damage it could cause in an accident. Newer, more expensive or high-performance vehicles cost more to insure.
Cars with advanced safety features like automatic emergency braking and lane-departure warnings may qualify for discounts. On the other hand, vehicles that are frequent targets for theft typically come with higher premiums.
Why it matters: You cannot change your age, but you can choose your vehicle and shop across multiple insurers to find the company that rates your specific profile most favorably.
Learn more: Average car insurance costs
Factors you cannot control
Some of the biggest factors in your rate are things you have limited or no control over. Understanding them can still help you choose your vehicle wisely and shop across multiple insurers to find the company that rates your specific profile most favorably.
Your age and gender
According to III, younger and less experienced drivers, especially teenagers, generally pay the highest premiums because they are statistically more likely to be involved in accidents. Rates typically decrease as drivers gain experience, with the most significant drops happening after age 25. Seniors may also see rate increases as accident rates tend to rise for drivers over age 65.
Gender also plays a role in most states. Statistically, men under 25 tend to have more serious accidents and DUIs. However, some states prohibit gender as a rating factor, including California, Hawaii, Massachusetts, Michigan, Montana, North Carolina and Pennsylvania.
Learn more: Car insurance costs by age
Where you live
Your ZIP code is one of the most significant factors when determining your rate. Urban areas with higher rates of accidents, theft and vandalism tend to have higher premiums than suburban or rural areas. State laws, traffic density, local repair costs and the rate of uninsured motorist coverage claims in your area all affect what you pay.
According to the Insurance Research Council, 15.4% of motorists were uninsured in 2023, with rates varying widely by state. Living in an area with a high percentage of uninsured drivers can push your rates higher because insurers factor in the likelihood that you will be hit by someone without coverage.
Learn more: Liability insurance vs. full coverage
Why rates vary so much between insurers
Every insurance company uses its own proprietary formula to calculate your rate. Two companies can look at the exact same driver and quote prices that are hundreds of dollars apart.
This happens because insurers weigh rating factors differently. One company might penalize a speeding ticket more heavily, while another might give more weight to your credit score or the type of car you drive. Some insurers specialize in certain driver profiles, like young drivers or drivers with violations, and offer more competitive rates for those groups.
According to the NHTSA, an estimated 39,345 people died in traffic crashes in 2024. Insurers factor in regional accident trends, claim costs and traffic fatality data when setting rates for different areas.
This is exactly why comparing quotes matters. The insurer that was cheapest for your neighbor may not be cheapest for you, and the only way to know is to compare quotes for your specific profile.
Why it matters: Insurers set rates based on historical loss data for similar risk profiles. Shopping around is the most effective way to find the company whose formula works in your favor.
It only takes 2 minutes to sign up at Jerry.
faq
-
Does my credit score affect my car insurance rate?
-
Why is my car insurance so expensive?
-
What is the biggest factor in car insurance pricing?
-
Does the type of car I drive affect my insurance rate?
-
How often should I shop for car insurance?
-
Can I lower my car insurance rate without changing coverage?
Methodology
Data included in this analysis comes from policies that Jerry has quoted within the last 6 months for drivers with a clean record and that have full coverage, unless stated otherwise. Data related to violations, accidents or credit scores pull from quote data from the last 18 months. Jerry services 48 states and offers a range of insurance companies to choose from. Read Jerry’s car insurance data methodology to learn more about how we collect, verify and share real-world insurance data.
Ben Moore is a writer and editor at Jerry and an auto insurance expert. He previously worked as a writer, editor and content strategist on NerdWallet’s auto insurance team for five years. His work has been published in The Associated Press, Washington Post, Chicago Sun-Times, MarketWatch, Nasdaq and Yahoo News. He also served as a NerdWallet spokesperson, with appearances on local broadcast television and quotes in Martha Stewart and Real Simple magazine.
Ben has an extensive background in digital marketing, working on affiliate and programmatic advertising campaigns for brands like Cabela’s, H&R Block and Sears. He holds a bachelors degree in marketing from Olivet Nazarene University.
