Distance and amount of driving you do. Most car insurance companies ask prospective clients how far, and to where, they do most of their driving in a day. The thinking is that further you have to drive, and the more often you do it, the more likely you are to have an accident. The person who commutes 45 minutes to work every day is going to pay more than the person who drives 10 minutes to work. Likewise, a college student who walks to class, and drives home three or four times a year will cost less than the college student who spends 30 minutes commuting to and from campus each day.

Location of your car. Car insurance companies rate areas according to the number of accidents or thefts that occur in a specified amount of time in that area. Sometimes, the company can even pinpoint a neighborhood. If you live in a large city, your rates will be higher than if you live in a town. Additionally, if there are multiple thefts or car vandalisms in the area in which you live, you are more likely to pay a higher insurance premium.

There are very few people who meet all of the criteria for having a perfect insurance rate. However, if you know what car insurance companies consider when setting premiums, you have a better idea of the things you can do to reduce your premiums. For the most part, being a safe and responsible driver, and taking good car of your car, will help you keep your premiums low.