How Your Credit Score and Vehicle Type Affect Auto Insurance Premiums


THE cost of your car isn’t just the amount you paid to get it out of the dealership.

Auto insurance is required in most states to drive, and it’s not always cheap.

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Auto insurance is a big annual expense for drivers, and a few key factors can change premiums by hundreds of dollars

The average insurance policy cost $1,633 in 2021, according to Insurify, and they expect the price to jump to $1,707 this year.

But your insurance rate can vary greatly depending on personal details such as your age and accident history, your car itself, and your credit.

Here are the most important factors affecting your car insurance and how much they could cost or save you.

Your credit score

In all but a handful of states, your credit score plays an important role in your car insurance rate.

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Some studies have shown a correlation between a driver’s credit score and their likelihood of filing an insurance claim.

A 2007 Federal Trade Commission report indicated that drivers with bad credit were more likely to file insurance claims than those with higher credit scores.

As a result, bad credit leads to much higher costs.

Bankrate found that in 2021, drivers paid the following amounts broken down by credit score:

  • Excellent: $1,487
  • Voucher: $1,647
  • Average: $1,865
  • Poor: $3,877

California, Hawaii and Massachusetts prohibit insurers from using credit scores to price car insurance.

In any other state, increasing your credit score can help you save hundreds of dollars on car insurance.

Your driving history

If you have a bad driving record, insurers are more likely to consider you a risk in the future.

Past accidents, speeding tickets, and DUIs will all make your insurance premiums more expensive.

ValuePenguin found that an accident increases insurance costs by 44% on average, while a DUI increases prices by double.

On the other hand, a safe driving history leads to reduced premiums, especially compared to inexperienced motorists.

According to a WalletHub study, drivers in their teens and early 20s pay hundreds of dollars more on average for insurance than 25- to 65-year-old drivers.

Your car

Insurers take into account the make and model of the car you drive when setting your premiums.

The price you paid matters; the more expensive a car is, the more it will cost to insure.

They also use your car’s safety rating and weight, loading safer and heavier cars less due to less expected damage in the event of a crash.

Luxury cars typically cost thousands more to insure than the average ride, but you’ll still see big differences between an everyday car or truck.

Bankrate compared the average premium drivers of 50 different paid cars and found, for example, that a Ford F-150 costs $291 less to insure than a Honda Accord or Civic.

Your family

As mentioned above, young drivers are generally considered to be among the riskiest and pay the highest premiums.

Of course, most teens don’t have their own insurance coverage and are likely covered at their parents’ expense.

You can expect your premium to more or less double after adding a teenager to your policy.

Your location

Drivers in some states pay significantly more for insurance than others.

Idaho offers the cheapest average price for full auto coverage, $1,027, while the most expensive, Louisiana, charges $2,986 on average.

Most people aren’t willing to move states on insurance rates, but many states offer different quotes to drivers in different zip codes.

Typically, drivers in urban areas pay more than motorists in the suburbs or countryside, due to the higher risk of theft, vandalism or accident.

You can use this calculator to compare costs by postcode to see how your rates stack up.

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