Factors Affecting Automobile Insurance Premiums

Every auto insurer evaluates every applicant differently in terms of risks the applicant poses. As a result the premiums required will be different for each vehicle owner and this will also change depending on the company. In short, the factors used in premium calculation and their relative importance within will be different for each firm. That is why you can see quotes ranging from very high to moderate and low. Here are some of these factors;

Number of Claims

Number of accidents and insured losses suffered by policyholders are seen as clear proof of what you can expect from insuring such policyholders. The higher the claim count the higher the premiums would be to compensate for high possibility of the insurer having to pay for losses.

Age and Gender of Listed Drivers

Generally, drivers between the ages of 50 – 65 are considered to be safest. Male Drivers between the ages of 16 – 19 are considered to be highest risk. When one group is being very cautious and the other causing reckless accidents it is normal that premiums can be hugely different between these two driver age groups. In addition, female drivers get better rates than their male counterparts.

Features of Insured Vehicles

Cars with high safety features and better crash test results are cheaper to insure. Low value, mid-size, four door sedans are common and they are cheaper to insure as well. Sports cars, SUVs, 4x4s are expensive as they are likely to cause more accidents due to speed and cause larger damages to others due to structure.

Your Zip Code

Where autos are kept overnight and driven mostly is important. Auto theft, accident and vandalism rates in those areas are reflected on the chance of policyholders making a claim and therefore on premiums charged.

Driving History

Apart from having accidents drivers can receive traffic violation tickets as well. These tickets are registered in DMV records and seen by insurers. It is a simple assumption that drivers who break traffic rules are going to end up in an accident sooner or later. That is why they will be facing surcharges on premiums depending on how bad the records are.

Credit Score

Financial histories of policyholders are considered by 90% of car insurance companies when they are determining prices. Few states do not allow use of this information but most do. You can expect as much as twenty percent surcharge should you let your credit score slip lately.


It is only natural that drivers who use their cars more will have to pay more premiums. The longer you stay on the road the higher the chance of accidents. And you don’t pay as much if you are driving only few miles a year.

Education and Profession

More and more companies seem to be including education in their premium calculations. In addition a few companies offer discounts for certain professions like army personnel, fire fighters, nurses or government employees. Being member of a trade association like law bar, teachers union or professional associations like engineering can offer you ten to fifteen percent savings. Also, membership to auto clubs like AAA can save you around ten percent.

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