The Ana Staples are excellent drivers. She is defended behind the wheels, has not had an accident, and has no tickets in her records. However, when her car insurance was renewed, she was hit by a 50% rate increase. Her monthly car insurance payments swelled from $100 to $150. “My car was repaid, my driving records have been creakly clean and my mileage has been lowered annually,” Staples says. “I was very angry.”
A Seattle resident, Staples began considering whether it was worth keeping a car in a city with good public transport. “I thought it wasn’t so I sold the car last November,” she says.
Staples should be the very driver insurance company should reward you, or at least not slap it on a big price increase. She was cautious, did not spend many miles on the car, had great credibility, and drove a modest vehicle (2016 Chevy Volt Hybrid). Despite this, her rates have risen – and she is not alone. According to a Bankrate analysis, drivers with good credit and clean driving records will pay an average of $625 more per year for their full coverage policy than in 2023.
Your car insurance premium is assumed to be a measure of your risk as a driver. High-risk drivers pay more. Low-risk drivers pay less. If so, why do safe drivers like staples see their fees creep up?
The evaluation factors are highly personalized. Not all of them have to do with driving
“People are paying hundreds, even thousands of dollars, even thousands of dollars, even researchers,” says Micheal Delong, an associate in research and advocacy for the American Consumer Federation. Most of this has to do with car insurance pricing. Insurance companies take into account individual factors such as accident history, the type of car you drive, and the amount of driving experience when setting the rate. However, insurance companies can see (and often do) other factors, factors that have nothing to do with the way they drive.
Credit history plays a major role in insurance pricing
In most states, auto insurance companies can use your credit history to help you with the price of your insurance policy. A 2007 report from the Federal Trade Commission found that the credit criterion insurance score was an “effective predictor” for both the number of claims filed and the cost insurance company for both the claim amount. However, critics argue that this practice is an inaccurate predictor of insurance risk. “You may have a bad faith in factors other than your control,” Deron says. “Let’s say you have a big medical crisis or something along those lines.”
It’s not uncommon to have a perfect credit history. Bankrate’s 2025 credit card debt report found that almost half (48%) of credit card holders have balances per month. Of credit card debtholders, 47% say the main cause is emergency/unexpected costs, including medical costs, car repairs, home repairs, or other costs. The impact is major when auto insurance companies use it to narrow down their already tight budgets. According to the true cost of Bankrate’s 2025 Auto Insurance Report, poor credit drivers pay an average of 76% more and more for full coverage insurance. Dellon also said using credit history in car insurance pricing “harms low-income consumers, black and Latino consumers.”
Other non-driving factors your insurance company considers
In most states, auto insurance companies use socioeconomic factors such as marriage status status, education, and whether to rent or own a home when setting rates. “You can pay one penalty because you’re single rather than getting married. You can rent a house instead of owning a house, so you can pay a third of your penalty just for graduating from high school,” Delong says.
How are these factors related to insurance? “They should price auto insurance based on their driving records, crashes you made, your bills and how they cover and look at their tickets,” DeLong said.
Personal factors are just one part of the puzzle
It may be disappointing to hear, but what you pay for your car insurance depends on where you live and the drivers around you. Insurance works by spreading risk to a wide range of groups. Insurance companies place drivers in different groups based on their postal code, risk, age, or vehicle type. If other drivers in the group file are charging, they are recklessly driving or sacrificing insurance money, which is why they are more premiums.
“Although auto insurance is a highly personalized product, your rates may be heavily affected by other drivers and events in the surrounding area,” says Bankrate Insurance expert Shannon Martin. “Let’s say your town removes a traffic light near your home and suddenly the speed of a car accident is skyrocketing. You may see your premium increase despite maintaining a perfect driving record.”
“I have never had an accident and have never taken over nine years of car ownership. While I wasn’t living in Florida, they increased their car insurance multiple times each year. The recent increase was “almost $500 because I changed the ZIP code where the claim was filed.”
– Bankrate Staff
Telematics has promised a personalized fee. Why isn’t it delivered?
For safe drivers tired of seeing prices go up, telematics may seem like the perfect solution. You are a safe driver and now you can prove it to your insurance company. Telematics devices track driving habits in real time and share their information with insurance companies to better coordinate premium pricing and actual driving behavior. If you are a safe driver, you could be rewarded on an individual level. Most insurers with telematics programs advertise generous saving opportunities.
