What determines the price of my Auto Insurance Policy? Written by Marty Karriker on 12/2/2010 10:00 AM . It has 3 Comments. What determines the price of my policy? There are many factors that influence the price you pay for auto insurance. The average American driver spends about $850 a year. Your premium may be higher or lower, depending on: Your driving record. The better your record, the lower your premium. If you’ve had accidents or serious traffic violations, you will pay more than if you have a clean driving record. You may also pay more if you haven’t been insured for a number of years. The number of miles you drive each year. The more miles you drive, the more chance for accidents. If you drive a lower than average number of miles per year, less than 10,000, you will pay less. For instance, some companies will give discounts to policyholders who carpool. Where you live. Insurance companies look at local trends, such as the number of accidents, car thefts and lawsuits, as well as the cost of medical care and car repair. Your age. In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or young people below age 25 drive your car. The car you drive. Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car, the cost of repairs, and the overall safety record of the car. Your Credit. For many insurers, credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim. Credit-based insurance scores are based on information like payment history, bankruptcies, collections, outstanding debt and length of credit history. For example, regular, on-time credit card and mortgage payments affect a score positively, while late payments affect a score negatively. The amount of coverage. Of course, like anything else, the more coverage you have, the more you pay. However, you may qualify for discounts.