What Affects Car Insurance Premiums?

Car insurance premiums are the amount of money an individual pays each month for automobile insurance. Your monthly premium depends on many factors – some you can control, and others you cannot.

Driving History

Driving history has a big impact on car insurance premiums. If you have received multiple traffic tickets, you are automatically flagged as “high risk.” Since you are a higher risk than drivers with cleaner records, your monthly car insurance payment will be higher. Similarly, the more traffic accidents you’re involved in, the higher your premium. If you continue to drive recklessly and prove to be a serious liability for the insurer, they may cancel your policy altogether.

Credit History

Credit history affects car insurance premiums, too. Auto insurance companies want to know that they are dealing with responsible consumers who pay their bills on time and in-full. Similar to your driving history, if your credit history is in bad shape, your car insurance premium will be higher than the average.

Type of Car

The make and model of your car is another factor that affects car insurance premiums. Generally, the more expensive the car, the more expensive it is to insure. This is because expensive cars have expensive parts and require costly labor if damaged.

Safety Features

Auto insurers also analyze your car to determine its safety. The more safety features your car has, the less likely you will be injured in an accident or your car will be stolen. This means that your car insurance premium will be lower, too. If your automobile has Anti-Lock Brakes, airbags, and an alarm, you’ll receive a lower monthly premium.


Generally, drivers under the age of 25 pay higher car insurance premiums than older, more experienced drivers. Younger drivers will enjoy lower car insurance premiums once they develop a solid driving history and prove to be a “good risk” for insurers.


For people living in high-traffic, urban areas, car insurance premiums are more costly. This is because living in populated areas means more people on the road and on the streets, thus increasing your risk of an accident, theft, or other misfortune.


One of the best ways to reduce car insurance premiums is to lower the deductible. A deductible is what you, the driver, must pay for a claim before insurance pays the rest.

Let’s suppose Henry has a $300 deductible. If he gets into a wreck, he must pay $300, and then his insurance company pays for the rest. If Henry were to raise his deductible to $800, he would have to pay $800 for the wreck, but would probably save hundreds of dollars a year on his premium.

By raising your deductible, you assume more risk and responsibility. Insurers will reward you for that and reduce your monthly payment as much as 50%. So if you’re a good driver and have the financial resources to pay a higher deductible if you’re involved in a wreck, consider raising your deductible to see immediate savings on your premium.

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