A car insurance premium is what you shell out to your auto insurance company to keep you and your vehicle covered. The insurer figures out this cost based on their assessment of how likely you are to file a claim or have someone else claim against you if you cause an accident.
Several factors influence the premium, like the coverage options you pick, your driving history, where you live, and your age. You can choose to pay your car insurance premium monthly, biannually, or annually, depending on the payment plan you go for and the duration of your policy. You can read How Much Is a Car Insurance Premium in 2024 if you want.
Factors That Affect Your Car Insurance Premium
Every state has rules that make insurers reveal the factors they use to set premiums. Let’s dive into some of the most common factors that influence those premium calculations.
- Driving record
- Household status
- Claims history
- Type of vehicle
- Location or ZIP code
- Prior insurance coverage
- Discount eligibility
In many states, the following factors are taken into account. However, in places like California, Georgia, Hawaii, Massachusetts, Montana, North Carolina, New York, and Pennsylvania, some or all of these factors might not impact your premium, as noted by researchers from the insurance site The Zebra.
- Your credit history
- Gender
- Age
- Education, occupation, and employment status
Your state requires you to have a minimum level of liability insurance to cover any damage you might cause to other people and their vehicles. The cost of your premium can vary based on the type of coverage you choose.
- Additional coverages
- Liability coverage limits
- Deductible levels
What’s Up with My Car Insurance Premium Going Up?
A lot of drivers across the country have noticed their car insurance rates going up by over 25% lately. This spike is mainly due to inflation, natural disasters, a rise in car accidents, and higher repair costs. It’s worth mentioning that your car insurance premium can still go up when it’s time to renew, even if nothing has changed with your coverage, driving history, or other factors.
Conclusion
Car insurance premiums are what you agreed to pay for your auto coverage when you bought your policy. To keep those costs down, it’s a good idea to shop around for the best rates every year. There are also other ways to lower your premiums, like paying on time, raising your deductibles, and making sure your insurance company has your most current info.