The cost of auto insurance

The cost of auto insurance

Auto insurance cost is a major concern to Washington’s drivers. Insurance companies must submit their 

rate requests to our agency for review. These requests must include enough financial information (actuarial-based) to verify the need for the requested rate. If we are satisfied with the rate information, we must approve 

the request.

Insurance companies can rate all licensed drivers 

in the household -- the policyholder and his or her 

spouse, and other household members, whether 

or not they are related by blood. This includes 

roommates. As a result, insurers generally base their 

premiums on all household members.

Insurance companies base auto rates on a variety 

of factors. The premium you pay consists of a “base 

rate.” The base rate is adjusted based on factors such 

as your age, sex, marital status, driving pattern, 

claims history, location, credit history, and the make, 

model and year of your vehicle. When you shop for auto insurance, remember that each company uses these factors differently. 

Age

Statistics show drivers under the age of 25 have more accidents than adults between age 25 and 65. As a result, insurers charge young drivers and families with young drivers in the household higher rates. Statistics also show that senior citizens are more likely to be involved in an accident.

Gender

Young men under the age of 25 are involved in more 

accidents per miles driven than any other population 

group. Washington state law allows insurance 

companies to charge based on gender and age when 

statistics indicate a greater risk.

Marital status

Statistically, married couples have fewer accidents 

than singles and generally pay lower rates.

Vehicle type

Generally, the more expensive your vehicle, the 

more you will pay for comprehensive and collision 

coverage. Also, because sports cars and high-performance cars are involved in more accidents, 

cost more to repair, and are stolen more often, they 

cost more to insure.

Location

A higher number of accidents in a highly populated 

area will raise both liability and collision premiums. 

Higher crime rates in urban areas can also raise 

premiums for comprehensive coverage. The law also 

allows companies to base your rates on your address 

(where you keep your car), even though you may 

drive to a more urban or rural area.

Driving patterns

The number of miles you drive per year can increase 

your rates. For example, if you drive a total of 7,000 

miles in a year, you will normally pay lower rates 

than if you drive 15,000 miles in a year. Insurance 

companies consider the distance you commute 

to work as additional miles you add to your non-commuting, “pleasure” miles.

Driving record and claims history

Most companies apply a surcharge to drivers 

involved in an accident or convicted of multiple 

traffic violations. Likewise, the more claims you file, 

the more likely your rates will increase.

Credit history

Under federal law (Fair Credit Reporting Act), 

insurance companies can use credit history as one 

factor that impacts your auto rate. They may assign 

you an insurance score based on your credit history. 

They use your score as one factor to decide whether 

to accept or decline your coverage, or how much to 

charge you. However, the Insurance Commissioner 

believes that the use of credit information in 

insurance is inherently unfair and in 2002, he 

requested a bill to limit its use. The law limits the use 

of certain information in credit scoring.

Companies differ in the skill, care and speed with which they settle customers’ 

claims. The OIC cannot recommend one company or policy over another.