However, the reality of savings looks different. A 2024 survey from Consumer Report found that the median savings for drivers enrolled in the telematics program was only $120 a year. The same study found that the actual savings from Geico’s driven version was about 10%.
Only about 14% of drivers surveyed in the Consumer Report were registered with Telematics. Why aren’t more drivers trying to sign up? Part of the issue is about data privacy. Privacy regulations vary from state to state, and it is not entirely clear how much data the telematics program will collect. It’s a relatively new car insurance product, and state laws are still catching up. New York and California are the only two states with laws specifically regulating telematics programs, and Montana and Washington have several laws.
How should car insurance pricing work?
According to a Cambridge Mobile Telematics (CMT) study, one of the key benefits of telematics above individual rates is that it “stopping dangerous driving performance.”
A CMT study found that for high-risk but very enthusiastic drivers (those who recorded 20 or more sessions in three months), distracted driving was reduced by 20%, hard braking was reduced by 9%, and speeding times were reduced by 27% when telematics was used. The study concluded that if these improvements were expanded to other driving populations, it would “reduce significant reductions in physical injuries and deaths on the road.” Safer roads, logically, will have fewer car insurance claims. This will help you reduce costs across the board.
Can insurers encourage more drivers to adopt telematics?
If there is a problem, telematics should theoretically patch the problem if the price of car insurance is too much to do with not related to driving behavior. DeLong expressed cautious optimism about the telematics program. On the one hand, “telematics could be part of a transition from the use of these unfair socioeconomic factors that make businesses no longer use their credit scores, someone’s education level, or their job or occupation,” while he recognizes the key data privacy concerns. “Telematics has a major problem first because most states have found that there are no safeguards or restrictions on the data these programs can collect and use.
Improving privacy regulations could encourage more drivers to adopt telematics, leading to safer roads and lower rates. Some drivers complain that the program unfairly flags it as “unsafe” such as driving at night, so the improvements in the tracking technology these programs use could also be a potential solution.
Focus on driving-specific evaluation factors
To revamp your car insurance ratings, more closely reflecting the factors monitored by telematics programs is another potential solution, such as eliminating rating factors such as gender, marriage status status, education level, credit history, and homeowner status. That way, what you pay for your policy will accurately reflect how risky you are – not how good your credit is, or whether you can afford a home. In that case, a safe driver like staple can avoid hiking expensive car insurance rates when the insurance policy is renewed.
Since auto insurance is state-controlled, you will be brought to each state’s insurance department to decide what will be in your car insurance pricing. While some states effectively eliminate age and gender from car insurance ratings, state laws often leave room for workarounds. For example, Massachusetts does not allow you to consider age when setting up your car rate, but you do allow you to consider the year you received your license. In Michigan, carriers are not allowed to consider credit scores, but they are still allowed to consider credit-based insurance scores. This means that policyholders are fined for credit-related input.
I’m a safe driver. How can I avoid a rate hike?
If your car insurance company is raising prices and is unable to identify the personal factors that contribute to your hike, it may be helpful to consult with an agent to determine why the premium is rising. Even if the rate rise is due to hiking at the full rate in your state, the next strategy may help you save money.
- Please get a damage assessment before submitting a claim: In some cases, it may be more cost-effective to pay from your pocket for repairs to a smaller vehicle. Submitting a claim can increase your premium. If the cost of modifying your vehicle is close to your policy deductible, it may not make much sense to file a claim.
- Consider the bundle: Insurance companies often offer the largest discount to customers who purchase multiple policies. And it’s not just homeowners – tenants, RV owners, and even secret pet insurance owners, usually have bundle discounts available.
- Compare quotes before moving:Changing your ZIP code, whether you travel across the country or across a few streets, can change your car insurance premiums. We recommend comparing car insurance quotes for new postal codes before moving on. That way, if you are moving somewhere with more expensive insurance, you can adjust your insurance policy accordingly. You may increase your deduction amount or sign up for a defensive driving course.
- Get a quote before you get a new car: Auto insurance premiums often vary depending on the type of vehicle. If you’re in the market for new cars or new cars, you can budget by comparing car insurance rates for a particular manufacturer and model.
