Car Insurance: Factors That Affect Your Premiums

Different factors affect how much you'll pay for car insurance. You can control some factors, but not others.

What type of insurance coverage you choose to buy, your selected coverage limits, and your deductible amounts all impact the monthly premiums you'll pay for car insurance. Which of the following do you think affects one's car insurance premium?

  • what vehicle you choose to drive
  • your driving history and habits
  • your credit history
  • where you live, and
  • your age and gender.

The correct answer is that all of these factors can impact your car insurance premium. For information on coverage types, coverage limits, and deductibles, see Buying Insurance for Your Car. For information about how vehicle choice, your driving history, and your personal details affect your car insurance premiums, read on.

Vehicle Choice and Driving History Affect Premiums

Some factors that are within your control—like what car you choose to drive, your driving history and habits, and even your credit history—can influence how much you'll pay for insurance premiums.


Car insurance premiums are partially based on the potential cost of repairs and the risk of claims associated with specific vehicles.

Cars with High Insurance Premiums

Newer, costlier, and higher-performance vehicles will generally require higher premiums. Drivers should check their estimated premiums before buying a car to avoid getting stuck with insurance bills that are surprisingly high.

Safety Features Impact Insurance Premiums

Vehicles with certain features might be eligible for discounts. Usually, autos that have features like daytime running lights, anti-lock brakes, electronic stability control, airbags, and anti-theft systems qualify for a discount. Recently-developed safety features—like automatic braking, lane assist, blind-spot detection, and video-assisted reverse—are likely to provide discounts in the foreseeable future.

Driving History and Habits

Drivers with fewer tickets and accidents than other drivers pay lower premiums. However, drivers might not realize that the more they drive, the higher their premiums are likely to be. Carpooling, public transportation, and other alternatives can help reduce annual mileage for drivers looking to lower their premiums. Drivers who use their vehicles for business or frequently drive at night also face higher premiums.

Failing to disclose your driving habits accurately to the insurance company can result in a denied claim. How will the insurance company know? When you file a claim, an adjuster will likely inspect the vehicle, and the average annual mileage can be calculated using odometer readings. If the mileage calculation comes in at significantly above a driver's reported mileage, the insurance company might deny the claim. Similarly, if a driver has an accident while driving commercially, an insurance company can deny the claim if the insured party hid that fact that he or she was using the vehicle for commercial purposes.

Credit History

Having a good credit score is important for many reasons, but drivers might not realize that getting lower car insurance premiums is one of them. Statistics show that drivers with lower credit scores file more and higher insurance claims. As a result, drivers with poor credit scores are likely to pay substantially higher premiums than drivers with good credit scores. A few states have banned the use of credit scores in calculating insurance premiums, but most have not. (To learn ways to start improving your bad credit, see Ways to Rebuild Your Credit.)


While drivers can choose where they live, car insurance is probably not one of the determining factors when making that choice. Local crime rates, frequent inclement weather, and traffic levels can impact the amount drivers pay in premiums. A driver's specific neighborhood can even factor into premium calculations.

Factors Beyond Your Control

Other factors that can affect your premiums—like your age and gender—are not within your control.

Does Age Affect Car Insurance Premiums

Younger drivers, especially those under 25, will pay higher premiums.

Does Gender

Affect Car Insurance Premiums

Other factors being equal, men will frequently have to pay higher premiums than women. Though, some states don't allow gender to affect premiums.

Common Car Insurance Premium Discounts

Beyond safety features, insurance companies offer various discounts to drivers. These discounts ordinarily fit into three categories: merit-based, affiliation-based, and customer-service discounts.

Merit-Based Discounts

Insurance companies often give merit-based discounts to those who have a good driving history or have low annual mileage, for example. Some companies offer discounts for drivers who complete a defensive driving or driver training course. Merit-based discounts can also be based on non-driving behavior, like good-student discounts for young drivers.

Affiliation-Based Discounts

Affiliation-based discounts are based on the driver being connected with a certain demographic or group. This kind of discount includes military discounts, senior citizen discounts, low-income discounts, and discounts based on membership in certain organizations (frequently called "affinity" discounts).

Customer-Service Discounts

Customer-service discounts are generally designed to reward customers for their business. Customers who insure multiple cars with the same company frequently receive a multi-car discount, as do customers who choose to carry other policies with the company, especially homeowners' insurance. (Purchasing two or more types of insurance with one company is typically called "bundling.")

Customers who remain with the same company for several years might qualify for loyalty discounts. Other customer-service based discounts—like discounts when you agree to automatic payments, paperless statements, and early renewal—are used to encourage customers to be efficient.

Drivers shouldn't wait for the insurance company to offer discounts. It's better to be proactive by contacting the insurance company to inquire about discounts that might apply in your situation. Drivers should also consider membership in organizations that can pay for themselves through savings on car insurance premiums and other benefits.

The Bottom Line

Drivers can take steps to reduce their car insurance premiums. Buy a vehicle that has affordable insurance premiums, maintain a good driving record, build a decent credit score, and look into discounts. Some of these actions might take a little more time, such as improving your credit or changing your driving habits, while others provide an immediate benefit, such as asking about discounts and having the insurance company apply them to your policy.

More Information

To learn more about insuring your car and other vehicle-related matters like traffic accidents and drunk driving, get Nolo's Encyclopedia of Everyday Law, by the Editors of Nolo. This handy guide contains information about driving, as well other legal topics affecting the average American.

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