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How do car insurance quotes work?
Most insurers allow shoppers to get free car insurance quotes online. When calculating quotes, insurers try to predict how likely you are to make a claim based on what they know about you. Let’s break down a few of the variables that insurance companies use to estimate your quotes.
Car insurance quotes by company
Car insurers charge different prices for coverage, and you might find a drastically lower quote at one company compared to another.
This is the most important reason to compare auto insurance quotes when shopping. For example, a driver could get a quote costing $109 per month from one company and $196 per month from another for the same full coverage policy.
How location affects vehicle insurance quotes
Car insurance is regulated at the state level, so auto insurance quotes often vary drastically depending on where you live.
And accidents are more likely to happen in dense, urban areas, so drivers in large cities often get higher quotes than people in rural communities.
State requirements
Nearly every state has some minimum coverage requirements for drivers to legally operate on the road. However, requirements vary drastically from state to state.
Most states require some form of bodily injury and property damage liability insurance, though the actual coverage limits required can differ. The higher the coverage limits required, the more expensive the policy.
Some states require some form of uninsured and underinsured motorist coverage or personal injury protection (PIP), whose limits can also vary and add to policy costs considerably.
Population density
Insurers price premiums based on the risk or likelihood of claim filings in an area. Typically, denser urban areas with narrower roads and more vehicles experience a higher frequency of car accidents and, in turn, claim filings.
Drivers in densely populated areas are likely to pay more for car insurance than those in less dense areas. Rhode Island, for example, is one of the only states with more than 1,000 residents per square mile, and it is in the top 10 for most expensive auto insurance quotes.
Local risk profiles
Because auto insurance is regulated at the state level, states often function as distinct insurance markets with different carriers operating depending on the state.
Insurance companies all have their own proprietary mechanisms to assess risk, bundle coverage types and price auto insurance quotes, so some insurers cost more than others. The rates available to drivers depend on the insurers operating in their state.
Some states may statistically have more high-risk profiles than others. If a state, a city or even a particular neighborhood demonstrates a consistently high frequency of accidents and claim filings, insurers will increase quotes accordingly.
How coverage affects auto insurance quotes
When purchasing auto insurance, the more coverage you buy, the higher your bill will be, but you’ll also get more protection in case of a crash.
The two most common types of car insurance policy are:
- A minimum coverage policy, which meets the minimum legal requirements for car insurance in any given state.
- A full coverage policy typically adds comprehensive and collision coverage and therefore costs more. Full coverage, however, provides protection for damage to your car, even if you’re responsible for the crash.
How gender impacts car insurance quotes
| 17 | $4,618 | $4,946 | 7.1% |
| 24 | $2,159 | $2,277 | 5.5% |
| 32 | $1,831 | $1,846 | 0.8% |
| 65 | $1,364 | $1,401 | 2.7% |
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Car insurance is typically more expensive for men than women, especially for younger drivers.
Differences in quotes are typically larger among new drivers in their teens, and often the gap in price between men and women narrows significantly throughout their early 20s to mid-20s.
Quote disparities are largely due to how insurers evaluate risk, as historical data has shown that young men engage in risky driving behavior more often than young women.
Some states, however, prohibit carriers from using gender in the auto insurance quotation process, including California, Massachusetts and Michigan, among others.
How age affects car insurance quotes
Car insurers typically charge young people much more for car insurance than older, more experienced drivers.
Your age is one of the key determining factors when it comes to how much you’ll pay for insurance.
Auto insurance quotes are usually most costly for younger and new drivers who have less experience on the road. Quotes typically level off around 30 years old and increase slightly much later in life when drivers become seniors, particularly after age 70.
How vehicle type affects auto insurance quotes
Car insurance quotes can vary substantially depending on the type of vehicle you drive.
In general, car models that are newer, more expensive, faster and less safe have higher insurance costs. But every insurer weighs each of these factors differently.
Among the country’s top-selling vehicles, which range from pickup trucks and SUVs to sedans, the Mazda CX-5 and Ford Ranger have some of the cheapest full coverage car insurance rates.
| SUV | Mazda CX-5 | $2,343 | $25,370 |
| Minivan | Honda Odyssey | $2,585 | $32,290 |
| Sedan | Honda Civic | $2,732 | $21,900 |
| Crossover | Chevrolet Traverse | $2,632 | $33,700 |
| Pickup truck | Ford Ranger | $2,558 | $25,285 |
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How credit scores impact car insurance quotes
| Very good | $1,638 |
| Average | $2,208 |
| Bad | $3,341 |
Insurance companies have found that credit scores help indicate how likely drivers are to file claims, so a better credit score can mean lower rates.
Our analysis found that for full coverage policies, drivers with very good credit receive quotes that are 51% less expensive than quotes for those with poor credit.
Some states, including California, Michigan, Massachusetts and Hawaii, have banned the practice of using credit scores to determine insurance quotes. In these states, your credit score will not influence your auto quote. A few other states are considering adopting similar legislation.
How marital status affects auto insurance quotes
| Single | $2,208 |
| Married | $2,125 |
Married drivers typically pay less for auto insurance than single people.
Insurers tend to view married drivers as more financially stable and risk-averse and therefore charge them lower rates than single drivers.
Across the U.S., single drivers on average tend to pay $83 more per year for full coverage auto insurance than married drivers. Mississippi has the biggest difference in rates, with single drivers paying 13% more per year than married drivers.
Married people can also generally save on insurance by sharing a policy and qualifying for multicar discounts.
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