Ana Staples is a good driver: she’s defensive behind the wheel, hasn’t been in an accident and has no tickets on her record. But when her auto insurance policy renewed, she was hit with a 50 percent rate increase. Her monthly car insurance payment ballooned from $100 to $150. “My car was paid off, my driving record squeaky clean and my annual mileage low,” says Staples. “I was so mad.” 

A Seattle resident, Staples began to consider whether it was even worth it to keep a car in a city with good public transportation. “I figured it wasn’t, so I sold my car last November,” she says. 

Staples is exactly the kind of driver insurance companies should reward, or at the very least, not slap with a major rate increase. She’s careful, didn’t put a lot of miles on her car, has great credit and drove a modest vehicle (a 2016 Chevy Volt hybrid). Nevertheless, her rate went up — and she’s not alone. According to Bankrate’s analysis, drivers with good credit and clean driving records pay an average of $625 more per year for a full coverage policy than they did in 2023. 

Your car insurance premium is supposed to be a measure of your risk as a driver: high-risk drivers pay more; low-risk drivers pay less. If that’s the case, why are safe drivers, like Staples, seeing their rates creep up? 

Rating factors are highly personalized. Not all of them have to do with driving

“Folks are paying hundreds, even thousands of dollars more, even if they have a perfect driving record,” says Micheal DeLong, a research and advocacy associate for the Consumer Federation of America. A large part of this has to do with how auto insurance is priced. Insurance companies do consider individual factors like your accident history, the kind of car you drive and how much driving experience you have when setting your rate. But, an insurance company can (and often does) look at other factors — ones that have nothing to do with how you drive. 

Credit history plays a major role in insurance pricing

In most states, your car insurance company can use your credit history to help price your policy. A 2007 report from the Federal Trade Commission found that credit-based insurance scores were “effective predictors” of both the number of claims filed and how much claims cost insurance companies. However, critics argue that the practice is an inaccurate predictor of insurance risk. “You could have poor credit for factors outside your control,” says DeLong. “Say you had a big medical crisis or something along those lines.” 

It’s not uncommon to have a less-than-perfect credit history. Bankrate’s 2025 Credit Card Debt Report found that almost half of credit cardholders (48 percent) carry a balance from month to month. Among credit card debtholders, 47 percent say the primary cause was an emergency/unexpected expense(s), including medical bills, car repairs, home repairs or some other expense. When your car insurance company uses this to squeeze an already tight budget, the ramifications can be major. According to Bankrate’s 2025 True Cost of Auto Insurance Report, drivers with poor credit pay an average of 76 percent more for full coverage insurance than those with good credit. DeLong also noted that using credit history in auto insurance pricing “disproportionally hurts low-income consumers, Black consumers and Latino consumers.” 

Other non-driving factors your insurance company might consider

In most states, car insurance companies also use socioeconomic factors like marital status, education and whether you rent or own your home when setting your rate. “You could pay one penalty because you’re single instead of married, another penalty because you rent your home instead of owning it and a third because you only graduated high school,” says DeLong. 

How are these factors related to insurance? DeLong says that they aren’t: “They should be pricing auto insurance policies based on how risky someone is to cover and look at driving record, any crashes you’ve been in, your claims filed and your tickets.” 

Personal factors are just one piece of the puzzle

It can be discouraging to hear, but what you pay for your car insurance policy is determined by where you live and the drivers around you. Insurance works by spreading risk across a wide group of people. Insurance companies put drivers in different groups based on ZIP code, risk, age or vehicle type. If other drivers in your group file claims, drive recklessly or are otherwise costing your insurance company money, you could end up with a higher insurance premium because of it. 

“While auto insurance is a highly personalized product, your rates can still be heavily influenced by other drivers and events in your surrounding areas,” says Bankrate insurance expert Shannon Martin. “Say your town removes a traffic light near your home and, suddenly, the rate of car accidents spikes. You may see an increase in your premium even though you have maintained a perfect driving record.”

“I have never been in an accident, never pulled over, nothing for 9 years of car ownership. Every single year between living in Florida and now North Carolina they have upped my car insurance time and time again. The most recent increase was by almost $500 because I changed ZIP codes where ‘claims were being filed.’”

— Bankrate Staffer

Telematics promised personalized rates. Why isn’t it delivering?

