The Factors that Determine Your Car Insurance Rates
Scroll through any local Facebook page, and you’ll inevitably come across a post from someone asking how much others are paying for their yearly car insurance premium.
While it doesn’t hurt to crowdsource this information from your friends and neighbors, the details they share won’t necessarily be applicable to your specific coverage needs. There are a variety of factors that determine your annual auto insurance premium, and each of them are unique to you!
So, what are the factors that decide your auto insurance rates? Here’s a quick lesson in what insurance carriers consider when determining the cost of your car insurance coverage each year:
- Driving Record – Accidents, moving violations and other incidences that cause you to put in a claim often create a rate increase. These incidences typically affect your insurance rates for anywhere from three to five years.
- Claims History – As you might expect, the cost of your policy or the exact amount that your policy increases after you file a claim, varies based on severity of the situation and size of the claim. Drivers who have clean records with no tickets or accidents can expect to pay a lot less than those with moving violations, crashes, DWIs and other incident that make you look more likely to file a claim to an insurance carrier.
- Credit Score – While this varies depending on the state you live in and the insurance carrier you work with, a lower credit score (under 600) often equates to a higher insurance premium. Reason being: Studies show that people with lower credit scores are more likely to file a claim or even commit insurance fraud. Likewise, some carriers may require a client with a lower credit score to pay a large percent of the premium upfront to in hopes of avoiding future lapses in payment and coverage.
- Location – Drivers that live in a highly populated area often pay more in premium than drivers that live in less densely populated towns and cities. It is presumed that those who live in more congested areas have a higher likelihood of getting into an accident. Likewise, people that live in areas with higher rates of vandalism, car theft and even harsh weather patterns, may be subject to paying more than those that live in zip codes that don’t meet these criteria.
- Usage – How you use your vehicle, and how many miles a day you drive, also play into the cost of your car insurance coverage each year. A driver that uses their vehicle to get their children to-and-from school or to run errands, will most definitely pay a lower premium than someone who commutes an hour in each direction for work five days a week.
- Amount of Coverage on your Vehicle – The higher the coverage you have on your auto policy, the higher the premium. Auto insurance policies encompass coverages such as Liability, Collision and Comprehensive, Uninsured/Underinsured Motorist & Medical Payments or Personal Injury Protection (PIP). All are valuable, especially if an incident occurs and your coverage is needed, so when reviewing your options for coverage, keep in mind that the old adage “you get what you pay for” absolutely applies.
- Type of Vehicle – Not surprisingly, the type of vehicle you drive affects your insurance rates. For instance, a sportscar costs more to insure than a sedan. Luxury vehicles are most costly to insure than a sportscar. A rule of thumb to keep in mind when it comes to the type of vehicle you own and the cost of coverage: the more expensive the vehicle, the higher the insurance premium.
- Number of Vehicles – Drivers with more than one vehicle (e.g., a married couple) qualify for a multi-car discount, which automatically makes their rate per vehicle lower. Likewise, drivers that pair their auto coverage with homeowners and/or an umbrella would also be eligible for lower rates on their auto coverage.
- Coverage History – Drivers who have had lapses in coverage or who have not carried insurance coverage previously (e.g., a newly licensed driver) often pay higher premiums than those who do not have these factors in their recent insurance history. Factors like these will increase your premium for a few years, but not forever.
- Age – Statistically, young and older drivers have shown to be more prone to distracted driving, accidents and other incidences behind the wheel that commonly result in insurance claims. As a result, drivers under the age of 25 and over the age of 70 typically face higher auto insurance premiums than those who are “in their prime” or middle-aged. Drivers with less than three experience on the road are considered “inexperienced” and as a result, considered to be more high risk in terms of getting tickets for moving violations or into fender benders. The good news? This doesn’t mean that affordable coverage is impossible to find!
J. Hoffman Insurance serves Warwick, Goshen, and Middletown, NY, providing commercial auto insurance and other coverage options, from home to business insurance. Our firm strives to provide insurance policies that best serve your needs. Contact our team today to learn more about which car insurance policy is best for you!
Running a successful business requires more than strong sales and day-to-day operations. It takes thoughtful planning, risk awareness, and financial discipline. Two of the most important professional relationships a business owner can have are with their insurance advisor and their Certified Public Accountant (CPA). When these two roles work together, the result is stronger protection, smarter financial decisions, and long-term stability. Here are five key ways business insurance and working with a CPA are closely connected—and why aligning the two matters. 1. Risk Management and Financial Planning Business insurance is designed to protect your company from unexpected risks such as lawsuits, property damage, accidents, or liability claims. A CPA, on the other hand, helps you plan financially for both known and unknown risks. Together, they form the foundation of a strong risk management strategy. Insurance transfers risk, while a CPA helps you understand how those risks impact your balance sheet, cash reserves, and overall financial health. When both are aligned, your business is better positioned to withstand disruptions and recover quickly when the unexpected happens. 2. Compliance and Regulatory Requirements Many businesses operate in industries that require specific types of insurance coverage, such as workers’ compensation, professional liability, or commercial auto insurance. Failing to carry the proper coverage can lead to fines, penalties, or even business shutdowns. At the same time, CPAs help ensure compliance with tax laws, payroll regulations, and financial reporting requirements. Insurance and accounting compliance often overlap—especially when it comes to payroll, employee classifications, and industry regulations. Working with both professionals ensures your business remains compliant on all fronts. 3. Tax Deductibility of Insurance Premiums One often overlooked benefit of business insurance is that many premiums may be tax-deductible. Policies such as general liability, professional liability, property insurance, and workers’ compensation are commonly considered legitimate business expenses. A CPA plays a critical role in making sure these premiums are properly categorized and documented, helping maximize allowable deductions while staying within IRS guidelines. When your CPA understands your insurance program, you’re more likely to capture every tax advantage available to your business. 4. Cash Flow and Budgeting Insurance premiums are a recurring expense and can have a meaningful impact on cash flow, especially for growing businesses. A CPA helps forecast expenses, plan for renewals, and ensure insurance costs fit within your broader financial strategy. By coordinating insurance coverage with budgeting and financial projections, businesses can strike the right balance between adequate protection and affordability. This collaboration helps avoid being underinsured—or overspending on coverage that doesn’t align with actual risk exposure. 5. Business Continuity and Succession Planning No business owner likes to think about worst-case scenarios, but planning for them is essential. Insurance products such as business interruption coverage, key person insurance, and buy-sell funding play a major role in keeping a business running during a crisis. CPAs incorporate these protections into long-term financial planning and succession strategies. Whether it’s preparing for the loss of a key employee, an extended shutdown, or an ownership transition, insurance and accounting together help ensure the business can survive and thrive beyond any single event. Bringing It All Together Business insurance and CPA services are not separate silos—they are complementary tools that work best when aligned. Insurance protects what you’ve built, while a CPA helps you grow and sustain it financially. When these professionals collaborate, business owners gain clearer insight, stronger protection, and greater confidence in the future. If you want your business to be resilient, compliant, and financially sound, make sure your insurance strategy and your CPA are working together—not independently. For a review of your business’ insurance coverage, contact Vicki Hoffman, J. Hoffman Insurance, at 845-239-4787 or vicki@jhoffmaninsurance.com . Want to learn more about how working with a CPA can benefit your business? Contact John Pacos, CPA at 845-694-5703 or john@jpacoscpa.com .
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