5 factors that affect the cost of your car insurance

Image source: Getty Images

Auto insurance is an important purchase to protect assets – and the law also requires certain types of coverage. Since car insurance is compulsory, every driver must pay for a policy.

But how much will coverage cost exactly? Car insurance premiums can vary for many reasons, but here are five of the most important factors that affect the price of car insurance.

1. Driving record

The policyholder’s driving record is the single most important factor that affects car insurance premiums. This is because auto insurers price policies based on the risk of having to pay a claim. A driver with a history of dangerous behavior – as shown by a series of accidents or speeding tickets – is much more likely to cause an accident that results in an insurer paying out.

Insurers will ask about past accidents, travel violations, or issues such as drunk driving convictions. The more black marks there are on a motorist’s record, the higher the premiums will be. And in some cases, many previous issues could even lead to denial of coverage when applying for car insurance.

2. Other Policy Drivers

Many people who buy car insurance have other people in their household who will also be driving. This could include, for example, spouses or children. Since the auto insurer could be obligated to pay a claim if these other drivers cause an accident, the insurer will want to know who else might be behind the wheel – and what their driving history looks like.

Unfortunately, this can mean that people with teenage drivers in their household, or whose spouses have had a lot of accidents, could end up paying a lot more for a car insurance policy.

3. The scope of coverage

The amount of auto insurance coverage a motorist purchases also affects premium costs. After all, if a driver has greater protection, such as a liability insurance policy that would pay more than the minimum or a comprehensive policy that pays for losses caused by theft or other non-accidental causes, then he chances are that an insurer will end up having to pay a lot of money if a claim is made.

In many cases, it makes sense for drivers to pay higher premiums to get more than the minimum required car insurance coverage. This allows motorists to ensure that they are protecting their assets and will not suffer direct losses if the worst happens.

4. Home

Where a driver lives can affect the chances of accidents or other problems with the car, such as vandalism or theft. As a result, insurers want to know where the motorist lives and whether the car will be parked in a garage. If a neighborhood is not very safe and there is a higher chance that there will be a problem, insurance premiums will be higher.

5. Choice of vehicle

Finally, the choice of car driver affects bonuses. Some cars are safer than others, and some cars are more likely to be stolen than others. If a particular car has a higher than normal accident rate or is particularly susceptible to thieves, costs could increase.

Drivers should be aware of all of these factors so they can take steps to try to avoid unnecessarily increasing their car insurance costs. By choosing a vehicle carefully and avoiding an accident history, motorists can ensure that premiums remain as affordable as possible.

The best credit card cancels interest
If you have credit card debt, transferring it to this superior balance transfer card can pay you 0% interest for 18 months! It’s one of the reasons why our experts rate this card as a top choice to help you control your debt. This will allow you to pay 0% interest on balance transfers and new purchases during the promotional period, and you will not pay any annual fee. Read our full review for free and apply in just two minutes.

We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Christy Bieber has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.