How Are Auto Insurance Rates Determined?

Posted By Brandon J. Broderick, Attorney at Law

5 Mar. 2018

As an insured driver in New Jersey, you may feel like there’s no rhyme or reason to your insurance rates, but we assure you that’s not the case. You might be surprised to learn just how much goes into your insurance rates. There are the obvious factors, like whether you drive a sports car, and if you have too many speeding tickets, or if you have a conviction for driving while intoxicated (DWI). But what about the less talked about factors? Do you know what these are?

In reality, there are a number of factors that determine your auto insurance premiums: your age, gender, driving record, the type of vehicle you drive (yes, sports cars typically cost more to insure), and even what part of town you live in. Below, we’re going to shed light on what goes into determining your auto insurance rates.

1. Your age: Your age is a direct reflection of your level of experience and as a rule, the older the driver, the more experienced and less accident prone he or she is. Marital status is another factor. Statistics have shown that married drivers get into less accidents than their single counterparts. You might not have known that.

2. Your gender: According to, one important factor is gender, “specifically since statistics say males are more likely to be involved in an accident than females.” This is also the case with young male drivers – they usually cost more to insure than female drivers the same age.

3. Your driving record: This one is a no-brainer. If you have a history of speeding tickets, moving violations or DWI – your auto insurance rates can rise – sometimes a lot. This is because the insurance companies see you as a “high risk” driver and they make you pay for it through higher insurance premiums.

4. Where you live: Unfortunately, where you live can be a big factor in your auto insurance rates. If you live in a 24-hour town like Atlantic City, or if you live in a place like Newark, Jersey City, Paterson, or Woodbridge, your auto insurance rates will be higher than if you lived in a small, rural town. Why? Because, highly-populated areas have more thefts and insurance claims, plus the risk of a crash is higher due to the level of congestion.

5. The type of vehicle you drive: This has to do with two things: 1) the value of your vehicle and 2) how well your vehicle scores on crash tests. Generally, the more it costs to repair or replace your vehicle, the higher the rates. On the flipside, if your automobile scores well in crash tests, the lower the rates.

6. If you have gaps in insurance coverage: If you’re in the habit of paying for auto insurance and then letting it lapse here and there, it will work against you. As a general rule, insurance companies consider this practice risky. So, they’ll consider you to be a higher risk and in effect, you’ll pay with higher insurance premiums. To save money, consistently maintain coverage and don’t let your insurance lapse.

7. How many miles you drive annually: You can be the best driver in the world with a clean driving record, but if you drive a lot each year, your insurance rates will likely be higher. Why do insurance companies do this to you? It’s because the more you drive, the higher the chances that you’ll be in an auto accident. To lower your rates, carpool to work, rent a car for road trips or find other ways to combine your trips and drive less.

We hope this post has cleared a few things up for you on auto insurance premiums. If you were injured in a car accident in New Jersey and need to file a claim, contact Brandon J. Broderick, Attorney at Law today. To learn more about our stellar legal team, read our Attorney Profiles.

Categories: Car Accidents
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