As the cost of everyday living continues to rise, we are all looking for ways to stretch our dollars wherever possible. You might even be thinking about your auto insurance premium and wondering if there are any savings to be found there. The good news is, there just might be.
Many factors go into how car insurance rates are calculated. Below, we’ll take a look at the biggest ones, why they matter, and steps you can take to lower your auto insurance premium.
Your Driving Record
If you are of driving age, chances are that you or someone you know has received a traffic ticket or been in a car accident. One of the unpleasant—and often surprising—consequences of these events is an increase in car insurance rates.
Adverse events while driving, whether it’s a speeding ticket, a DUI, or an accident causing property damage or bodily harm, all go on your driving record. Insurance companies regularly review these records to assess your risk as a driver. If your record suggests you are a higher-risk driver, your insurance premium will be increased to reflect that.
Conversely, a clean driving record will get you better pricing on car insurance. Some insurance companies will even offer safe driving discounts if your driving record is clean and you’ve proven yourself to be a safe driver over time. It pays to be a safe driver!
TIP: Check your official driving record every few years to see if old traffic violations or accidents still show up. While timeframes vary by state, many violations are removed after 3–5 years. If you see something on your record that you think needs to be removed, contact your state’s DMV.
Vehicle Type and Usage
It may seem obvious, but it’s worth stating: Two of the biggest factors affecting your auto insurance premium have to do with the kind of vehicle you drive and how you use it.
For example, a brand-new luxury vehicle is at much higher risk of theft than a 10-year-old pre-owned car, and it will have a higher insurance rate as a result. Likewise, a foreign car that is harder to find replacement parts for or is more expensive to repair, or high-performance cars that make it all too easy to speed, will also come with higher premiums.
How do you use your car? Do you put a lot of miles on it commuting for work each week? Are you on the highway regularly, or do you mostly drive in town? The reason insurance companies ask these questions is because, statistically, the more you drive, the likelier you are to be involved in an accident—again, it’s all about risk assessment. The higher the risk, the higher the premium.
TIP: If you’re in the market for a new car, be sure to take note of safety ratings and any special safety features the vehicle offers. These can help keep your insurance rate down.
Coverage Levels and Deductibles
As you look at your existing insurance policy, give some thought to the type of coverage you currently have on your vehicles. If you have a newer car that you use every day to drive the kids to daycare and then yourself to work, odds are that you want to protect your car in case you get into an accident, make sure you have coverage if your car is vandalized and be sure you have extended transportation with a limit that allows you to get a rental car large enough to fit your family.
By contrast, if you have a vehicle that mostly sits in the garage, you might consider liability-only coverage, which will come with a significantly lower premium.
Another way to bring down your car insurance premium is to choose a higher deductible. Your annual rate (and monthly payment) will go down to something more affordable; the tradeoff is that, in the event of an accident, your deductible will be significantly higher. Still, choosing a higher deductible with a lower premium may make sense if the vehicle you are insuring is less likely to be stolen or in an accident.
Your Location in North Carolina
On average, residents of North Carolina pay 27% less for auto insurance than those in other states. Even so, rates within North Carolina can vary
depending on the size of your town or city and even from zip code to zip code within a city.
Generally speaking, residents of larger cities such as Charlotte pay more for car insurance than rural residents. This is because in densely populated areas with higher traffic, the odds of a vehicle owner needing to file an insurance claim go up.
Crime rates can also play a role in determining your insurance rate. If your zip code is considered more at risk due to a high amount of auto theft or break-ins, you may pay more for insurance than those living in the next zip code over.
TIP: While accidents and theft can and do happen anywhere, statistics show that rural areas experience fewer incidents simply by virtue of there being fewer people. If you are moving or considering a move, be sure to look at the rate of vehicle thefts and accidents in your prospective new zip code—these are factors that may adjust your car insurance rates up or down.
