What's in the Cost?

6 Factors that Influence Auto Insurance Premiums

No one loves paying their auto insurance premium. We do it because it offers us a level of protection when we hit the road commuting to work, running errands, or going on road trips. It provides peace of mind. But what determines the amount we pay? There are several things that inform the insurance company about what to charge each customer.

Driving Record In most cases, if you’ve been involved in an accident (and you’re the at-fault driver) you can expect to pay more. Over time, however, you can lower your premiums by keeping your record clean. Those who have never been involved in a crash won’t pay as much.

Vehicle of Choice The make and model of your vehicle influences what you pay. Sportier, higher horsepower vehicles tend to come with hefty premiums, while cars that emphasize safety and security are paired with lower premiums. Additionally, vehicles with lower safety ratings or that are more susceptible to theft are more expensive to insure.

Location Insurers look at areas where crashes are more frequent and theft rates are higher. Typically, this is the case for just about every city in the country. That means people who live in more densely populated areas will have a bigger insurance bill. Those who live in more rural areas usually spend less.

Mileage How frequently and how far you drive is another factor in what you pay. Basically, if you drive more, you can expect to pay more. It comes down to this: The more time you spend on the road commuting, the more likely it is that you’ll experience a crash.

Credit History Insurers can reference your credit history when determining your premium and some use your credit history to determine your likelihood of submitting an insurance claim. That is to say, people with lower credit scores are a greater liability in the insurance company’s eyes.

Age Data shows drivers under the age of 24 (male drivers, in particular) are more likely to get into a crash than any other group. As a result, their premiums are higher. In almost every case, the younger you are, the more you can expect to pay, though the cost decreases as you age. Those who are past retirement age traditionally pay the least.