Your premium at a glance
For a deeper understanding of your premium, you should learn how your premium relates to your actual car insurance coverage. In addition to your driving, personal, and vehicle factors, the type of coverage you select will affect your premium as well.
How your premium affects your coverage
Auto insurers offer you different types of coverage to choose from. Each type of coverage you choose will influence your premium. The more coverage you have, the more you’ll pay. Common auto insurance coverages include:
Bodily injury liability: Required in nearly every state, this insurance covers injuries you cause to others in an accident.
Property damage liability: This coverage pays for damages you cause to someone else’s vehicle or property with your car. Most states require policyholders to have this coverage, according to the Insurance Information Institute.
Personal injury protection (PIP): PIP insurance covers your own medical bills following an accident, regardless of fault.
Uninsured/underinsured motorist: While all drivers should have insurance, some don’t — and some may even commit a hit-and-run. This coverage can help you take care of costs from damages that a driver with little or no insurance causes.
Collision: This coverage pays for damage to your car if you cause an accident or hit something with your vehicle, like another car or a tree.
Comprehensive: This coverage provides payment for noncollision incidents, like damages or loss from theft, vandalism, or extreme weather.
A full-coverage policy with liability, collison, and comprehensive coverages will cost more than liability-only coverage. For some older vehicles, it might make sense to purchase only your state’s required liability coverage. If paying for full-coverage insurance to have your car repaired or replaced in an accident would cost more than the value of your car, you should consider trimming your coverage.
Read More: How Much Car Insurance Do I Need?
Setting your coverage limit
You can also influence your premium by how you set your coverage limit. Many states have a minimum coverage amount for liability, but you can choose a higher limit.
For example, your state might require a minimum of $50,000 of bodily injury liability. If you stick with the minimum, you’ll have a lower premium. Higher coverage amounts, though, lead to higher premiums. Consider what coverage limit seems reasonable, and set your limit there if it works for your budget. Decide how much car insurance you need, and plan accordingly.
Your premium and your deductible
You already know that your premium and your deductible differ, but your deductible also affects your premium. The more you commit to pay out of pocket for an incident, the lower your premium. So, if you choose a higher deductible, you’ll get a lower premium. Having a $750 deductible will lead to lower premium payments than if you had a $250 deductible.