There are many factors that affect the premium you'll pay for auto insurance. Each is a statistically based risk for a specific population. The higher the risk associated with a person, the more he or she is likely to pay for coverage. We've elaborated on some of the risk factors below, but there are numerous others, including driver's gender, miles driven per year, purpose for using the vehicle (commuting to work, using for work, leisure only), etc.

Statistically, drivers under the age of 25 have a greater risk for being in an accident than the population over age 25. The population of drivers between the ages of 50 and 65 tend to have some of the safest records. These are not absolutes, just assessments based on historical data. But age is just one of the many factors used to calculate your premium.

If you're a parent, then having your 16-year-old on your policy will be an added cost. If you have more drivers than cars, you can make Junior a part-time, rather than a full-time, driver, and that may lower his premiums. Check with your insurer to see if this is an option.

Driving record
Being liable for an accident or having moving violations on your record (speeding tickets, DWI, reckless driving, etc.) put you at a higher risk for accidents and will likely mean a higher premium. Depending on the state in which you live and insure your car, insurance companies can penalize you for your record for as many as five years from when the incident occurred. The good news is, as your record improves, many companies will lower your premium.

Where you live
Where you live really can make a difference. People living in areas with little or no traffic are likely to spend less on insurance than those living in congested cities or suburbs. Why? Because areas with a lot of traffic tend to have more accidents. Some areas also have a higher rate of vehicle thefts, which can result in a higher premium.

Type of vehicle
As we've said, many factors contribute to the cost of your premium, including the make and model of the car you drive. If you have a relatively new, pricey car, it will cost more to repair it. Unless it's been paid off, your lienholder will require you to carry collision coverage on it. More expensive repairs translate into a higher collision coverage premium. As your car ages, however, your premium may decrease. But the book value isn't the only contributor to your premium. Certain cars, regardless of age or initial cost, seem to be exceptionally attractive to thieves, and that can result in a higher premium.

Car insurers offer many discounts that can result in some nice savings. Be sure to ask about them when you're getting a rate quote. Here is just a sampling of things that may qualify you for a discount:

  • Having homeowner's or renter's insurance with the same company

  • A young driver on your policy with an impressive grade point average

  • Taking a defensive driving course

  • Using an approved (by your insurer) anti-theft device in your vehicle

  • The number of years you've been with the same insurer, especially if you have a good record

  • Housing your car in a garage versus on the street

  • Membership in some professional associations

Learn more about the kind of auto insurance you should have -- as well as other types of "disaster protection." And if you have specific questions, ask them on our Insurance discussion.