Updated: July 2016
There are many factors that may affect your car insurance premium. While it may be tempting to reduce or eliminate coverages to help lower your car insurance premium, it's important to know that there are other factors that may also affect the price you pay.
According to the Insurance Information Institute (III), your premium may depend on:
Certain types of cars cost more to insure. However, if you drive a vehicle with built-in security features, such as anti-lock brakes or anti-theft devices, you may qualify for discounts on your car insurance premium.
Your Driving Record
If you've been in multiple accidents, your cost for car insurance is likely to be higher than someone with a clean driving record. If you're a new driver and have not had insurance before, chances are you'll pay more for car insurance.
How Much You Drive
Insurers typically look at how much you use your car. Someone who has a long commute to work may pay more for insurance than someone who only uses their vehicle to run errands on weekends — since more miles behind the wheel mean more exposure to risk.
Where You Live and Park Your Car
Where you live and where you park your car overnight may affect your car insurance premium. Urban neighborhoods typically have higher rates of accidents, theft and vandalism than more rural areas, which means premiums might be higher.
Your age and gender may also impact your car insurance premium. Younger, less experienced drivers often pay more for car insurance than older drivers.
The Type of Coverage
The coverages you choose may affect the cost of your car insurance premium. Most states have some auto insurance requirements, typically involving liability coverage. Coverages that are also typically included in a car insurance policy are comprehensive coverage, collision coverage, uninsured/underinsured motorist coverage, and medical payments or personal injury protection, depending on the state.
There are also optional protections you may want to consider such as towing and labor costs, rental reimbursement and sound system coverage.
Your Limits and Deductibles
A limit is the maximum amount your policy will pay toward a covered loss. Typically, each coverage in a policy has its own limit, and you may be able to adjust it based on your needs. You'll likely find that the more coverage you purchase, the higher your premium may be. Your deductible — the amount you agree to pay before your insurance kicks in to help pay for a covered loss — also plays a role in the amount of your premium. Generally, you may find that setting a higher deductible means you'll pay less for your policy.
A local agent can help you decide which limits, deductibles and coverages are right for you. They can also help identify any discounts for which you may qualify.