Auto insurance is a vital part of a motorist's life, providing a financial safety net against car accidents, theft, and vandalism. A requirement in all but 2 states in the US, car insurance is one of the most heavily marketed and competitive services available today. While different auto insurance companies may offer different rates and discounts, the set of factors that result in lower insurance premiums are generally the same across the auto insurance industry, and all motorists should be aware of them.

Driving Record

Probably the single most important factor in lowering insurance premiums is maintaining a good driving record. Major violations such as DUI's, DWI's, and at-fault accidents can increase insurance premiums by 100%, and even minor traffic violations such as speeding tickets can increase insurance rates by as much as 40%. The longer an individual can maintain a great driving record, the lower their premiums will be, so driving responsibly should always be the top priority of a driver.

Vehicle Type and Characteristics

Cars that are newer and/or more expensive will have higher premiums than older, less expensive cars, whereas sports and luxury cars will generally always have much higher premiums than standard vehicles. Also, a common misconception among motorists is that cars that have additional safety features such as collision-warning systems or electronic stability control systems will have lower rates. Unfortunately, many insurance companies view these features as adding to the value of the car, and thus increasing the expense to insure, and also consider them as a potentially significant expense should they become damaged.

Mileage

As a general rule, driving less will result in lower premiums. It is important to note that in many states mileage is not a significant factor in lowering premiums, with the difference between a motorist who travels less than 7,500 miles per year and one who travels over 15,000 miles per year being about $90. However, in California, mileage is one of the biggest factors in lowering insurance premiums, with the difference between the two previous mileage resulting in a rate differential of nearly $600.

Insurance History

Auto insurance companies will lower insurance rates for drivers who maintain a consistent and continuous level of coverage. One recent study of 7 different auto insurance providers showed that insurance rates dropped considerably for motorists who maintained 5 consecutive years of coverage after previously not being covered, with savings on average of nearly $200 per year. This factor also underscores the importance for newer drivers who were previously insured under their parents' policy to always let their new insurance company know about their previous coverage to get the lowest premium possible.

Bundling Insurance

Bundling insurance is an increasingly popular option among motorists, a practice where an individual can choose to have multiple types of insurance policies (car, home, etc.) with the same insurance company. A person can choose to have a single-line policy, protecting all of their different types of insurable assets under one policy, or can insure each type of insurance policy separately. Bundling insurance plans will often result in the reduction of premiums for all plans included in the bundle, saving a significant amount of money for the customer.