What Factors Affect the Price of Car Insurance Rates? | Gabi

by Jessie Jordan,  Oct 3 2017
Updated at Mar 24, 2022|2 min read

You’ve probably looked at the monthly cost of your auto insurance and wondered if it was pulled out of thin air. With the complexity of car insurance, it might seem that way. So, what factors affect car insurance rates? The experts at Gabi are here to help demystify all things related to the insurance industry. Here are the four main factors that go into calculating your rates on auto insurance.

Factor #1. Driving Experience

The more years you’ve been licensed–especially with a clean driving record (no tickets or at-fault accidents)–the lower your cost of insurance will be.

Factor #2. Vehicle Rating

Fast cars have a higher probability of causing a major accident. Expensive cars are expensive to repair. More commonly stolen vehicles are more likely to be targeted by thieves. The “riskier” the car–as defined by the factors above–the more expensive your insurance rates.

Factor #3. Coverage Limits

These should be selected based on your protection need. A high-net-worth driver will need higher liability limits since they have more assets exposed. It’s better to be slightly over insured then slightly under insured.

Factor #4. Location

Each zip code is unique in the eyes of insurance companies. Your insurance cost will be higher if a company has paid out more claims than average in your zip code. Because this factor changes constantly, it’s important to shop again for insurance at every renewal.

While the exact calculations that go into your monthly rate may be extremely complex and constantly changing, the insurance rating factors remain relatively constant. Make sure to keep them in mind when you’re in the market for auto insurance.

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Editorial content on is reviewed by a licensed insurance agent. It is intended for informational purposes only and should not be considered legal or financial advice.
Written by
Jessie Jordan
Jessie is a Marketing Specialist at Gabi. As a licensed insurance agent, she has been helping Gabi customers buy and understand auto, home, renters, landlord, and umbrella insurance in a digestible way since she joined the Gabi team in 2020. Before joining Gabi she was a globally recognized Senior Account Executive for UPS- trusted with advising top brands on how to grow and streamline their business.
Reviewed by
Robbie Boddy
Robbie is the Vice President, Head of Sales & Customer Experience at Gabi. As a licensed insurance agent, he has more than 15 years of experience in the insurance industry, joining Gabi after working with Liberty Mutual as the Assistant Vice President and Site Leader, Direct Sales and Innovation. Robbie is a member of the Chartered Property and Casualty Underwriters society and has a Master of Business Administration (MBA) from Grand Canyon University.
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