9 Life Events That Might Affect Your Car Insurance Rates

Your car insurance company accounts for a number of changes in your life that could affect your car insurance premium, such as moving to a new area or buying a new car. While not all life events will have a positive impact on your insurance rates, understanding how the changes in your life affect your premium can let you know what’s important to notify your insurers about for potential discounts.

Keep reading to learn more about several life events that impact car insurance rates, how your insurance company calculates your rates and what you can do to reduce your costs.

9 Life Events That Can Impact Car Insurance Rates

Below, we’ll discuss some life events and situations that can change your car insurance rate. 

1. Getting Married

Marriage can result in lower car insurance premiums thanks to certain discounts. Some companies will offer a multi-car discount if you add your spouse’s car to your existing policy. However, keep in mind that if you add your spouse to your policy and they have a poor driving record, it could result in a higher car insurance bill.

In addition, if you separate from your partner, either due to death or divorce, you can no longer claim the multi-car discount unless you’re insuring at least two cars.

2. Buying a Home

Auto insurance companies may offer homeowners discounted rates because they believe these individuals are more stable and less risky than renters. If you’ve recently purchased a new home, it may be worth updating your insurers to see if it will affect your rates. In addition, many insurers offer discounts if you bundle your car and homeowners insurance.

3. Getting Older

As a person gets older, insurance companies will charge you different rates based on your age category. Younger people tend to pay higher-than-average car insurance rates, as they’re three times more likely to get in an accident compared to drivers over 20 and are, therefore, more risky to insure.^[1] Elderly adults can also see their premiums rise, with car accidents becoming more likely as drivers reach 70 and older.^[2]

4. Having Children

Having a child doesn’t typically directly result in changes to your car insurance premiums, but it could result in some changes to your driving that might affect your rates. For example, you may upgrade your existing car with a minivan or SUV that can be rated safer than other car models and could result in fewer rate-increasing claims. 

Additionally, having a child on board could make you a more cautious driver, which would help keep your driving record clean and may result in good driver discounts.

However, down the line, when you have to add your teenager to your auto policy, you will likely see your rates increase to account for their driving inexperience.

5. Starting a New Job

Depending on the circumstances, job-related changes can raise or lower your premiums. For example, starting a new job requiring a significant car commute could result in higher insurance premiums as you would spend more time on the road and be at higher risk for an accident, like a fender bender. However, your insurer may reduce your car insurance rates if a closer commute means you spend less time on the road.

Insurers may also charge people more based on their professions. For instance, they may charge those who regularly drive at night, such as late shift workers, more due to riskier driving conditions. At the same time, individuals perceived to be careful, like first responders, may receive a lower rate or discount.

6. Buying, Selling or Owning a Vehicle

The car model you own can affect your premiums and insurers may charge lower rates for older models than newer ones because cars depreciate as they age. At the same time, certain high-performance vehicles, luxury cars and SUVs may cost more to repair due to their advanced technology and higher-quality parts, which can result in increased rates.

In addition, if your car is old and paid off, you may be paying for only minimum coverage. If you buy a new car and finance it, you will need to buy collision and comprehensive coverage, which will add an additional cost.

If you sell your car and don’t plan on replacing it for some time, canceling your current policy could leave you vulnerable if you still want to drive occasionally by borrowing someone else’s vehicle. Consider purchasing non-owner coverage to provide liability coverage while driving a car that doesn’t belong to you. Otherwise, going without coverage will create a lapse in coverage that can make it more expensive to buy car insurance in the future.

7. Moving to a New Area

Each state has different minimum car insurance requirements, which is why you can see insurance premiums vary considerably by state. Some states require higher liability limits than others. For example, you have to buy at least $15,000 of bodily injury coverage to one person in California and at least $25,000 of coverage in Massachusetts.^[3][4] Massachusetts also requires additional types of coverage on top of standard liability coverage, including uninsured motorist insurance and personal injury protection.^[4]

In addition, local accident rates, crime rates, repair costs and other local factors can all affect your insurance rate. For example, if you move to an area with a high rate of auto burglaries and vandalism, you may face higher comprehensive insurance premiums. However, certain states like Michigan don’t allow zip codes to factor into insurance rates.^[5]

8. Changes in Your Credit Score

In some states, car insurance companies utilize a credit-based insurance score to help underwrite your policy, as poor financial history could indicate risk for a car insurance claim. If you’ve recently gotten a low credit score due to late or missed payments, high credit utilization or other factors, it could result in higher rates. Similarly, if you pay off a big debt and stay timely on your payments, you may see your insurance rate drop in the future.

However, insurance companies can’t use your credit score to solely determine your rates in some states that have either restricted or banned the practice, including California, Hawaii, Maryland and Massachusetts.^[6]

9. Getting Into a Recent Accident

If your driving history shows a record of accidents or claims, it could increase premiums. For example, average car insurance premiums can increase by 49% after an accident.^[7]

To help keep your record clean and reduce any rate increases, you’ll generally want to remain accident-free for around three years. This can qualify you for a good driver discount that can further lower your premiums, but the exact requirements and discount amount can vary by state and insurance company.^[8]

How Do Car Insurance Carriers Typically Determine Rates?

Car insurance companies will gauge your rates based on how likely you are to make a claim. These risk factors can range from where you live and your driving history to your personal information, such as age and gender. What factors determine rates can vary between insurance companies, so shopping around to determine your best options for auto insurance rates is essential for getting the best price.

Keep in mind that some life events that could affect your rates, such as purchasing a home, aren’t obvious to your insurance company, and you may need to inform them directly to see changes in your premiums. Additionally, how much of a deductible you choose can affect your rates, as a lower deductible may result in higher premiums to offset the insurer’s cost.

Are There Ways To Lower Car Insurance Rates?

Companies account for multiple factors when determining car insurance rates, some of which may be outside your control. However, there are a few means of reducing your rates through discounts, finding a better deal and reducing your risk to your insurer:

• Increase your deductible: Higher deductibles can lower your premiums.
• Keep your driving record clean: Insurers use risk to calculate your premiums and showing you’re a safe driver could result in lower rates.
• Improve your credit score: In some states, financial stability is another factor that could lower your appearance of risk, resulting in lower rates by keeping a good credit score.
• Get a multi-car discount: If you insure several vehicles with the same company, you'll generally receive a discount. 
• Buy a car with safety features: You may get discounted premiums if your model has certain safety features or equipment, such as passenger-side airbags.
• Bundle: Buying auto insurance and homeowners or renters insurance from the same company will typically add a bundling discount to your policy.
• Shop around: Compare quotes from at least three to five car insurance companies to ensure you get the best value at the best rate. Click here to get a cost-free quote today.