Auto insurance is a necessary expense for anyone who owns a vehicle. Most drivers look to save money on car insurance by altering coverage or changing insurance companies. However, by understanding how auto insurance costs are determined and what discounts are available it’s pretty easy to reduce the cost of your policy premiums.

How Auto Insurance Premiums are Calculated

Car insurance companies determine the cost of policies by assessing a driver’s risk. The higher the chances of a person being involved in an accident, the more his insurance will cost. Some risk factors, such as a driver’s age and gender, are out of his control. Other factors are based on his behavior, such as the number of traffic citations he’s received or how many accidents he’s been in.

In addition to individual risk factors, premiums are also decided based on geographic concerns and the type of vehicle insured. Sports cars, luxury vehicles and other cars that are expensive to repair will cost more to insure than more affordable vehicles. Additionally, drivers who live in areas with high crime rates or a high concentration of uninsured motorists will pay more for auto insurance than other drivers.

Some auto insurance companies also charge higher rates due to the structure of the company itself. For example, companies that rely heavily on agencies to sell policies may have higher rates than direct-sales companies. This is because agent salaries are an expense that must be recovered through premiums. On the other hand, many direct-sales insurance companies spend a substantial amount of money on advertising, so the actual price difference may be smaller than you’d expect.

Some people believe that better customer service is worth paying a little extra for, while others would prefer insurance for a bare minimum price. As long as the company is legitimate and follows the insurance laws of the state, the quality of service is a personal choice on part of the insured. Many direct-sales companies have very courteous and professional call center employees, so don’t assume you’ll need an agent in order to receive customer service.

How to Keep your Auto Insurance Rates Low

The easiest way to reduce the cost of auto insurance is to maintain safe driving habits. Drivers with no history of accidents, DUIs or traffic violations will pay much less for auto insurance than people who have those things on their records. Other methods of saving money on car insurance may be less obvious:

— Take Advantage of Discounts

Most car insurance companies offer safe driving discounts, but many providers also provide discounts to good students, military personnel or people who carry multiple lines of insurance with a single company.

— Insure Affordable Vehicles

Before buying your next car, take the time to research what insurance rates will be. This way you can avoid after purchase sticker stock for your car insurance bill.

— Maintain Low Mileage

Auto insurance companies assume that drivers will put about 10,000 miles on their vehicles each year. If you drive fewer miles than this, inform the insurance company and offer to provide regular odometer readings; this may result in a discounted rate.

— Only Buy Coverage You Need

Assess your needs and purchase insurance accordingly. If the vehicle is only worth a few thousand dollars, full coverage car insurance is probably unnecessary. If you have a second car, you might not need rental reimbursement coverage.

— Raise your Policy Deductible

The deductible is the amount of repairs you agree to pay out of pocket whenever your vehicle is damaged. The higher the deductible, the less the policy will cost. Most deductibles start at $500, but it’s possible to increase this to $1,000 or higher in some cases.

If you believe you’re paying too much for auto insurance, it may be time to change insurance companies. Auto insurance is very competitive and many companies offer substantial discounts as an enticement to switch. By taking the time to comparison shop between multiple companies (and armed with a little knowledge of how car insurance works) a driver can often much more affordable rates than speaking with a single agent.