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Factors Affecting Auto Liability Insurance Rates

Nearly every state requires motorists to carry liability insurance that covers injuries to other people or damage to other people’s property when you cause a car accident. This type of insurance is the minimum coverage you’ll need to drive on public roads, but it can still be costly depending on your accident history and more.

Key Factors Influencing Liability Car Insurance Rates

Several factors can affect liability car insurance rates, including previous moving violations, coverage amounts, vehicle type, and your age. Here are 13 factors that impact the cost of auto liability insurance:

1. Driving History

If your driving history shows even a few moving violations (such as speeding tickets) in the past several years, your liability car insurance rates may be higher than those for a driver with no moving violations on their record. You might even pay more for liability coverage if you’re a new driver who lacks a driving history.

2. Accident History

Have you been involved in one or more auto accidents in the recent past? If so, your liability car insurance rates might be higher than a driver with an accident-free record.

3. Claim History

An insurer will check to see how many auto insurance claims you’ve filed in the past three to five years when you’re buying or renewing a policy. If you’ve recently racked up a few claims, you might end up paying more for liability coverage.

4. Vehicle Type

The kind of car you drive affects the price of your liability coverage. For example, if your car costs a lot to repair, is likely to be stolen, or has a poor safety record, an insurer might bump up your liability insurance rates.

5. Safety Features

If your car is equipped with an array of safety features, you might enjoy some relief from higher liability car insurance rates. Safety features that could result in lower rates include:

• Airbags
• Anti-lock brakes
• Anti-theft devices
• Rearview cameras
• Blind-spot monitoring systems
• Lane-departure warning systems
• Adaptive cruise control

6. Age

Younger drivers, namely those under age 25, often pay more for liability insurance. That’s because they tend to get into more accidents than older drivers do. Even if you, the policyholder, are over the age of 25, your insurance costs can rise if you live with a younger driver who has access to your vehicle or who is listed on your insurance policy.

7. Gender

Data shows male drivers get into more accidents than female drivers, including serious accidents and drunk driving accidents. Therefore, male drivers might pay more for liability insurance than their female counterparts.

8. Marital Status

You might pay the price for being single when you buy liability insurance. Why? Because single drivers statistically tend to file more auto insurance claims than married drivers do.

9. Location

Where you live helps determine your liability car insurance rates. For example, if you live in an urban setting with high rates of accidents, theft, and vandalism, you could face higher liability insurance rates than if you live in a small town or rural area. Likewise, you might pay more for liability coverage if you park your car on a residential street rather than in a more secure garage.

10. Coverage Level

If you decide to buy liability coverage that exceeds the state-mandated amount, you’ll likely pay more for it. For example, Texas requires at least $30,000 of bodily injury coverage per person, up to a total of $60,000 per accident, and at least $25,000 of property damage coverage. But if you choose to surpass your state’s minimum amounts to ensure you’re better protected financially, your liability insurance rates will probably rise.

11. Past Coverage

If your auto insurance has been canceled or not renewed over the past few years, an insurer might charge a higher rate for liability insurance.

12. Discounts

A number of auto insurance discounts can lower the cost of liability insurance. For instance, you might score a discount if you:

• Insure more than one vehicle with the same company
• Purchase at least a couple of policies with the same company (such as auto and homeowners insurance)
• Earn good grades
• Maintain a good driving record
• Don’t drive a lot

13. Credit History

Many U.S. insurers rely on credit-based insurance scores to help generate car insurance quotes. (Use of these scores when determining rates is banned or restricted in several states.) A credit-based insurance score takes into account factors such as payment history and length of credit history to judge your insurance risk. This score enables an insurer to predict how likely you would be to file an insurance claim. This type of score differs from the credit scores lenders use, but they tend to be based on the same general factors. For that reason, improvement in your credit score could translate to an improved credit-based insurance score.

The Bottom Line

Many factors go into setting rates for liability car insurance. Therefore, it’s important to obtain quotes from several insurance companies before settling on liability coverage. Use Experian’s free policy comparison tool when you’re shopping for car insurance to get quotes from several insurers.

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