How are Auto Insurance Premium Amounts Determined?

A man holds a floating image of a car between his hands beside the words "Auto Insurance Premiums"

When was the last time you took a detailed look at your auto insurance premium? By assessing not just the total premium amount for your policy, but also looking at a breakdown of your insurance costs, you can get a better idea of exactly what you’re paying for. After all, there are a lot of different factors that go into determining your car insurance premium, and having a better understanding of the different factors that influence your premium can help you determine whether or not you’re getting a fair price for your auto insurance coverage.

Credit Score

Believe it or not, your credit score and credit history can play a role in how much you pay for car insurance. If you have less-than-ideal credit, most insurance companies will consider you a greater risk to insure. This is one of the reasons why it’s always a good idea to know what your credit score is. Be sure to pull an updated copy of your credit report at least once a year so you can review it and dispute any errors that may be affecting your score.

Vehicle Type and Features

The specific car you drive can also have an impact on how much you pay for auto insurance. Certain types of cars are considered a greater risk to drive than others. Notoriously speedy vehicles, such as sports cars, are inherently seen as riskier than a basic four-cylinder sedan, and will likely require a higher auto insurance premium. The same goes for vehicles with a higher value, such as luxury vehicles and exotics.

The safety features included in your vehicle can also impact your premium. For example, if your vehicle has technology that makes you less likely to get into an accident (such as lane-departure warning systems and rearview cameras), your insurance company may give you a break when it comes to your premium. The same goes if your car has features like side-curtain airbags and theft-deterrent systems – all of which make you less likely to end up filing an insurance claim.

Driving Record

Your past driving record can also influence how much you pay for car insurance. If you have blunders on your driving record (such as recent moving violations or accidents), there’s a good chance that these will be reflected in your auto insurance premium. On the bright side, poor marks on your driving record don’t last forever; in most states, they’re removed from your record (and thus no longer have an impact on your insurance premium) after just a few years.

And of course, if you have a stellar driving record with no recent accidents, moving violations, or other citations, you could save a pretty penny on your coverage. Some insurance companies even offer discounts to low-risk policyholders.

Location and Vehicle Mileage

There are also some other miscellaneous factors that can play a role in how much you end up paying for auto insurance. The location in which you park your car each night, for example, can influence your rates. This is typically based on your ZIP code and local statistics for vehicle theft, vandalism, and similar issues. If you park your car in an area that is known for vehicle thefts and other related crimes, you’ll likely have to pay more for insurance.

The number of miles you put on your car in any given year can also affect your car insurance premium. Generally, the less you drive, the less of a risk you are considered to be by your insurance carrier. If you only drive your car the short distance to and from work each week, you may be entitled to a low-mileage discount.

Lowering Your Auto Insurance Premium

The best way to lower your auto insurance premium is to make sure you’re getting the coverage you need and comparing quotes between reputable insurance carriers. Furthermore, if you’re in the market for a new car, consider choosing one with great safety ratings and standard safety features that could save you money on your car insurance.

Ready to start shopping for car insurance? Schertz Insurance has you covered. Give them a call at (940) 891-4803 to request a free auto insurance quote or to find out more about the services they offer..