What Major Factors Influence Your Auto Premiums?

What Major Factors Influence Your Auto Premiums?

| September 02, 2022

You’ve probably heard all kinds of information when it comes to what factors are considered when insurance companies determine your premiums. Maybe you heard that your neighbor’s premiums went down because they traded that red car for a blue one, or a coworker mentioned their rates went up when they turned 70. Maybe a friend told you people with mustaches pay more. Who knows how the decision is made? Well, there are a plethora of things to consider when it comes to why your premiums are what they are, and some might not be what you’d expect. Today we will look at some of these major factors.

Insurance History

Insurance history, like credit history, is a major factor when insurance companies set premiums. If you’re a new driver, there isn’t much history to determine your driving habits. On the other hand, there is deluge of data that indicates newer drivers are at higher risk. Or maybe you have habitual gaps or long stretches without coverage. Insurance companies often see the willingness to drive without insurance as a red flag.

Age and Experience

This is one of the biggest determining factors in your premiums. Age and experience play a factor in decision-making. Teenage drivers have historically been riskier drivers on the road due to a lack of experience both on and off the road. Because of this, teenage drivers pay the highest premiums. On the contrary, the lowest premiums are paid by adults in their 50s, as data indicates that these drivers are often lowest risk. This is because these drivers have logged more experience on the road, which leads to smarter decisions behind the wheel.


Some may be surprised to learn that gender does play a role in things. Insurance companies review data all the time, and on average they have found that male drivers are more likely to have riskier driving habits while female drivers tend to avoid risky habits and situations that lead to accidents.

Driving History

Not to be confused with insurance history or years of experience, driving history refers to your track record on the road. Do you have a history of tickets, accidents, or motor vehicle-related crime? Age and experience don’t supersede twenty years of bad driving. Insurance companies weigh this heavily when setting your premiums.


How many miles are you logging each year? Fewer miles driven typically show that the driver will be less exposed to the risks of driving than someone who drives thousands of miles each year. Because of that, insurance companies must consider how often you plan to be on the road.

Claim History

Claim history refers to your history of involvement in auto insurance claims. A long history of claims, either filed by you, against you, or that include you as party to a covered incident, is often a red flag to insurance carriers. Insurance companies have access to a database called the ISO Index, and they can use this database to find deep and detailed claims history for any claim in which you’re involved. Underwriters and adjusters use this data daily. If they see a long pattern of payouts by your insurance company or to you by insurance companies, they will take that into serious consideration when making decisions on your premium.

There are several other factors that go into deciding your insurance premiums, and every insurance company uses that information a little differently in their process. For a personalized review of your policy, or a quote tailored to your needs, call Insurance Strategies – The Cooksey Agency at 757-819-6896 today!