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Know the factors affecting car insurance premiums and learn how to lower insurance costs.

You pay one amount for car insurance, your best friend pays another and your neighbor pays still another amount. What gives? Most insurance companies look at a number of key factors to calculate how much you'll end up paying for your car insurance.

Take a closer look at these factors that affect your car insurance premiums to clear things up — some of them also come with bonus suggestions for keeping costs down.

Factors that affect car insurance rates

Your policy and deductibles

When you are choosing your car insurance deductible and coverages, the specifics play a role in your monthly payment.

Generally, choosing a higher deductible means a lower monthly payment.

Choosing a lower deductible means a higher monthly payment.

Any additional coverage you add typically gives you added insurance protection, depending on the claim, but will also add to your monthly cost.

One way to lower insurance costs is to review your policy with your insurance agent and eliminate any coverage you may not need, such as comprehensive coverage on an older vehicle, rental reimbursement or emergency roadside service.

What you drive

Car insurance providers often develop vehicle safety ratings by collecting a large amount of data from customer claims and analyzing industry safety reports, and they may offer discounts to auto customers who drive safer vehicles. The opposite can apply for less safe rides.

Some insurers increase premiums for cars more susceptible to damage, occupant injury or theft and they lower rates for those that fare better than the norm on those measures.

Driving vehicles that rate highly in terms of driver and passenger protection may mean savings on insurance.

So before you head down to the dealership, do some research on the car you want to purchase. Does the vehicle that has caught your eye have strong safety ratings? Is this specific model often stolen? Knowing the answers to a few simple questions can go a long way toward keeping your rates low.

How often, and how far, you drive

People who use their car for business and drive more miles in a year pay more than those who drive less. The more miles you drive in a year, the higher the chances of a collision — regardless of how safe a driver you are.

To help offset how much you drive, consider joining a car or van pool, riding your bike or taking public transportation to work. Insurance rates may be lower if you drive fewer miles.

Check with your insurance company about a discount for driving less. Usage based car insurance like Drive Safe and Save™ by State Farm® provides a personalized discount baed on how the vehicle is driven and the miles driven by using telematics information from your car or smartphone..

Where you live

Generally, due to higher rates of vandalism, theft and collisions, urban drivers pay more for car insurance than those in small towns or rural areas.

Your driving record

Drivers who cause accidents generally pay more than those who have gone accident-free for several years. If you've been accident-free for a long period of time, don't get complacent. Remain cautious and maintain your good driving habits. If you are insured and accident-free for 3 years, you likely qualify for a State Farm accident-free savings.

And even though you can't rewrite your driving history, having an accident on your record can be an important reminder to always drive with caution and care. As time goes on, the effect of past accidents on your premiums will decrease.

Your credit history

Certain credit information can be predictive of future insurance claims. Where applicable, many insurance companies use credit history to help determine the cost of car insurance. Maintaining good credit may have a positive impact on your car insurance costs.

Your age, sex and marital status

Accident rates are higher for drivers under age 25, especially single males. Insurance prices in most states reflect these differences. If you're a student, you might be in line for a discount. Most car insurers provide discounts to student drivers who maintain good grades.

What are ways to help lower car insurance premiums?

Dropping unnecessary coverage, increasing your deductible or reducing coverage limits may help lower insurance costs. Your insurance agent can share the pros and cons of these options.

In some states, younger drivers are also able to take driver safety courses like Steer Clear® by State Farm that could lower your premium. Overall, it doesn't hurt — and might very well help.

You can also check with your insurance company to see if they have a telematics program, like Drive Safe & Save from State Farm. These usage based car insurance programs record how you drive and the miles you drive. The safer driver you are, the more you may lower your car insurance..

Other typical discounts include those for good students, children no longer driving while away at college, insuring multiple vehicles, installing anti-theft devices, taking defensive driving courses and accident-free driving. See your local agent for a full list of discounts.

Using one insurance company for multiple insurance policies can lower your total costs. Combining the purchase of an auto policy with the purchase of a home policy, sometimes called bundling, can save you money.

Finally, as always, it's a good idea to talk to your State Farm agent about what policies are best for you and your situation.

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