Seven Factors Affecting Your Car Insurance Premiums

Before you head down to the dealership, do some research. Does the vehicle that has caught your eye have strong safety ratings?

There are a number of key factors most insurance companies use to calculate how much you’ll end up paying for your car insurance.

The coverages you choose, where you live, the kind of car you drive, how your car is used, who drives the car, and information from consumer reports impact the cost of your car insurance.

Below is a more detailed look at seven key factors that affect your car insurance premiums, as well as some suggestions for keeping the costs down:

  1. Your Coverage and Deductibles

Car insurance providers allow you to choose your deductible and decide whether to add additional coverage that isn’t necessarily required by the laws in your state. The specifics of your coverage and deductibles play a major role in your monthly payment.

Typically, choosing a higher deductible means a lower monthly payment; choosing a lower deductible means a higher monthly payment. Additional coverage gives you added financial protection, depending on the claim, but will also add to your monthly costs.

  1. What You Drive

By collecting a large amount of data from customer claims and analyzing industry safety reports, car insurance providers often develop vehicle safety ratings and offer discounts to customers who drive safer vehicles.

Some insurers increase premiums for cars more susceptible to damage, occupant injury, or theft, and lower rates for those that fare better than the norm.

2010 Toyota 4Runners, for example, rate highly in terms of driver protection and passenger protection, which means discounts on insurance. And while two-door Honda Civics are one of the country’s most popular vehicles, their lower-than-average safety ratings and desirability to car thieves make them more expensive to insure.

Before you head down to the dealership, do some research. Does the vehicle that has caught your eye have strong safety ratings? Is the same particular model often stolen? Knowing the answers to a few simple questions can go a long way in keeping your rates low.

  1. How Often, And How Far, You Drive

People who use their car for business and long-distance commuting normally pay more than those who drive less. The more miles you drive in a year, the higher the chances of an accident – regardless of how safe a driver you are.

Consider joining a car or van pool, riding your bike, or taking public transportation to work. If you reduce your total annual driving mileage enough, you may lower your premiums.

Also, you can take a look at our 10 Driving Tips for Saving Gas article for more ideas of how to cut down on your diving costs.

  1. Where You Live

Generally, due to higher rates of vandalism, theft, and accidents, urban drivers pay more for car insurance than do those in small towns or rural areas.

  1. Your Driving Record

Drivers who cause accidents generally must pay more than those who are accident-free for several years.

If you’ve been accident-free for a long period of time, don’t get complacent! Remain vigilant and maintain your good driving habits.

And even though you can’t rewrite your driving history, having an accident on your record can be an important reminder always to drive with caution and care. As time goes on, the effect of past accidents on your premiums will decrease.

  1. Your Credit History

It has been shown certain credit information helps predict future insurance claims. Where applicable, many insurance companies use credit history to help determine the cost of car insurance. Maintaining good credit can have a positive impact on the cost of your car insurance.

  1. Your Age, Sex, And Marital Status

Accident rates are higher for all drivers under age 25, especially young males and single males. Insurance prices in most states reflect these differences.

If you’re a student, you might also be in line for a discount. Most car insurers provide discounts to student-drivers who maintain good grades. In some states, younger drivers are also able to take driver safety courses that will lower premiums.

Note: Car insurance premiums are determined based on state-approved rating factors.

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Erin Lewis
Erin Lewis – Your Dream Queen ™ - is owner of a leading insurance & financial service firm where she and her team help Maryland families protect and realize their dreams thru risk management and implementation of sound financial strategies. She is Founder of The Dream Queen Association (, Co-founder of the Gals Lead Non-Profit Teen Program (, and currently serves as a commissioner for the Governor’s Office on Service & Volunteerism. Erin’s passions include connecting passionate, positive, purpose-filled women and teens with one another so they can live their dreams, fulfill their purpose, make a difference, and impact the world at large in a positive way. Erin received her BA in Economics & Political Science from St. Mary’s College of Maryland. She is currently married to her husband of 3 years and is mom to an energetic 2 year old daughter.


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