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7 Factors That Determine Car Insurance Premiums

Close up of a car insurance policy next to a calculator and car keys to depict factors that determine car insurance premiums.

If you are looking for cheap car insurance prices, you might be getting a similar priced car insurance premium quoted for you from multiple car insurance companies. Many folks are looking for different ways to get a lower premium for their car insurance policy, but don’t know how. In fact, most people don’t even know how insurers calculate the price of a premium in the first place.

If you don’t know how insurers come up with your car insurance premium price, you’re not alone. Many people wonder why car insurance is so expensive. The truth is that there are many factors that influence your car insurance cost. Here are some of the top factors that help car insurance companies determine your car insurance premium price.

1. Your Demographics

Your age, sex, and marital status play into what kind of car insurance rates you’ll be offered. Statistically speaking, unmarried males are a higher risk of getting into car accidents compared to married people or women. This may be outside of your control, but it is still factored into determining your premium.

Younger drivers are also considered a higher risk compared to older, experienced drivers. However, if you are under the age of 25, you can see if you can get a “good student discount” from your insurance provider. This can help you save money if you are able to maintain a certain grade point average in high school or college.

2. The Make and Model of the Car You Drive

Not all cars are created equal, so not all premiums are created equal. If your car is lacking certain safety features such as anti-lock brakes or side airbags, this can affect the cost of your premium. Also, cars that are higher-end models or have rarer parts are more expensive to insure since replacement parts and materials tend to be pricier than standard automobiles. They also have a higher risk of theft compared to modest automobiles.

If you want a lower insurance premium, make sure you purchase a vehicle with a high safety rating with some anti-theft devices thrown in. This can be pricey up front, but it will lower your overall risk, which will then lower your premium.

3. Where You Live

Car insurance companies will look into the crime rate of your area in order to determine your risk. If you live in a densely populated area with higher rates of theft and vandalism, it could factor into the overall cost of your car insurance premium. Not only that, but a higher population means more traffic which means a greater risk of an accident. People who live in cities tend to pay higher premiums than those who live in rural areas.

4. How You Use Your Car

Determining your car insurance premium isn’t just what you drive or where you drive, but how you drive, too. If you are driving long distances daily, you’ll likely have to pay a higher premium than those who just take their car out only for short weekend rides. The less mileage you drive in a year, the lower your car insurance premium will be.

5. Your Deductibles and Type of Coverage

What you pay for your premium also depends on the type of insurance coverage you are paying for. People purchasing full coverage car insurance will pay more for a premium than those who only want liability coverage since they have a wider net of protections. If you pay a low deductible, you’ll likely pay a higher premium as well. Fortunately, if you are willing to pay a higher deductible for when you get into an accident, you’ll likely be able to lower your overall premium cost. Some insurance companies will also give you a lower premium if you bundle your car insurance plan with other insurance products that they sell.

6. Your Credit History

Car insurance companies use your credit history to help build your profile and calculate risk. If you have a history of late payments or unpaid debt, it can affect your credit score and the cost of your insurance premium. If you have a history of paying your bills on time and paying off debts, insurers will likely offer you an insurance policy at a lower rate.

7. Your Driving Record

This is arguably the biggest factor determining your car insurance premium. People who have violations on their driving record will likely face higher premium costs since you have a history of accidents, have unpaid traffic tickets, or have filed an insurance claim in the past. You are considered a higher risk than safe, accident-free drivers.

Fortunately, there is hope if you do have poor marks on your driving record. If you remain incident-free, your past driving infractions will have less of an impact on your record. Over time, you’ll notice that your insurance premium costs will decrease more and more as long as you remain safe and accident-free.

For low-cost premiums on high-quality coverage, check out Freeway Insurance. Freeway Insurance offers affordable car insurance quotes from a wide network of the top insurance providers in the nation. Call (800) 777-5620 or get a free auto insurance quote online and start saving today!

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