What Affects Your Auto Insurance Premiums?

Your auto insurance premium is based on many different factors. Insurance companies combine all of these individual items and compare to a statistically generated risk model to create a premium based on the type of insurance you are looking for. The reason these specific items are used is to determine risk of the insured. The higher risk you are deemed, the higher premium you will pay.

Some factors include:

Driving record – The better driver you are, the less you pay. If you have previous delinquencies such as DUIs, moving violations and speeding tickets, your premium will be higher. Over time, if your driving record improves, you will have to pay less.

Type of car – The safer your car, the less you will pay. Most insurance companies offer discounts based on safety features of the car. Also, the higher risk your car, the more you will pay. For example, a sports car driver will pay more than a station wagon driver.

Where you live and drive – This affects your premium because areas differ on levels of safety for you and your car. A person living and driving in an urban area will pay more than a person living in a rural area due to higher rates of theft and accidents in urban areas.

Frequency of driving – How often you drive and how far you drive consistently effect your premium. If you only commute a short distance to and from work, you will pay less than a person who has a long commute. Also, if you use your car consistently for business, you will pay more than someone who does not use their car for work purposes.

Personal information – Your gender, age, marital status and credit history all affect your premium amount. Female drivers tend to pay less than male drivers. As you grow older, your premium will decrease. Married couples generally pay less than single people, but if you have children that also drive your car, your premium will increase. Your credit history is also used to determine risk and generally the higher your credit rating, the less you pay.