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UPDATED: Mar 13, 2020
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If you are not happy with your insurance rates, the best way to find a better deal is to comparison shop. By soliciting quotes and comparing several insurers, you can see if the premiums that you’re currently paying are fair or exorbitant.
Since every insurance company charges rates differently, the only way to find the best deal is to see which company has insurance products that are priced to sell.
While rates do vary from provider to provider, sometimes you pay high rates because of your driving history and your driving experience.
When there are factors that you can’t change, you simply have to wait for your prices to go down over time. Here’s your guide to rates and when they go down so that you know when you can reduce your auto insurance budget.
Make sure you have the best rates by comparison shopping with our FREE online tool! Enter your zip code to get started!
How are your insurance rates determined?
You can’t familiarize yourself with how rates go down if you don’t know how they are calculated in the first place. That’s why it’s good to rundown how auto insurance rates are determined from the start and how they get personalized.
Every insurance company files a gross rate for car insurance with the department of insurance. Once the rate is approved, the company will use their guidelines to calculate how much each applicant must pay based on the amount of risk presented. Candidates who are statistically more likely to file claims will pay higher premiums.
How does the company place each applicant into a risk class?
Insurance companies invest money to review data and trends. The purpose is to see what factors make drivers most likely to file claims.
The parts that have an effect on your premiums are called rating factors. They can influence your premiums both ways and insurers review these factors to place you in a risk class.
Common rating factors include:
- Age, gender, marital status
- Credit-based insurance score
- License status and years of domestic driving experience
- Vehicle usage and driving habits
- Annual mileage estimates
- Vehicle year, make, model, safety features, and claims history
- Zip code and vehicle rating territory
- Driving record for the past three to 10 years (depending on the state)
- Accident and claims history
Driving Experience Can Change Your Rates Regularly
When you first get a license, it can cost a small fortune to buy insurance. Auto insurance carriers classify newly licensed operators as high-risk drivers.
Since inexperienced drivers are much more likely to get into an accident, you will have to pay high rates for a few years before you can prove that you drive responsibly.
Typically, your rates will go down after you have three years of driving experience without any tickets or at-fault accidents, which is when you’ll qualify for a Good Driver Discount.
After the three years passes, you will notice that your rates will decrease each year as you get more experience. In most cases, your rates drop the most after your 25th birthday.
When Tickets Fall Off Your Record, Your Rates Fall
It’s best to take traffic school whenever you’re eligible for it. When you take traffic school for an infraction, your insurer can’t see that it happened.
If you weren’t eligible for traffic school or you didn’t take it when you had the chance, your insurer can add a surcharge to your premiums for up to three years.
If you have a surcharge on your policy, you might notice that it drops a little bit each year. You won’t get back to your old low rates for at least three years when the company can no longer surcharge you.
When the ticket drops off, you might even earn back discounts with the possibility of noticeable savings.
When Accidents Are No Longer Chargeable
Your prices don’t go up every time you file a claim. In most states, companies can only raise your rates after an at-fault accident.
Comprehensive claims and non-fault accidents usually don’t impact rating decisions. If you have an at-fault accident, how much your rates go up is dependent on whether or not there were injuries.
If you or another rated driver in your home had an accident, your rates would go down three years after the surcharge was added to the policy.
If you had a ticket and an accident, it could have disqualified you for a Good Driver Discount. When this happens, you receive the discount back when one of the blemishes falls off your record.
Loyalty, Prior Insurance, and Multi-line Discounts
If you’ve never owned an insurance policy, you might pay more for insurance. After time passes, you will be eligible for prior insurance discounts and even loyalty discounts through the carrier. How much you will save from company to company varies, but any little bit helps.
Companies also give out multi-line discounts when you buy more than one product from them. If you have auto and home insurance bundled together, you could save up to twenty percent off of each policy. If you notice that you’re not getting your discount, ask for it at your renewal.
When your policy renews, you should shop the market if you’re not happy with your new rate quote. Many times you can save money by making a switch.
Use our FREE online price quote tool to help you compare premiums instantly and you can watch your rates drop. Enter your zip code to get started!