Auto insurance is a bit like going to the dentist. No one really wants it, but we need it. Because this is not an expense we relish, the temptation exists to cut corners in order to pay lower auto insurance premiums. This is not a good idea, as you may find yourself hopelessly underinsured when you need it most.

The cost of auto insurance depends on the type of cover you’re insured for. Though there are other factors that affect your insurance premiums. One person may pay considerably less for the same auto insurance cover than another. Insurance companies calculate your premiums based on your individual risk profile.

Not all insurance companies calculate auto insurance premiums based on the same criteria. It is advisable to obtain several quotes from different insurers to find the deal that best suits you. All insurance companies require detailed information from you, in order to evaluate your risk and what you will be paying for the auto insurance policy you choose. This can be anything from your age to where you live.

It is important to provide accurate and honest information. If you do not fully disclose all the information required, you could find that the insurance company will not honor a claim if they discover that your personal information is false or incomplete.

How do insurance companies evaluate your auto insurance premiums?

Driving Record

An unblemished driving record, with no violations or accidents, will reduce your auto insurance premiums. A new driver, with no record, may often pay more than someone who has been driving for several years.

How Much You Drive

If you spend a lot of time on the road, your risk increases. A person who works from home and drives very occasionally will usually pay a lower auto insurance premium. A person who regularly commutes over a long distance will typically pay a higher premium.

Where Live

In some states or counties, insurance premiums may be higher than in others. This will depend on a number of factors, like crime rate, cost of medical treatment in that area, extreme weather zones, and the cost of vehicle repairs in that area.

Generally, urban areas are considered higher risk than rural areas. You can expect to pay a higher auto insurance premium if you live in a city.


Most insurance companies charge lower premiums for older drivers. People under the age of 25, generally pay more for auto insurance. If you list your teenage children as authorized drivers, your insurance premiums may increase.


Not all insurers consider gender as a factor in determining premiums. Statistically, female drivers are involved in fewer accidents and incur fewer DUIs. Some auto insurance companies charge lower premiums for female drivers.

Type of Car

Obviously, a more expensive car will cost more to insure but the car you drive may affect your auto insurance premiums in other ways. Some vehicles are deemed a higher risk based on theft and accident statistics. This means that the make and model of your car may affect your insurance premiums.

Other factors would include typical repair costs for a certain vehicle and the security features of a particular car.

Credit-Based Insurance Score

Like your credit score, insurance companies determine the probability that you will file a claim based on your claim history. They also evaluate the possible cost of your claims. If you've filed many times in the past or made several expesnive claims, you could pay a higher premium.