Glossary

Insurance rate

The price per unit of coverage an insurer files with the state, which rating factors then adjust to produce your individual premium.

Also called: base rate, insurance rates, rate level

An insurance rate is the price an insurer charges per unit of coverage before your personal details are applied. Rates are set separately for each coverage, such as liability, collision and comprehensive, and usually start as a statewide base rate that is multiplied by factors for territory, vehicle, driver and policy choices to produce your premium.

Actuaries build rates from projected claim costs, the expense of handling claims, operating costs such as commissions and premium taxes, and a margin for profit and contingencies. In regulatory language, "rates" also include the rating rules and factor tables. Insurers submit them in a rate filing, and state law requires that rates not be excessive, inadequate or unfairly discriminatory. Example: if a $500 base collision rate rises 8% in a new filing, it becomes $540, and collision premiums built on it rise by roughly the same percentage (hypothetical figures).

The distinction matters when your bill goes up. A rate increase affects everyone with that insurer in your state, including drivers with clean records; a change in your own rating factors, such as a ticket or a new car, affects only you. When an insurer's claims costs outrun its premiums, a rate increase usually follows. See how car insurance rates are calculated.

Last reviewed October 4, 2026

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Related terms

Premium The amount you pay for an insurance policy over its term, built from the insurer's rate, your rating factors, coverage choices and discounts. Rate filing The package of proposed rates, rating rules and supporting data an insurer submits to a state regulator when it wants to change prices. Rating factors The characteristics insurers use to price a policy, such as driving record, location, vehicle, mileage and, where allowed, age and credit. Loss ratio The share of premium an insurer pays out in claims, often including claim-handling costs; a key number in rate filings and profit reports. Prior approval A rate regulation system in which insurers must get the state regulator's approval before using new rates or rating rules. Territory rating Pricing based on where a car is garaged, with each area assigned a factor that reflects its local claim costs.

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Credit-based insurance scores and car insurance How insurers use credit-based insurance scores to price car insurance, which states ban or limit it, and your rights under federal and state law. How age, gender and marital status affect car insurance Why insurers charge by age, gender and marital status, what crash data shows, and which states ban or limit these factors, verified against state law. How car insurance rates are calculated How insurers build a car insurance price: a filed base rate, multiplied by rating factors for driver, car, place and coverage, then adjusted by discounts. Why your ZIP code changes your car insurance price Insurers price by rating territory because claim costs vary by place. How territory rating works, which states limit ZIP code pricing, and what moving does. Why your premium went up at renewal with no claims The common reasons a car insurance renewal costs more with a clean record, how to tell which one applies to you, and the rules that limit insurers.