What are auto insurance premiums?

Auto insurance premiums refer to the monthly or yearly price you will pay for an insurance policy. Good drivers can expect to pay around $118/mo. on average for auto insurance.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 21, 2021

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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

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Here's what you need to know...

  • Your premiums are what you pay to purchase your car insurance policy
  • The type of policy you purchase can affect your rates
  • Insurance providers charge different rates because they use different formulas for calculating risk
  • An insurance comparison tool can help you find a policy you can afford

An auto insurance premium is an amount you pay for your auto insurance and can be paid up-front for the entire length of the policy or divided and paid over a period of months, usually six.

There are several factors that go into figuring out how much your car insurance costs. One of them is the insurance company you choose.

Thankfully, an insurance comparison tool can help you search through policies from multiple insurance companies. Use our free tool today to start comparison shopping.

Factors that Determine Your Insurance Premium Rate

According to the Insurance Information Institute, the average car insurance premium varies, and some drivers pay more than others.

It depends on your insurance company’s specific formula for calculating rates. Factors considered include:

  • Age – Being under the age of 25 generally means higher car insurance premiums. Being over 50 generally results in lower car insurance premiums
  • Driving record – If you have had a lot of accidents, filed a lot of claims, or incurred several traffic violations, your insurance rates will be higher
  • Gender – Women tend to have lower rates than men because they statistically get into fewer car accidents
  • Make, model, year of your car – Newer cars cost more to insure than older cars. Insurance companies also look at the theft rates for your type of car and if it is a sports car
  • Number of miles you drive – Driving a lot of miles each year means that you are on the road longer and more prone to getting into an accident
  • Type of insurance policy – The type of insurance policy you purchase will affect your rates. Liability policies generally cost less than collision coverage
  • Your credit score – Your credit score is used by some insurance companies in an effort to determine how likely you will be to file a claim
  • Your location – Individuals who live in rural or low crime areas pay less than individuals who live in high crime areas or densely populated areas.
  • Your insurance company – Different insurance companies use different metrics and formulas for calculating their policies


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Factors that Can Lower Your Insurance Premium

The type of car insurance policy you purchase can affect the cost of your premiums.

State minimum insurance policies are generally the cheapest, but they may leave you financially liable if you have caused an accident and the damage is more than the limits on your policy.

Liability insurance covers the other driver if you cause an accident.

A liability only auto insurance policy does not pay for your car repairs or medical bills.

Since the limits are higher than state minimum insurance policies, they are generally more expensive. However, they are still cheaper than full coverage car insurance.

Full coverage car insurance is a policy that includes liability, comprehensive and collision insurance.

When you purchase a full coverage insurance policy, it pays for your vehicle and the other driver’s vehicle if you cause an accident.

Full coverage policies are the most expensive type of insurance policy. However, you can lower your monthly rates by increasing your deductible amount.

Common Discounts

Car insurance companies offer discounts for drivers that meet certain criteria.

  • Personal use – Driving fewer than 5,000 miles each year can qualify your vehicle as a personal use vehicle
  • Good studentMaintaining a high GPA while you are in school can help you lower your insurance rates
  • Multi-line or multiple cars – Having multiple insurance policies with the same insurance company can save you money
  • Getting Married – Married drivers are considered less of a risk than single drivers
  • Working in certain professions – People who are in certain professions, like teachers, nurses, and the military, are considered a lower accident risk

Searching for an Insurance Policy

When you search for car insurance, it is very important that you research. The first step is getting multiple quotes from multiple insurance companies by using a comparison tool.

Car insurance comparison tools compare your information and insurance needs against insurance policies from several insurance carriers.

Once you have your quotes, read the details of each policy and compare the prices against your budget and needs.

Determine which policies would best benefit you, then read reviews of each carrier. This will help you understand the insurance carriers’ customer service standards and claims processes.

Lastly, choose your policy and purchase it online.

You can start today by using our free tool. Just enter your zip to get started.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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