What Really Affects Your Insurance Premium? Let’s Break It Down

Ever Wonder Why Your Insurance Costs What It Does?
You’re not alone. Whether it’s your car, home, or life insurance policy, you’ve probably looked at your premium and thought, “How did they come up with that number?”

It might seem like a mystery, but insurance companies use a specific set of factors to decide how much you pay. Some are things you can’t change—like your age or where you live—but others are totally within your control. And understanding how it all works is the first step to saving money.

Let’s take a look at what actually goes into your insurance premium—and what you can do to manage it.

1. The Coverage You Choose
This one’s straightforward: the more coverage you have, the more you’ll pay. But that doesn’t mean more coverage is bad—just that it should match what you actually need.

Here’s what affects your rate:

• Coverage limits – Higher limits mean more protection, but also a higher price.
• Deductibles – A lower deductible means your insurer pays more in a claim… and you’ll pay more upfront in premiums.
• Extra features – Things like roadside assistance, rental car coverage, or extended coverage for valuable items can add to your monthly bill.

The takeaway: Don’t just assume your coverage is right—review it. You might find places to cut back or gaps that need filling.

2. Your Personal Information
Insurance is personal—because risk is personal. Your premium is partially based on things like:

For car insurance:

• Your driving record (tickets and accidents matter)
• Your age and experience
• Where you live and park your car
  

For home insurance:

• Your location (crime rates, weather risks, fire protection access)
• The age and condition of your home
• How close you are to things like fire hydrants or coastlines

The takeaway: Some of this is out of your hands, but keeping a clean driving record and doing regular home maintenance can go a long way.

3. Your Credit Score (Yes, It Matters)
Like it or not, most insurers use your credit score to help determine your rate—especially for home and auto coverage. Why? Because statistically, people with higher credit scores tend to file fewer claims.

Want to help your rate?

• Pay bills on time
• Keep credit balances low
• Check your credit report for errors and fix any you find

The takeaway: A better credit score can mean a better premium—and it’s worth paying attention to.

4. Your Claims History
If you’ve filed multiple insurance claims in recent years, your premium may reflect that. Insurance companies see a history of claims as a sign you might be more likely to file again.

The takeaway: It doesn’t mean you shouldn’t file a claim when you need to—but if you can afford to cover smaller repairs or losses on your own, doing so might help keep your rate lower in the long run.

5. Discounts You May Not Know About
Good news: there are plenty of ways to save—you just need to know where to look.

Here are a few common discounts:

• Bundling your auto and home policies
• Safe driver discounts
• Security systems or smart home devices
• Good student discounts for young drivers
• Paperless billing and auto-pay options

The takeaway: Always ask your broker or insurer what discounts you qualify for—you might be missing out on easy savings.

What You Can Do Right Now
If you feel like your premium is too high—or just want to be sure you’re getting the best deal—here’s what you can do:

• Review your current policies annually
• Talk to an independent insurance broker who can compare options for you
• Ask questions, especially when life changes (buying a home, getting married, changing jobs, etc.)

You don’t have to be an insurance expert—you just need someone who has your back.

Let’s Make Sure You’re Not Overpaying
At National Insurance Brokers, we believe insurance should be clear, customized, and fair. We’ll help you sort through your options, find discounts you might be missing, and make sure your coverage fits your life—not someone else’s.

Reach out today for a free, no-obligation policy review. Let’s figure out what you’re really paying for—and how we can help you pay less for the right protection.