What is a Car Insurance Premium?


A car insurance premium is the total amount or cost of an automobile insurance policy. A premium is calculated using many different factors by insurance companies to determine the amount of each individual policy. A car insurance premium can be paid electronically or by check using various billing methods including monthly, quarterly, semi-annually and annually. A premium is not set in stone and can be lowered and raised by making changes to the limits of a policy.


Insurers use many factors to calculate the premium to charge for car insurance, including an individual's credit score and driving history.


Discounts that can be applied to a policy will lower the cost of the premium and can be offered for belonging to a group or having additional policies.


Selecting a higher deductible will lower the premium amount because it means that the insurer needs to pay out less when there is a claim.

Driving History

The driving history of an individual includes tickets as well as violations. It is used by insurance companies to base insurance rates that affect the premium for a policy.

Pay in Full

Many insurers offer a paid in full discount when the entire premium amount is paid in full at the time of purchase and at renewal.


An insurance premium can be paid using many methods such as an automatic bank draft or by using a credit card.


Any leftover premium will be refunded to the insured when a policy is canceled. A policy is usually canceled by an insured if a better deal if found elsewhere.

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