Credit Score, Insurance History, and Experience
If you’ve ever been the parent of a new driver, then you already know a driver’s age is a major factor that affects auto insurance costs. Most insurers consider drivers under the age of 24 (i.e. “youthful drivers”) to be at higher risk, and the data bears that out: According to the National Safety Council, whether due to speeding, intoxication, or distractedness, youthful drivers are more likely than any other age group to be involved in car crashes.
In North Carolina, once a teen receives their limited or full driver’s license and is added to their parents’ insurance policy (or gets their own), insurers are mandated by state law to impose an “inexperienced driver surcharge” that, in 2025, was extended from three to eight years.
A related factor that is calculated into your insurance premium is the driver’s insurance history. Whether it’s a new driver with no history at all, or someone who was without insurance coverage for an extended period of time, insurance premiums will be higher than for someone who has been consistently covered for many years or decades. Likewise, if your auto insurance history shows that you’ve made a number of claims over the years, your premium is likely to be higher than someone with fewer claims or none at all.
Finally, depending on the state where you reside, insurance companies may look at what’s called your credit-based insurance score when calculating a car insurance premium. While every company has its own proprietary formula, credit-based insurance scores are based on the elements that play into your overall credit score (e.g., credit history length, amount of debt, credit mix, and payment history).
Why do insurance companies care about your credit? Because research has shown that drivers with good credit history are less likely than those with bad credit to file insurance claims. People less likely to file claims are rewarded with lower premiums.
How to Lower Your Auto Insurance Premium
Now that we’ve talked about the factors that can raise your car insurance premium, let’s talk about how you can save.
Bundle your home and auto insurance: Many insurance companies will offer discounted rates if you select multiple policies from them.
Look for a usage-based insurance policy: If you are a low-mileage driver, you may be eligible for a lower premium. Some insurance companies will also reward you with lower costs if you enroll in their “safe driving” programs.
Young driver-specific savings: You may be able to save on your car insurance rate in North Carolina with a “good grades” discount or an additional driver’s training program. One big way to save is to include your teen as an occasional driver on your vehicle, versus buying them their own car and paying for them as a primary driver. If the inexperienced driver needs to have their own car, the insurance will be less if you don’t need to have coverage to protect the car itself (liability only).
Improve your credit: While this is a longer-term strategy, you can definitely save on premiums over time since many North Carolina insurers consider credit-based insurance scores.
Talk to a Local Expert at OIA
Key Takeaway: While there are many factors that get calculated into your insurance premium, having auto insurance doesn’t have to break the bank!
- Ask your insurance agent to look into available discounts for things like safe driving records.
- Double-check your coverage to make sure it aligns with your driving lifestyle and habits.
- Consider driving a less expensive vehicle.
- Monitor your credit and driving history reports to make sure there aren’t outdated negative marks that could be driving up your premium.
Finally, be sure to shop around for the best quote. As a full-service, locally-owned, and independent insurance agency based in Charlotte, we pride ourselves on finding the best coverage options to suit our clients’ needs. Our licensed, insured, and knowledgeable agents take the time to listen and understand your personal circumstances, whether you’re looking for auto, home, business, or life insurance coverage.
Contact us today at 704-510-8884 to speak with one of our agents or request a quote. We look forward to serving you!
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FAQs
What is the most important factor when it comes to auto insurance premiums?
There are several factors that influence auto insurance premiums, with two of the most important being your driving record and your insurance claims history.
Does my credit score affect car insurance in North Carolina?
Yes. With only a few exceptions, most states allow insurance companies to factor in your credit score when determining your car insurance premium. This is because research has shown that drivers with good credit history are less likely than those with bad credit to file insurance claims. People less likely to file claims are rewarded with lower premiums.
Can bundling policies reduce my car insurance cost?
Yes! Insurance companies that offer multiple types of insurance often offer discounts for those who choose to “bundle” two or more policies. Bundling home and auto insurance is a popular option.
