When do car insurance rates go down?
By Allstate
Last updated: January 1
Car insurance rates may go down for a number of reasons. Some factors that help your rates go down are within your control, while other factors are set by the insurance company. The cost of car insurance can also rise and fall over time due to a variety of circumstances.
What factors can affect a policy's price?
Many of the factors that may affect your car insurance premium are related to the amount of financial risk you pose to the insurance company.
Insurance companies use underwriting and rating to help set the price of a car insurance policy, according to the National Association of Insurance Commissioners (NAIC). During underwriting, insurers assess the risk of an insurance applicant. During rating, the applicant is assigned a price based on the results of the underwriting process.
Some of the risk factors insurers look at may include the type of vehicle you drive and your driving record, according to the NAIC. What you pay for car insurance could increase or decrease when you buy a new car or participate in an insurer's telematics program to track your driving habits.
Demographic factors such as age, gender and location also may play a role in your car insurance rates, according to the NAIC. Moving to a new location, for example, can make your car insurance premiums go up or down.
How you can help reduce your car insurance cost
Adjust your current policy
You may be able to help decrease your car insurance premiums by taking on more risk (which decreases the risk you pose to your insurer). This could mean:
- Dropping optional coverage, such as collision or comprehensive if you own your vehicle outright
- Decreasing your coverage limits
- Increasing your deductibles
Keep in mind that doing these things could increase your personal financial burden after a car accident.
Shop around and seek discounts
In addition to making adjustments to your current car insurance policy, you may be able to take additional steps to lower your car insurance premiums. These include bundling your auto and home insurance policies with the same insurer or shopping around to compare car insurance quotes.
And, don't forget about taking advantage of potential car insurance discounts, from safe-driver savings to discounts for students with good grades. Discounts vary by insurer, so be sure to ask your agent for more information.
Does car insurance go down at 25?
Insurers typically charge higher premiums for drivers younger than 25, according to the Insurance Information Institute (III). But, as teen drivers get older, rates typically drop — as long as they maintain a good driving record, the III says.
One thing to consider: If you're still living with your parents in your mid-20s, it may be more affordable to stay on your parents' car insurance policy. Parents may have lower rates than young, single drivers, says the NAIC. But, if you own your own car (the title is solely in your name), most insurance companies will require you to have your own auto insurance policy, separate from your parents' policy.
Insurance rates for males vs. females
You may also wonder whether insurance rates are different for males and females. Females statistically get into fewer car accidents than men, according to the III. But, age and gender are only part of the many factors that may affect car insurance cost. The car you drive, driving history, driving record and where you live and drive can also play a role in how much you pay.
Car insurance rates can fluctuate over time, but you may be able to take some steps to help reduce your premiums. Knowing some of the factors that insurers consider to set rates can help you make smart decisions about your policy and potential savings.