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What Will Raise (or Lower) Your Car Insurance Rates

Your vehicle options, driving habits and even your age can affect what you pay for coverage

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Matt Chinworth

It’s not your imagination: Car insurance has gone up — a lot. So much so that auto insurance premiums are now a significant force driving inflation. But why have prices skyrocketed? Does the color of your car, the car options you choose or how you drive affect your premiums? What about how old you are? More important, what can you do about lowering your insurance costs?

Why it’s up

At the beginning of 2024, the cost of insuring a car in the U.S. had jumped a whopping 20.6 percent compared to the previous year, according to the Bureau of Labor Statistics consumer price index (CPI). That is the single greatest price increase since 1976, when Gerald Ford was president and we were in the middle of an energy crisis. According to Bankrate’s estimate, the average annual cost of car insurance for full coverage in the U.S. is now $2,543, compared to $1,771 just two years ago. 

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Car insurance rates are up for two fundamental reasons:

  1. Cars are more expensive to buy.
  2. Cars are more expensive to repair. 

According to the CPI, new car prices rose over 20 percent from 2020 to 2024, for example.

So when accidents happen (to those other drivers — never you, of course), insurance companies have been paying out more. From 2020 to 2024, auto repair costs rose 32 percent; that, in turn, raises rates for all of us. Unfortunately, there’s not a lot you can do about that.

What factors can you control to keep your car insurance as low as possible? Here are a few myths busted and truths told about what sets your car insurance price.

Does driving an EV mean lower insurance?

What if you did the environmentally conscious thing and switched from a combustion engine car to an electric vehicle (EV)? EVs require less maintenance than gas-powered cars, so one might assume that they should also be cheaper to insure. Alas, the opposite is true.

EVs are still relatively new and require newer technology and expertise. The Progressive insurance company, for example, says insuring an EV may cost more because EVs tend to have more sophisticated technology, and if there’s an accident, those components are more expensive to repair or replace. 

LexisNexis, which supplies insurance companies with industry data that many of them use to set premiums, cites higher labor and parts prices associated with EVs that mean it costs more to fix an electric vehicle versus a traditional internal combustion engine car. And that translates into higher insurance rates.

According to Zebra, an insurance comparison website, a Chevrolet Bolt EV costs $78 more per year to insure than a Hyundai Ioniq Blue, a hybrid. And a Tesla Model 3 Long Range costs $470 more per year to insure than a gas-powered Audi A4 2.0T Premium.

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There is some good news on the EV front: Electric car prices are coming down. Compared to a year ago, the average price of an EV is down 13 percent, so we should start to see a concomitant drop in related insurance rates. 

And some insurers reward buyers for dumping their gas-powered vehicle. For example, Farmers offers what it calls an alternative fuel discount for vehicles powered by anything other than gasoline, but only in California. So it doesn’t hurt to ask your agent to see if similar discounts are available in your area.

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How does the color of my car affect insurance?

“The most common false myth about auto insurance is, a red-colored car costs more to insure than other vehicles. Color is not a factor in the price of auto insurance,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute, an industry trade group.

The idea behind this piece of automotive folklore seems to be that a flashier car (red!) suggests you’re also a flashier or more aggressive driver and therefore more prone to take risks. Friedlander says this isn’t the case, although over a dozen other factors do affect your insurance, including the vehicle make, model, body type, engine size, safety record, and how often the model is reported stolen.

The last two factors explain why some Hyundai and Kia models were difficult to insure for a while thanks to popular TikTok videos demonstrating how to steal them. Conversely, it also explains why the most inexpensive cars to insure, according to Progressive, are the Subaru Ascent, Subaru Forester and Honda Passport. According to the insurer, those vehicles are reportedly safer because they have lower bodily injury losses than other models. (Bodily injury losses refer to the other party’s medical bills when you are found liable in an accident.)

Do seniors pay higher insurance?

Another common myth is that older drivers pay more for car insurance, Friedlander says. In fact, the opposite is true. In most states, the younger you are, the higher the rate — although not all states allow age as a factor when determining rates, according to Bankrate. A person's gender also matters in most states; males can expect to pay more than females, although that gap narrows as people get older. 

Older drivers may also be eligible for special discounts.

Friedlander points out that those over 55 can often get a reduction in their auto insurance premium if they successfully complete a defensive driving course (available through state-certified agencies as well as through AARP). And people who are retired and therefore may now be driving less could be eligible for a discount (check with your insurer).  

On the other hand, while Friedlander says drivers in their 50s and 60s with clean driving records pay the lowest average car insurance rates in the U.S., he acknowledges that rates begin to increase slightly for drivers in their 70s due to an enhanced risk of accidents.

Do my driving habits matter?

Friedlander’s caveat about a clean driving record is a significant factor in what you will pay. If you drive above the speed limit and rack up tickets for your transgressions, that will affect your insurance rate. Avoiding higher insurance premiums should be an incentive to obey the traffic rules.

However, even if you stay within the rules of the road, you may get tagged to pay higher rates. The New York Times has reported that insurers have been penalizing drivers not only for violations of traffic laws but also for their recorded regular driving habits — legal or not.

As cars have become rolling computers and listening posts, automakers have increasingly been recording the status of those cars, including their location and speed. That data can include recording driving behavior such as jackrabbit starts and hard braking — information car companies such as GM have been collecting and selling to outside companies like LexisNexis, according to The New York Times. In turn, LexisNexis sells the information to auto insurers, which use the data to set rates for individual consumers.

Since publication of the Times story, GM says it has changed its policy and will no longer share driving behavior details with other companies. However, if you tend to be a jaunty driver and own a late-model car from another manufacturer, your insurer may be using your driving habits against you.

Car companies tend to conceal such information in voluminous user agreements most of us sign without reading, but owners can generally opt out of such tracking. If you want to do so, make sure you do not sign up for any driving improvement or monitoring program, or even use the automaker’s smartphone apps, which may require that you allow them to track you. 

Will a car with more safety tech mean lower insurance?

The tracking data that some manufacturers monitor is made possible thanks to the technology and communications equipment in the latest vehicles. Some of that same technology can make your car safer and help avoid accidents, such as automatic emergency braking and lane-keeping assistance. So if you buy a car with such advanced safety features, will the insurance company cut you a break? Probably not.

Insurers have been notoriously slow to recognize the value of the latest advanced driver assistance safety systems. Progressive and Bankrate both claim that the inclusion of safety features can lower your insurance. But this claim is based on the fact that insurers use Insurance Institute for Highway Safety ratings to determine the relative safety of particular cars. In assessing safety, the institute now includes collision avoidance and mitigation technologies, such as automatic emergency braking, in its rankings. However, don’t expect insurance companies to give you a specific price break just because your new car has a video rearview mirror that eliminates blind spots or lane-centering assist.

Do car model options make a difference?

The options package or, in automotive argot, trim level you select will affect what you pay in car insurance. That means extras like brand-name sound systems, leather seats, Bluetooth and internet connectivity, and powered moonroofs can raise your premiums. A base model without such features will probably be less expensive to insure.

Similarly, the body style of your vehicle can affect your premiums, according to Bankrate. Four-door sedans, for example, are associated with more conservative drivers. Sporty coupes are associated with more risky driving behavior — even if it isn’t a Corvette or Porsche.  

Anything else?

Other factors can affect your insurance rates, including whether you are married (usually less if you are married, according to Bankrate) and the number of claims you’ve made in the past (more claims generally mean higher insurance). 

On the positive side, California, Hawaii, Massachusetts and Michigan no longer allow insurance companies to use two important factors against you: your gender and your credit history. Thank goodness for small mercies.

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