How auto coverage costs are determined, and how you can help control them 

The whirlwind weekends spent online and on lots are behind you at last; you’ve got yourself a new vehicle. You did the math, worked your sales-defense savvy and settled on a manageable loan payment. Hopefully, your number crunching considered that other monthly payment, the one that goes along with this exciting purchase. It’s auto insurance, your financial protection in case of damage, destruction or theft of your vehicle and a legal requirement in 49 states (the exclusion: New Hampshire).

Compared to the pricing of a vehicle itself, auto-policy pricing is objective and formulaic—and specific to both your car and you. Here are the key factors behind the amount you’ll pay each month:

Your car’s worth

Everyone has their dream vehicle. You know, that shiny new ride that blows past you on the left, making you whisper sweet even as jealous daggers shoot from your eyes. Well, don’t turn too many shades of green; you can bet that in addition to probable hefty loan payments, that driver’s monthly premiums are considerably higher than yours. In general, a more expensive car means a more expensive insurance policy.

Ratings and risks

In a manner of speaking, every vehicle’s reputation precedes it. In terms of insurance, that reputation is based not on public praise or gripes, but on hard data associated with the vehicle’s make, model, year and even color. Insurance agencies and consumers can obtain official reports on a vehicle’s safety ratings and theft risk from the National Highway Traffic Safety Administration (NHTSA) and the National Insurance Crime Bureau (NICB), respectively. In general, a lower safety rating and/or a higher theft risk correlates with a higher premium.

Your driving history

Following a minor accident, your first thought may be gratitude that no one was hurt. Your second might be, there goes my record. It’s true that past accidents can mean a higher initial insurance cost, and any going forward can raise your premium—provided you were deemed “at fault” and insurance payout was involved. On the flip side, a history of safe driving can earn you a discount (more below). For these reasons, it literally pays to drive safely.


If there were a golden rule of auto-policy shopping, it might be this: let no discount go undiscovered. For every car and driver, there is likely at least one insurance discount that applies. These can relate to the driver (such as safe driving history, student status or auto club membership), the vehicle (certain safety features may lower your premium) or the insurer’s own programs (for example, a discount for multiple vehicles or annual policy renewal). A good insurance agent will present you with all potential discounts; you shouldn’t have to dig.


Deductibles represent yet another seesaw on the auto insurance playground; the higher your deductible, the lower your monthly payment—and vice versa. It’s all about finding the balance that works for you. If an absolute minimal monthly payment is your goal right now, choosing the highest deductible is one way to achieve it. Keep in mind, though, that this is your out-of-pocket expense should an accident occur.

Where you live and drive

Though not as critical as it is with homeowners insurance, geography is a relevant factor on the road. For example, accident rates naturally are higher in more populated (and therefore traffic-heavier) areas, so drivers there may pay more for auto insurance than those in rural areas. Your travel tendencies may also carry weight. As longer distances and frequent drives raise the odds of something happening, these factors may mean a higher monthly premium.

Your general profile

A woman in her 40s may receive a lower insurance price quote than a 19-year-old male. A case of reverse ageist genderism? No. In the insurance world—whether life, health or auto—factors that affect premiums are based strictly on numbers, not bias. Because statistics show more accidents among drivers who are young, male and/or (believe it or not) unmarried, a driver fitting any of those bills may pay more for auto insurance. (Note: Though agencies vary, premiums often go up after age 60.)

Whether you’re shopping for a new vehicle or more affordable insurance for the one you’ve got, contact The Dowd Agencies. Our trusted experts will help you select a plan and monthly premium that work for you; no holiday clearance event required.