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Car insurance factors, find out what affects your rate | Wawanesa

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car insurance factors include car accidentsAre you wondering what affects car insurance rates? There are numerous factors that go into determining your car insurance premiums. Some of these are within your control while others are far outside of what you will influence. Insurance companies each use their own system of statistical analysis and calculations to come up with the precise number for your premiums, and these will vary depending on your state and your insurance company. To help shed some light on these factors and give you an idea of what to expect, we have put together a list of the seven most common variables that can affect your car insurance rates:


What Affects Car Insurance Rates?

1.    An Increase in Accidents

Sometimes your rates can go up regardless of whether or not you have personally been in an at-fault accident or received a traffic ticket. How can that be? There is a straightforward reason behind it, as John Erickson, our VP & Chief Product Officer, explains:

“In recent years, the combined effect of the increased number of accidents and the increased cost to settle the associated claims has caused the average annual cost of insurance to rise by approximately 10%. While insurance companies will identify higher risk drivers, including those with recent accidents and charge them more than ‘clean’ drivers, they can’t bear the entire additional costs.”


2.     An Increase in the Cost of Claims

While factors such as a rise in drivers on the road and an increase in drivers actively using, their smartphones have caused the number of accidents to jump (in turn leading to higher premiums for all).  Another major factor Mr. Erickson points to is the rising cost of claims themselves.

“The cost involved in settling claims has risen greatly in the last few years. While safety improvements have eliminated some accidents, the cost to repair newer vehicles has multiplied greatly. A bumper repair that once cost $1,500, can easily reach $5,000 or more on a new car with sensor technology.  In addition, the cost of medical services for people injured in accidents has been increasing much faster than general inflation.”

Even as premiums rise, clean drivers will continue to pay less than high-risk drivers. That being said, the increasing costs of repairs, labor rates, and medical services, can and do affect auto insurance rates.


3.     The Type of Car You Drive

Modern vehicles have more moving parts and complex systems to fix after an accident, which means repairs include more steps, more time and more money. For instance, replacing a bumper that is equipped with cameras, sensors and wiring for the rearview camera can cost almost twice as much as replacing the bumper on a base model that doesn’t include the same technology. In short: the more expensive the car, the pricier it is to repair. If you own the top-of-the-line trim model of a car, you will probably pay more in premiums compared to owning the base model.  


4.     Driving Habits

The more often you drive, and the longer the distances you travel, the more likely you are to be involved in an accident. For that reason, insurance companies often take your daily driving habits into account when tabulating your premium payments. People who use their car as a work vehicle, and those who have long-distance commutes typically pay higher premiums than those who drive less. So, if you’re looking for ways to lower your premiums, consider joining a carpool, taking public transportation, or riding your bicycle to work.


5.     Driving Record

One of the main objectives of your auto insurance provider is to minimize the risk involved in insuring their customers and your driving record is one of the biggest risk indicators they evaluate. That’s why the amount you pay for your auto insurance will directly correspond to your history of at-fault accidents and moving violations. Traffic convictions will earn you points on your record. The more points you have, the higher your premiums will be.


6.     Where You Live

A lot of people are surprised to learn that where you live is a factor when your car insurance company calculates your rate. If you live in an area that sees a high volume of insurance claims, it will likely increase your rates. For instance, if you live in a Zip code that reports a lot of vehicle accidents, vehicle thefts, or is involved in a high number of insurance fraud cases, it is likely that your rates will be higher. 


7.     Driving Experience

Inexperienced drivers pose a significantly higher risk on the road which means they also pose a higher risk to insurance companies. The more years of driving experience you have, the better. Especially if you have a clean record. Not only could this qualify you for lower premiums, but it also might earn you good driver discounts.

There are many other factors that go into calculating auto insurance premiums, and these factors will vary from state to state. If you would like more information on what you can do to lower your rates, contact us. We can guide you through the process. If you think you may be eligible for a better rate, get a free quote today to see if you should be paying less for your car insurance.




The above content is for informational purposes only and is not a direct representation of coverages offered by Wawanesa or its policies. The information does not refer to any specific contract of insurance and does not modify any definitions, provisions, exclusions or limitations expressly stated in any contracts of insurance. All references within the above content are illustrative and may not apply to your situation. The terms and conditions of the actual insurance policy or policies involved in a claim are determinative as to whether an accident or other loss is covered. To understand the coverage under your current policy, please log into the account management platform to review your policy or contact an agent directly.

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