Understand what shapes your car insurance price.

Your car insurance premium can feel like a number pulled out of thin air. It isn’t. Insurers estimate how likely you are to file a claim and how much those claims might cost, then set a price based on that.

Some of the factors are in your control, and some aren’t. Knowing which is which helps you spend your energy where it counts.

What insurers look at

Each insurer sets its own criteria, but these factors come up often:

• Driving record. At-fault accidents and traffic violations usually raise your price.
• Your vehicle. The make, model and age matter. Cars that cost more to repair or offer less protection in a crash often cost more to insure.
• Location. Where you live and park your car matters. Areas with more claims, often cities, tend to cost more.
• Annual mileage. More time on the road can mean more risk.
• The drivers. Age and some other personal details may play a role, depending on your state.
• Prior coverage. A gap in coverage or a cancellation for nonpayment can affect your price.
• Coverage choices. Higher limits and extra coverage cost more. Higher deductibles usually cost less.

Many insurers also use a credit-based insurance score, which is different from a regular credit score, as one factor where state law allows it. Not every state does. You can ask your insurer whether it used one for your policy. Some insurers also offer usage-based programs that look at how, when and how much you drive.

The main types of coverage

A typical policy is a bundle of separate coverages, each with its own limit and price.

• Liability. Bodily injury liability pays for injuries you cause to others. Property damage liability pays for damage you cause to someone else’s property, like their car or fence. Most states require some liability coverage. Since liability coverage helps protect your savings and home, ask whether limits above your state’s minimum make sense for you.
• Collision. This pays for damage to your car when it hits another vehicle or an object, or rolls over. It’s optional under the law, but a lender or leasing company may require it.
• Comprehensive. This pays for theft and damage from things other than a collision, such as fire, weather, vandalism, falling objects or hitting an animal. It’s also optional, though a lender may require it.
• Uninsured and underinsured motorist. This protects you when you’re hit by a driver who has no insurance or not enough to cover your losses. It can also help after a hit-and-run.
• Medical payments or personal injury protection (PIP). This pays for treatment of injuries to you and your passengers. Depending on the policy, PIP may also cover costs like lost wages. In no-fault states, your own insurer pays for your injuries, up to your policy’s PIP limits, no matter who caused the crash.

Required coverages and minimum limits vary by state. Your state insurance department can tell you what’s required where you live.

Ways to lower the cost without losing protection you need

There’s no guaranteed way to cut your premium, but these steps are worth a look:

1. Shop around. Prices vary between insurers. Give each one the same information, including the same coverages and limits, so you’re comparing like with like. Price isn’t everything, so also consider service and the company’s financial condition.
2. Choose your deductible carefully. Raising the deductible on collision and comprehensive can lower your premium. Only do this if you have savings to pay the higher amount after a claim.
3. Bundle, then compare. Many insurers offer a discount for insuring your car and home together, or for insuring more than one car. Check that the bundled price is actually lower overall.
4. Ask about discounts. Common ones include good driver, good student, driver education, safety and anti-theft devices, low mileage and multiple cars. Availability varies by state and insurer.
5. Review coverage on an older car. If your car is worth less than it used to be, weigh what you pay for collision and comprehensive against what the car is worth. If you still owe money on it, your lender may require that coverage.
6. Keep your details current. Check that your address, vehicles, drivers and discounts are listed correctly. Tell your insurer when something changes, like a new car, a new driver or fewer miles driven.
7. Check before you buy a car. Get an insurance quote before you choose your next vehicle.

Over time, a clean driving record is one of the steadiest ways to keep your price in check.

Your next step

Pull up your declarations page, the summary page of your policy. Find your collision and comprehensive deductibles and the list of discounts you receive. Then contact your insurer and ask one question: “Are there any discounts I qualify for that I’m not getting?”