Plenty of car owners believe that insurance rates are simply arbitrary numbers. In truth, the rates provided by insurance companies are based on real data and algorithm.

Insurance companies look at customer information and available claims data before they provide insurance rate quotes. If you have a high risk of getting caught in an accident, they will quote a higher rate for your insurance premiums.

Some of the risk factors that companies consider aren’t that obvious. For example, some insurers use credit history as one of their criteria. Others stick to the traditional criteria. They evaluate certain factors such as age, location, driving experience and marital status.

Learn all the factor that can affect your car insurance premium rates as you read on.


Most insurance companies ask for a client’s postal code before they start providing the base rate quotation. Customers who live in densely populated cities or areas with high insurance claims tend to pay higher insurance premiums. Rates are also higher for customers who live in an accident-prone city.


Auto insurance companies tend to charge higher premiums from younger drivers. This is based on the fact that younger people tend to be more immature and reckless when they’re behind the wheels. Statistics also show that young people are the riskiest type of drivers.

The rates typically drop by at least 20 percent for drivers who turn 25.

Aside from young drivers, senior drivers also tend to pay high premiums because of their increased risk of accidents while on the road.


Marital Status

Married individuals are less risky to insure compared to single, widowed or divorced individuals. Statistics suggest that married people are safer and less active than single drivers, so they’re less prone to claims and accidents.

Auto insurance rates for married couples are 5 to 15 percent cheaper than single people. Couples are also entitled to claim discounts if they want to merge their insurance policies or bundle their coverage with their renters or homeowners policy.

Driving experience

Inexperienced drivers should expect to pay high premiums because of their increased risk. For this risk factor, it doesn’t matter if you’re 16 or 55. If you don’t have driving experience, insurers will charge you more expensive rates.

This is why teenagers have to pay the most expensive insurance premiums. Their lack of driving background and their young age doubles their risk of car accidents and claims.

If you wish to find an affordable insurance policy in the UK for your teenage daughter or son, you can compare rates at websites like Quote Radar. They feature a lot of car insurance providers that offer no deposit car insurance perfect for your kids.


Driving history

Customers who have bad driving records are also risky to insure. Bad records may come in various forms. Here are some examples:

  • Minor violations – Mishaps such as parking violations can happen at any time. While this type of violation may tarnish your record, they won’t be a problem if you manage to fix them as soon as possible.
  • Speed ticket violation – Although speed violation is not a heinous driving crime, Insurance underwriters put a lot of weight into this type of driving violation because it reflects your behaviour behind the wheels.
  • Accidents – Accidents cause the highest surge in an auto insurance policy. These are red flags to any insurance company. To protect themselves, they will definitely raise your premium rates.
  • Driving under the influence or driving while intoxicated – If you get convicted for DUI or DWI, expect to pay a costly premium for your vehicle.

Claims record

Besides driving and accident history, insurers also pay great attention to the customer’s claims record. They will gather claims reports from your previous insurers to check how often you made a claim and how much you received for each claim.

If for example, you filed for insurance claims three times within two years, insurers will categorize you as a risky driver and increase your rate. Alternatively, they may decide to decline your application to renew your insurance policy.

Credit score

It’s still not clear if every car insurance company considers the credit history of a customer during the assessment.

For most auto insurance companies, they increase the premium rates of customers who have a low or bad credit score.

This is based on the results of studies which show that individuals who have bad credit score are more likely to file insurance claims and commit fraud.

If you have a poor credit history, you should have it fixed to avoid unnecessary premium rate surges.

Type of vehicle

Rates also differ depending on the type of the car a customer drives. Some brands and models are more susceptible to car crashes, while others are considered safer regardless of the experience level of the driver.

Driving with an insurance policy is a must, especially if it’s mandated by the law. It may be an additional cost, but it will equip you with the necessary protection while you’re on the road.

Before you avail an insurance coverage, we recommend conducting research to know which companies can provide you with the best deal based on the risk factors enumerated above.