The only time most of us think about our car insurance is when there is bad news, like a ticket or an accident. When you're young, single and incident-prone, rates only seem to go one way: up. There is a flip side. Tickets fall off your record, and so do accidents. You'll get older, you'll move to a better neighborhood. All of these events will affect your car insurance rates - in a good way. We compared rates among four insurers --Esurance, Progressive, Safeco and 21 st Century - for Jeff, a hypothetical hipster in Seattle. Let's see what happens to insurance rates as life happens to Jeff.
You pay a bundle for car insuranceJeff is 23, single, rents an apartment in Seattle, drives a paid-off 2011 Audi A3, commutes five days a week and puts about 12,000 miles a year on his car. He carries coverage levels of 50/100/50 liability and a $500 deductible on comprehensive and collision. Jeff starts out with a spotty record that includes a recent accident with $20,000 in total claims. Insurers hate claims. We're showing a range of rates to demonstrate how differently insurance companies do the math, but in every case, the numbers can be scary. Jeff's starting annual car insurance quotes: $3,206 to $6,198
You keep your nose cleanAccidents, tickets and claims will jack up your rate, in most cases for at least a few years. "Minor violations will factor into your insurance rate for three years, while major violations can impact your premium for five to 10 years," says Tom Santamorena with Minto & Wilkie Insurance Agency in San Rafael, California. But the more time that has passed since the infraction or claim, the better off you are. A year later, with the accident still on his record but no new incidents, Jeff sees his rates drop significantly.
You have a birthdayWhile most of us think of 25 as the magic number, the truth is that as long as a young driver keeps a clean record, most companies will drop rates a little bit every year before then. “It's not age that reduces premiums, really,” says Insurance.com Managing Editor Des Toups. “It's driving experience and a clean record that do it.” Here's what insurance quotes look like for Jeff as he gets older, assuming he keeps a clean record:
- Age 23: $2,602 - $4,020
- Age 24: $2,590 - $3,474
- Age 25: $2,190 - $2,958
You get marriedWhen Jeff ties the knot, his rates will drop. Insurers love statistics, and data show that married drivers are involved in fewer accidents. Married people tend to buckle up more often and obey the rules of the road. Some savings come as you combine policies and get multi-car discounts, but even if Jeff marries a spouse who doesn't drive, his rates still drop dramatically. On average, it's about a 10 percent drop. Jeff, 25 and married: $1,876 to $2,430
You take the busAccording to the Bureau of Labor Statistics, the average worker changes jobs every 4.4 years. A job switch will often change your commute, and that will change your premium. Jeff starts taking the bus to his new job and switches his primary use category from commuting to “pleasure use only.” His premium drops $100 with two insurers, but not the ones that are the least and most expensive. On average, nationwide, giving up commuting drops premiums about 2 percent. Hardly impressive, but every dollar helps. Jeff, 25, married and taking the bus: $1,876 to $2,430
You buy a house
Now that Jeff has found his soul mate, they are ready to buy a home. Insurers consider homeowners more stable than renters, so most will discount your rate, regardless of whether you insure your home with them or not.The discount amount will vary; nationally, it averages about 1.6 percent. More serious savings come from bundling your homeowners insurance with your car insurance, and the savings typically are reflected in your car insurance bill. Nationally, savings average about 8 percent. Jeff, 25, married and a homeowner (but not bundling): $1,772 to $2,430