If you’ve been driving for many years without an accident and with few speeding tickets, you might think that insurance companies will offer you their best rates. Unfortunately, that’s not necessarily the case. Insurers increasingly save their best prices only for customers who meet criteria unrelated to their driving histories. For example, most companies offer their lowest rates only to college graduates, homeowners, and, in most states, those with excellent credit scores. They’re also increasingly relying on secretive and opaque methods to calculate their rates. As we discuss below, some of these factors have huge effects on the rates you pay, but so do several other facts about you and your cars.

The Company You Keep

Your choice of insurance company has a huge effect on your premiums. Our price comparisons found that some companies charge more than double what others do for the same drivers, cars, and coverage.

Driving Record

The accident rate for drivers who have had accidents in the past few years is far higher than it is for people who have had no accidents. Similarly, the accident rate for individuals with two speeding tickets during a three-year period is twice as high as the rate for drivers with no tickets. That’s why your driving record has a big impact on the premiums companies offer you.

Cause an accident or receive a traffic violation in the previous five years and you’ll pay higher auto insurance rates than drivers who haven’t. Although with many companies, a single speeding ticket won’t affect their rates, with others a ticket more than doubles their rates. Accidents can be even more costly than tickets. One at-fault accident in the last three years will typically raise your premiums by 30 to 60 percent.

Most companies consider the driving records of everyone driving your car or cars. Therefore, if you have a perfect driving record but your spouse has had violations or accidents, you may not qualify for the companies’ best rates.

Fortunately, insurers don’t hold accidents or tickets against you forever. After three to five years, they cancel penalties for previous accidents and tickets if you’ve been a good little driver.

Many companies now offer discounts if you allow them to track how much you drive, how far, how fast, and whether you often do knuckleheaded things like suddenly accelerate, brake, or turn. Under these programs, you get an initial discount (10 or 15 percent) for playing along; after three to six months of tracking, your company might offer a bigger discount (on average, an additional 10 to 15 percent) if they deem you a “safe” driver—or provide no price break if it decides you’re a maniac. Of course, in our world of Big Data and big data breaches, these programs pose big-time privacy problems.

Age, Gender, and Marital Status

Drivers under 25 have the highest accident rates; after age 30, accident rates drop and remain fairly constant up to age 65, but then get worse. Men have more accidents than women. And married drivers have fewer accidents than singles.

This does not mean that women or older men are better drivers than, say, 25-year-old men. They may have fewer accidents simply because they drive fewer miles. Nonetheless, low accident rates result in lower premiums.

Many companies offer special rates, usually four to 10 percent lower, for those under age 25 who have taken approved driver training courses. Studies have shown that these courses do not produce better drivers, but because “good risks” seem to take them, they serve as a convenient screening.

Many companies also give a break—often 10 to 20 percent—to high schoolers who earn good grades (usually a B average or better). The combination of discounts for driver training and good grades may total 15 to 30 percent of a family’s premium.

Most companies also cut premiums dramatically if a driver on a policy goes to college more than 100 miles from home without taking a car. In addition, by agreeing to restrict a young driver to a single less-expensive car, a family may be able to cut the rates on other vehicles it owns.

Credit History, Education, Homeownership, and Secret Factors

In most states, insurance companies use credit history as a factor in setting rates. Using complicated formulas, insurance companies—or credit bureaus, on their behalf—calculate an insurance score to determine rates, or even whether to cover a driver at all. The insurance formulas are not the same as those used by lenders (banks, mortgage companies) to calculate credit scores, but they draw on the same types of data and are becoming increasingly more opaque. The formulas vary from company to company, since different insurers (or scoring companies) weigh factors differently.

The appropriateness of using credit histories and similar data in setting insurance rates is a hotly debated topic among the insurance industry and consumer groups such as ours. Companies clearly charge far higher rates to customers with poor credit scores than to those with good scores. Past reporting by Consumers’ Checkbook, the Consumer Federation of America, Consumer Reports, and others found that those with fair or poor credit scores can pay twice as much as similar drivers who have excellent credit scores—a similar penalty for having a recent at-fault accident or several speeding tickets in the last year.

A handful of states have banned this practice. Checkbook and other consumer advocates want all states to enact similar protections against the use of credit scores and other financial information to set insurance rates.

Our view is that all states should ban the use of credit scores and other financial information to set insurance rates, for several reasons:

• There’s an alarming lack of transparency. When insurance companies don’t have to disclose their formulas—even though the formulas have a huge impact on their rates—they circumvent laws put in place to oversee the industry and prevent discrimination and other abuses.
• By relying on credit reports and scores, the insurance companies are using data well known to possess many errors.
• The system effectively discriminates against minority groups, which are more likely to have lower credit scores.
• By making auto insurance unaffordable for many low-income drivers, these policies severely impact uninsured drivers, which in turn raises rates for others.
• By relying so heavily on credit scores and other financial factors, these pricing policies fail to punish lousy drivers and reward safe ones.
• Most Americans need to drive to get to work, get kids to schools, and shop, and auto insurance is a required purchase if you drive. The poor shouldn’t have to pay a disproportionately large penalty when they buy required coverage.
• Another moral issue: Medical debt is a leading cause of low credit scores in the U.S. Should the sick (and their survivors) have to pay double or triple for auto and home insurance?

Insurance History

If you have had a lapse in insurance coverage at any time in the past five years—including for non-payment of premium—expect your rates to skyrocket. Insurers view potential customers who have had insurance lapses as high-risk policyholders, and most will not offer them their lowest rate plans. Similarly, many insurance companies will not offer their lowest rate programs to potential customers who have recently maintained liability coverage limits below the 100/300/50 level.

Where You Live

Some localities present more chances for accidents, experience a higher incidence of auto theft and vandalism, or have higher repair costs or medical and legal charges than others. These differences sometimes result in far higher auto insurance rates in some areas  than in others.

The Car You Drive

Insurance companies charge more for insurance on vehicles that are relatively expensive to replace and repair, or prone to damage and theft. Some companies charge extra for, or refuse to insure, high-performance cars because their owners may be less responsible than other drivers.

Your insurance premiums may also decrease if your car is equipped with optional safety devices or anti-theft features. But these discounts are usually very small—typically only one to three percent of the total premium.

How Much You Drive

Premiums are higher for drivers who put many miles on their cars, but typically surcharges for high-mileage drivers and discounts for low-mileage drivers are small.

Companies also consider the number of cars they are insuring for a family, providing discounts for second cars because companies assume you will drive each car less than you would drive a single car.

Dual-Policy Discounts

Some companies love to tout the big discounts you’ll get by signing on with them to insure both your cars and home. Some knock off five percent, 10 percent, or even more from either the auto rate or the homeowners rate; some knock off a percentage from both. But keep in mind that even a 15 percent dual-policy discount isn’t really much of a discount if it’s offered by a company that charges twice as much as its competitors.

This dual-policy pricing is undesirable for consumers because it makes shopping more difficult; to find out the exact savings you could realize by switching companies, you have to shop for both types of coverage at once. Click here for our comparisons of homeowners insurance companies.