What Affects Car Insurance Rates?

Car insurance rates vary. Here are a few tips.

Car insurance rates, illus. by Ron Chan, image

Car insurance rates are based on a variety of factors. 

Car insurance policies can have as many moving parts as the vehicles they cover. Here are some key considerations to help you understand how your rates are determined.

  • A sporty car can cost you Got your eye on a new Corvette or Ferrari? Sharp cars with big engines often carry higher rates. Family vehicles, such as SUVs and minivans, tend to cost less to insure because their drivers have fewer collisions and their repairs can be less costly. Forget what you’ve heard about a car’s color; it won’t alter your premium. Feel free to choose red.
  • As in home values, location matters Rates often run higher for residents of urban areas, where collisions and theft are more common. Car owners in rural areas get off easier on that count even though they tend to drive more miles, a practice that might otherwise raise their rates.
  • Shiny new car? Pricier coverage As a rule, the newer the car, the more it’s worth and the more it costs to insure. Yet popular older models (the 1994 Honda Accord and 1991 Toyota Camry, to name just two) can have unexpected value when they’re chopped up and sold for parts. Their appeal to thieves can also nudge up your insurance rate.
  • The little things in life make a difference It’s no surprise that drivers with good records tend to pay less. Insurers are eager to cover drivers proven to be careful and considerate—who are a good risk, in other words. What’s less well known is that married people often pay lower insurance rates as well.
  • Youngsters and oldsters don’t always pay more Seniors and drivers ages 16 to 25 tend to run higher rates, but both groups can earn discounts. AAA offers discounts of up to 20 percent to teen drivers who complete the TeenSmart program and up to 5 percent to seniors who complete a mature driver safety course. Find details at AAA.com/safety.

Illustration by Ron Chan

This article was first published in September 2013. Some facts may have aged gracelessly. Please call ahead to verify information.

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