Short Answer:

credit score
zip code
driving record
age & sex of driver
vehicle & coverage
levels of liability

Long Answer:

Credit Score
This is listed first for a reason. In my opinion, it is the most important factor when determining risk. If someone has a lower credit score, they are much more likely to turn in a smaller claim that someone with a higher credit score. The person with a higher credit score would normally NOT turn in these smaller claims (they would just pay out of pocket to keep their premium from going up).

FYI — when running quotes for a client or prospect, it does not show us their credit score. It shows their “insurance score” which is closely tied to credit and their propensity to turn in claims.

Let’s say your tires are worn, very worn, and in need of replacement. Someone with a lower credit score is less likely to replace the tires when the time has come. Imagine a car with bald tires barreling down a highway or icy road….I’ll just leave it at that.

Also, someone with a good credit score is more likely to practice safe driving habits.

Insurance companies are smart — they have to charge more premium if a client is more likely to turn in a claim or have an accident.

Zip Code
The area in which your car spends the majority of its time will also factor into the premium. If you live in an area with high traffic or crime, it opens the door for accidents and claims.

Driving Record
Obviously your history of turning in claims and tickets/accidents is going to affect the cost of insurance. Most companies look at the last 3 years, some preferred companies go back 5 years.

Age & Sex of Drivers
This one is also obvious; 16-18 year old drivers are more likely to be involved in an incident than someone who has been driving for 10+ years.

Myth: You receive a discount on car insurance when turning 25 or 26. This is a fallacy and should not be taken to heart. Every year after turning 16, it goes down a little bit, until maybe the 25 year-old range. It’s not like there is a discount for turning 25. Age is just one of many factors that affect the premium and the further away from 16 you are, the better. This has to level off at some point and I believe this happens around the age of 25.

Also, the sex of the driver has a small affect on the rate. Generally, female drivers are more careful than male drivers. This is especially true with younger drivers. You can argue all you want but the proof is indisputable.

Vehicle & Coverage
The bigger the vehicle, the more damage it could do to a building, another car, house, etc. Also, the cost of parts for a certain type of vehicle is important. Typically rare or high performance vehicles cost more to insurance because of how hard it is to find parts.

If two brand new cars cost $40,000 and $20,000, which one do you think would cost more to insure?

Having full coverage is going to cost more obviously, and the year/make/model of the car correlates directly to the price due to the reasons state above.

Levels of Liability
There are many levels of liability coverage which affect the premium directly. If an insurance company is providing $100,000 in liability coverage per accident, then they are on the hook for that amount should something terrible happen. Therefore, they have to charge for this elevated coverage.

It is important to maintain higher liability limits if you own things, specifically a home or business. In the event of a major accident and your liability limits are exhausted, you are personally on the hook for the remainder.

People with more to lose need to make sure they are covered properly, to protect everything they’ve worked for.

Sometimes people want the cheapest insurance available, sacrificing coverage for price, which leaves them vulnerable should they have a substantial accident.

The cost for parts and labor increases a little bit every couple years, which means the insurance companies must adjust their rates to make up for the inevitable losses which will cost more and more each year.

Other Factors
Owning your own home usually equates to a nice discount. Having multiple cars usually results in a discount as well. There is also a “good student discount” for a driver with a GPA of 3.0 or better. Having an alarm or anti-theft device on your vehicle allows for added savings as well.

Thanks for reading and if you wanted to extend the dialogue or want a local, independent agent to shop your insurance, feel free to email me at

Cody Sailor
Sailor Insurance Agency
225 N. Main Street
Edwardsville, IL 62025

(618) 659-1495  /