5 Factors That Affect Your Auto Insurance Premiums

Aside from a mortgage or monthly rent payment, the largest line item in most budgets is transportation. Whether you drive a car, a truck, a motorcycle or a boat, lease and financing payments are no joke. And that's only the beginning of what you spend to get from point A to point B in safety, comfort and style. There are all of the regular repairs and maintenance costs, which escalate as your vehicle gets older. There's the rising price of a tank of gas, which seems to get worse with each passing year. And of course there's insurance. You must legally maintain a current auto insurance policy to drive in the United States, a frustrating fact that also keeps everyone safe, and helps you avoid economic ruin if the worst case scenario accident were to occur. But that doesn't mean you want to pay through the nose. You can get a quality policy and save money, as long as you are smart about the process. Here are five of the factors that affect your auto insurance premiums.

First of all, there are your basic personal characteristics. The vast majority of these are obviously out of your control, including your sex, age and race. Whether it is fair or not, auto insurance companies do adjust their premium rates based on these factors. If you are a young male you will pay far more than a middle-aged woman. And the research usually backs up their logic. Most male drivers will get in an accident during their first several years behind the wheel. But if you fall inside that range and are conscientious and safe this won't feel fair.

Your geography will also impact the size of the premiums you pay. Remember, an insurance company is trying to hedge their bets. They need to insure millions of drivers in order to stay in business, but they only make money off of the safe drivers. So they'll look at where you live and study the facts and figures. For instance, there is a much larger chance you will get in an accident if you live in an urban center with busy streets than if you are out in the country. The difference may not be enough to get you to move, but you should be aware of the variations just a few miles can create.

The type of car you drive will also have a lot to do with your premium. No two vehicle makes and models are the same, and insurance companies pour over the research provided by auto manufacturers. It's easy enough to query the police to find out which cars are stolen most frequently, or which vehicles are most often pulled over for speeding violations. If you drive an expensive, high-performance vehicle you will face much higher premiums than if you drive a station wagon, even if it is brand new. Consider this when making your purchasing decision.

The age of your vehicle will also be a factor. As your car gets older its value plummets. Your premium takes into consideration the cost of replacing or repairing your car if it is involved in an accident. Older vehicles are easier to repair. Newer cars, especially hybrid vehicles or cars with high-end computer systems require specialized mechanics. This might be a good reason to buy a certified used car that's two or three years old, instead of something brand new.

Finally, don't forget that your driving record will impact your auto insurance premiums. This could actually be the largest factor of them all. Insurers reward conscientious drivers, so try to maintain a clean record for as long as possible. You could also get discounts by maintaining a strong grade point average as a student. In the end, whatever you can do to make them see you are a low risk client will come back to help you with those premium payments.