Definition
Premium refers to the amount a policyholder pays an insurance carrier in exchange for the coverage outlined in the auto policy. Texas carriers typically bill premium monthly, every six months, or annually, with many drivers choosing monthly installments for budget convenience. Premium is calculated using rating factors filed with the Texas Department of Insurance, including the driver's age, driving record, years licensed, vehicle make and model, annual mileage, garaging zip code, and selected coverage limits and deductibles. Credit-based insurance scores are legal rating factors in Texas under Texas Insurance Code Chapter 559, though specialty non-standard carriers commonly waive credit scoring. Paying the full six-month premium up-front often earns a paid-in-full discount, while monthly billing may include installment fees. Premium is separate from deductibles — premium is what the insured pays the carrier regardless of claims, while deductibles are paid only at claim time.
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