finding out how much you’ll have to pay to insure your car can take away some of the thrill of getting your new wheels.
But it doesn’t have to be confusing! How much will car insurance actually set you back?
Well, that all depends on the car itself and details about you. Let’s shine our headlights on the world of car insurance and take a closer look.
How Much Does Car Insurance Cost?
Car insurance rates vary from state to state because each one regulates its own insurance rates. There are lots of factors that could affect your premium, but the national average cost of car insurance is $1,548 annually.1
Car insurance rates vary from state to state because each one regulates its own insurance rates.
Now, we’re not joking when we say rates can vary. For example, the average rates in Michigan, Louisiana and Florida are more than double the rates in Virginia, North Carolina or Maine.
So, how do insurance companies calculate your premium? Here are the factors that determine how much your car insurance will cost you.
You and Your Driving History
That’s right, it’s all about you. Here’s what insurance companies will take into consideration when deciding on your premium:
1. Your Age
If you’re a young driver (around the ages of 16–25), you’ll pay a lot more for car insurance simply because you don’t have the experience of an older driver. It’s a riskier proposition for the insurance company to cover you.
2. Your Gender
Being young and male is an expensive combination in car insurance terms! Even though the price difference for male and female drivers isn’t huge in the grand scheme of things, a teenage male driver will pay more than a teenage female. Hey, don’t look at us! We don’t make the rules!
3. Your Address
Car insurance is priced right down to each zip code in each state. So, where you live in terms of street address can make a real difference in how much you pay.
The average rates in Michigan, Louisiana and Florida are more than double the rates in Virginia, North Carolina or Maine.
4. Your Driving Record
Any traffic violations, tickets or at-fault collisions will, unfortunately, have an effect on your car insurance premium. They tell the insurance company you’re risky to insure.
5. How Much Driving You Do
Okay, this one isn’t rocket science. If you drive your car seven days a week, use busy freeways, or make long commutes to work, you’ll pay more in premiums than a driver who keeps their car in the garage most of the time. That’s because you’re putting in more miles and using the car’s parts more. The more you drive, there’s simply more of a chance that your car could be damaged, break down, or be involved in a traffic incident.
Your Vehicle and the Insurance Policy Specifics
Let’s take a look at how the kind of car you want to insure and the coverage you’re after can affect the cost of your car insurance. The insurance company will look at the following:
1. Type of Car
A new car will be more expensive to repair or replace than a used car, so insuring it will cost you more! The same goes for luxury cars, sports cars, convertibles or cars with turbocharged engines. Used cars cost less to insure because they’re cheaper to repair or replace..
Used cars cost less to insure because they’re cheaper to repair or replace.
2. Type of Policy
Car insurance quotes can come with several types of coverage. We recommend you focus on getting liability, comprehensive and collision coverages. These are the essential ones you can’t do without. Additional coverages like Guaranteed Auto Protection (GAP), windshield coverage or Personal Injury Protection (PIP) will increase your premium. In some states, PIP is mandatory.
3. Policy Limits
If you set your policy’s coverage limits on the lower side (the amounts you’re asking to be covered for), then your premium will be lower too. States set minimum coverage levels, but it’s a good idea to aim for a middle ground. Why? Because you don’t want to face legal or medical costs totaling hundreds of thousands of dollars with a policy that only covers you for half of that.
If the deductible on your policy is low (say $500), then your premium will be higher. That’s because you’re asking the insurance company to cover more of the cost of repairs. But if you raise your deductible to $1,000 (and have that money in an emergency fund whenever you need it), your premium would go down. That could save you money!
Having a good driving record, being on active military duty, or belonging to certain organizations could each reduce your annual premium through discounts.
6. Bundled Coverages
Your car insurance premium could come down if you bundle it together with your homeowner’s insurance or if you and your spouse are insured by the same policy. Single, divorced or widowed drivers will pay a bit more than married drivers for car insurance.
How to Save Money on Car Insurance
Now you know what goes into calculating your car insurance premium. So, how can you save money when shopping for car insurance?
Here are seven ways:
Raise your deductible with enough in an emergency fund to cover it.
Aim to buy a car that’s about five years old—not brand-new.
Get only the essential coverages (liability, comprehensive and collision).
Bundle your auto and home insurance.
If you’re married, share your policy with your spouse.
Shop around! Car insurance quotes can differ wildly from one company to the next.
Find an independent insurance agent to scan the market for the best deal.
Make sure you have the right car insurance! Download our free Car Guide today!
Get Car Insurance for the Best Price
Saving money on car insurance can be done. You just need the right insurance agent on your side! Our Endorsed Local Providers (ELPs) can help you find the best deals on auto coverage in your area.
Do you have the right auto insurance coverage? You could be saving hundreds!
They’re totally independent and they work for you—not for any one insurance company. You can trust our ELPs to find you a great deal without skimping on the important coverages you need.