For safe drivers tired of seeing their rates go up, telematics could seem like the perfect solution. You’re a safe driver, and now you can prove it to your insurance company. A telematics device tracks your driving habits in real-time and shares that information with your insurance company to better align premium pricing with actual driving behavior. If you’re a safe driver, you could be rewarded at an individual level. Most insurance companies with telematics programs advertise generous savings opportunities: 

However, the savings reality looks different. A 2024 study from Consumer Reports found median savings for drivers enrolled in telematics programs was just $120 per year. The same study found that actual savings with Geico’s DriveEasy are around 10 percent.

Only around 14 percent of drivers surveyed by Consumer Reports were enrolled in telematics. Why aren’t more drivers eager to sign up? Part of the issue pertains to data privacy. Privacy regulations vary by state, and it’s not entirely clear just how much data telematics programs collect. It’s a relatively newer auto insurance product, and state laws are still catching up. New York and California are the only two states with laws that specifically regulate telematics programs, while Montana and Washington have some legislation. 

How should auto insurance pricing work?

One key benefit of telematics that goes beyond individual rates is that it “discourages risky driving performance,” according to a study from Cambridge Mobile Telematics (CMT), to help make roads safer. 

CMT’s study found that for risky but highly engaged drivers (those who logged 20 or more sessions over a three-month period), distracted driving dropped by 20 percent, hard braking fell by 9 percent and speeding time decreased by 27 percent when using telematics. The study concluded that these improvements, if expanded out to other driving populations, “would significantly reduce bodily injury and deaths on the road.” Safer roads would, logically, lead to fewer car insurance claims — which could help drive costs down across the board. 

Can insurers encourage more drivers to adopt telematics?

If the problem is that auto insurance pricing has too much to do with things not related to your driving behavior, telematics should, in theory, patch the issue. DeLong expressed cautious optimism about telematics programs. On the one hand, “telematics could be part of a move away from the use of these unfair socioeconomic factors where companies no longer use credit scores or someone’s education level or their job or occupation.” On the other hand, he recognizes that there are major data privacy concerns: “Telematics has substantial problems first, to be fair, because we found that most states don’t have any safeguards or limits on the data that can be collected and used by these programs. We’re pushing for states to adopt those safeguards saying only data, relevant to auto insurance should be collected, and it should only be used for auto insurance purposes,” he says.

Improving privacy regulations could encourage more drivers to adopt telematics, leading to safer roadways and lower rates. Improving the tracking technology these programs use could also be a potential solution, since some drivers complain that the programs unfairly flag things like driving at night as “unsafe.”

Focus on driving-specific rating factors

Modifying auto insurance rating to more closely mirror the factors monitored by telematics programs is another potential solution, including doing away with rating factors like gender, marital status, education level, credit history and homeownership status. That way, what you pay for your policy accurately reflects how risky you are to insure — not how good your credit is, or whether you can afford a home. If that were the case, safe drivers like Staples could avoid expensive car insurance rate hikes when their policies renew.

Auto insurance is state-regulated, so it comes down to each state’s insurance department to decide what goes into auto insurance pricing. Some states have effectively eliminated age and gender from auto insurance rating, but state laws often leave room for workarounds. In Massachusetts, for example, carriers are not allowed to consider your age when setting auto rates, but they are allowed to consider how many years you’ve been licensed for. In Michigan, carriers are not allowed to consider credit scores, but they are still allowed to consider credit-based insurance scores, meaning policyholders are still being penalized for credit-related inputs.

I’m a safe driver. How can I avoid a rate hike?

If your car insurance company is raising your rate, and you can’t pinpoint personal factors that are contributing to the hike, it may be helpful to speak to your agent to identify why your premium is going up. Even if the rate increase is due to across-the-board rate hikes in your state, the following strategies may help you save:

• Get a damage assessment before filing a claim: In some cases, it may be more cost-effective to pay for smaller vehicle repairs out of pocket. Filing a claim will likely result in a premium increase. If the cost of fixing your vehicle is close to your policy deductible, it may not make much sense to file a claim.
• Consider a bundle: Insurers often offer the biggest discounts to customers who buy multiple policies. And it’s not just for homeowners — renters, RV owners and even pet insurance policyholders can usually take advantage of a bundling discount.
• Compare quotes before moving: Whether you’re moving across the country or a few streets over, changing ZIP codes can alter your car insurance premium. Before you move, you might want to compare car insurance quotes for your new ZIP code. That way, if you’re moving somewhere with more expensive insurance, you can adjust your policy accordingly: maybe you raise your deductible or enroll in a defensive driving course.
• Get quotes before getting a new car: Car insurance rates often vary based on vehicle type. If you’re in the market for a new or new-to-you car, comparing car insurance rates for a specific make and model can help you budget.