8 weird factors that affect your auto insurance rate


Paul Sisolak

Paul Sisolak

Blog author Paul Sisolak

As a personal finance journalist, Paul specializes in financial literacy, loans, credit scoring and the art of negotiation. He's covered some of the nation's most inspiring financial success stories for national publications including CNN, and US News & World Report and has a passion for helping Americans overcome their debt.

Published September 16, 2016|6 min read

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It’s an all-too-common scenario when shopping for auto insurance. You’re the model motorist, with a spotless driving record; a veritable VIP down at the DMV.So why is it that you keep getting quoted rates high enough to blow a head gasket in your budget?Even when you’ve dispelled its many myths, auto insurance rates – and what determines them – are still a riddle wrapped in a mystery inside an enigma. Hard as it may be to believe, but your choice of job, where you live, your marital status, and other metric-based factors can raise your rates.Take a look at some of the surprising, strange things that can raise your car insurance rates:

1. Your marital status

Does being married or partnered up make you a better motorist? Or are single people trying to impress someone and are therefore more prone to reckless driving? Whatever the reason why insurance carriers tend to impose higher rates upon single people. Research has shown that carriers like Farmers, Progressive, Nationwide and Liberty charge singletons, and also divorced and separated motorists, higher premiums than married folk. Additionally, widowed men and women aren’t immune to the effects of higher rates compared to their single, unmarried peers.

2. The reason you drive a car

Even when you driving record is clean, insurers want to know why you drive. Is it to commute to work daily? Or just to drive around town on the weekends? Maybe you use your vehicle for semi-commercial purposes, like using a truck to haul goods for a business. This can pose a big impact on the rates you receive, which may vary up to 18% depending on the nature which you operate your vehicle, according to The Zebra. And while the differences in usage are slight, the disparities in price can be great: data shows that drivers who use their car for undefined business purposes may pay up to $227 more annually versus people who use a vehicle for farming/agricultural purposes.

3. Your occupation

It may seem biased, presumptive, and even un-PC, but insurance companies will link the risk of your getting into an accident with your choice of profession. For instance, a scientist’s meticulous attention to detail can give insurers the impression that they’re more cautious and careful on the road. So do police officers, priests and nuns, and yes, even insurance underwriters, who are hoped to practice what they preach. Those on the road a lot, like delivery drivers, or with high-stress occupations, like attorneys, are prone to higher rates.

4. Where you live (and park your car)

Home is where the heart is – and where higher auto insurance rates may be, too. Doesn’t it sound a bit unfair, since one of the only times you’re not driving your car is when you’re home? Just like a franchise business (i.e. Starbucks) carefully scouts and selects the locations to set up shop based on demand and potential profitability, insurance carriers do their research when it comes to charging rates based on the neighborhood you live in. If you live in an urban area, you’re more prone to vandalism, theft, or car accidents, which can spike your premiums even if you or your vehicle have ever been involved in such an incident. They’ll also take into account population, overall crime rates, the average number of insurance claims filed in the area, and oddly enough, even the weather. Compare that to folks who live in small towns or rural areas, whose rates are likely to be cheaper.My own personal experience is an exercise to the contrary. In 2012, I bought a new car while living in Los Angeles, the second largest city in the U.S., infamous for its gridlock and motorist madness. Two to three years later, I paid more money on auto insurance for the same car, even though it had now depreciated in value, having aged and lived out its factory warranty. And I was living in a far less densely populated area of Florida, too. After changing insurance carriers three times to avoid rising rates, I still paid higher premiums in Southern Florida compared to Southern California. My agent at the time explained to me that one factor was due to the higher amount of retired, elderly drivers (greater accident risk correlated with lowered mental/physical faculties), and a generally high concentration of uninsured drivers.

5. What's under the hood

Higher horsepower can mean higher insurance rates. According to the Kelley Blue Book, the more HPs your engine has, the more likely you are to drive faster, and thus, at worse risk of getting into an accident. And it’s not just the high performance sports cars that count; even an upgrade in trim level on a family-level sedan – say from a 4-cylinder engine to a 6-cylinder – can ratchet up your insurance premiums with the increase in HP. If you’re budget minded yet looking at a vehicle with several different engines and performance options, consider that insurance isn’t the only way you’d end up spending more on a car with higher HP. A 6-to-8-cylinder car will get lower miles per gallon than its 4-cylinder counterpart, and you may also need extra octane fuel that costs more at the pump, too.

6. A low credit score

A low credit score can get you turned down for loans or lending products, or approved only for those with high interest. But it can also affect your auto insurance premiums, too. The reasoning? Low credit score = high car accident risk. Could it imply that if you’re careless with your money, you’ll be reckless on the road? Another explanation comes from insurer State Farm, who notes that insurers use the information in your credit report as a predictor for future insurance rates – up to 92 insurance companies, in fact, according to survey data.

7. Your habits

There used to be a time when every car had a lighter and ashtray of some sort. And we all know how being a smoker can affect your health insurance rates. But it can impact your auto premiums, too. And here’s the odd reason: it’s not because of the long-term health effect posed by smoking (like cancer or heart disease), but that smokers might be too distracted using their hands to light up instead of steering their car’s wheel. The National Highway Traffic Safety Administration even found that 1% of all distracted driving accidents were linked to smoking: puffing away, lighting up or flicking ashes into an ashtray. Now might be a good time to quit, for the sake of your health and other motorists.

8. Your education level

A college degree can open up more professional and career opportunities, but it may also secure you lower auto insurance rates. Data from both GEICO and Progressive indicate that the companies charge factory workers with only a high school degree higher insurance rates compared to their college educated colleagues (up to 45% in Seattle and 33% more in Baltimore, respectively). Studies have shown a link between low education levels and higher risk of car accidents. A recent study by The American Journal of Epidemiology indicated that in recent years, the amount of people with a high school or college degree who were killed in auto accidents decreased – while traffic-related deaths of those without degrees actually increased. So, this might be a good time to get back to school and hit the books if you’d like better pay, more advancement, and lower auto insurance rates.Taking this into account, it explains the good student discount some of your straight-A classmates have nabbed. Not only will it incentivize you to be a driver with eyes on the back of their head, but it’ll save you some money in the long run, too.

Paul Sisolak

Blog author Paul Sisolak

As a personal finance journalist, Paul specializes in financial literacy, loans, credit scoring and the art of negotiation. He's covered some of the nation's most inspiring financial success stories for national publications including CNN, and US News & World Report and has a passion for helping Americans overcome their debt.