The average cost of a full coverage auto insurance policy in the United States is just over $1,670 per year, averaging just over $139 per month. This number can be misleading since this average is the result of also taking the average full coverage rates from each state.
This means that your own qualifications may require you to pay much more or much less than even each state’s car insurance rates. New Hampshire and Virginia don’t require drivers to carry auto insurance at all, though injury liability is still on the table should another driver be injured.
All of this information means that it is important to do some research into the best insurance policy for your own needs, compare a variety of insurance providers, and get several car insurance quotes to properly compare each auto insurance policy available. This will help you get the best auto insurance rate possible and potentially be able to pay less than the average cost of car insurance.
Car insurance is one of the necessary costs of owning your own vehicle, but determining the actual cost that it takes to cover yourself, and the average cost of auto insurance across the board is much more complicated than it may seem. Car insurance rates can vary wildly based on a multitude of different factors.
Not only do car insurance companies vary between the rates they offer at baseline, but those same insurers also base their car insurance rates on credit score, insurance coverage type, driving record, gender, and age. Additionally, your state of residence also affects auto insurance rates and insurance coverage requirements.
Factors that Affect Auto Insurance Rates
There are usually eight main factors that affect what kind of auto insurance rates and average annual premiums you will have to pay. The largest indicator of having to pay higher rates is whether or not you are considered a high-risk driver to insurers. Being considered a high-risk driver usually includes adding several of these individual high-risk subgroups together.
For example, a newly-licensed male driver is seen as a high risk to insurers because of his inexperience, and because males generally pay higher rates for auto insurance. If this driver has also had an at-fault accident, a speeding ticket, and drives a sports car, his auto insurance rates would skyrocket. Oppositely, a middle-aged female with a clean driving history driving a Toyota Camry will most often be considered low-risk since she falls outside of the high-risk population parameters.
In addition to being considered a high-risk population because of gender, age, vehicle make and model, and driving history, other factors like state of residence, insurance policy type, and your chosen insurance company will affect the average car insurance cost.
Your driving record is one of the most influential factors in determining your auto insurance rates. A clean driver profile, free of speeding tickets, at-fault accidents, and DUIs will usually result in lower rates than those with a more reckless driving profile. In fact, insurance premiums can rise by thousands for those with multiple offenses or very serious one-time offenses such as a DUI.
Things like speeding tickets and minor accidents will not cause insurance premiums to rise as much as driving under the influence or a serious at-fault accident will, but these offenses cause insurers to see those who commit them as a bigger liability. This is ultimately what causes them to raise their rates for this population.
High-risk car insurance is reserved for those that are considered a consistent liability. Insurance companies differ when it comes to the high-risk rates they offer, but you can expect any company to charge higher rates for high-risk drivers than those who have a clean driving record. Those with clean driving records can often start to earn benefits and reductions after a certain period of time free of accidents and other moving violations.
Age is another big factor for car insurance policies. Both very young drivers and very old drivers have higher than average auto insurance costs. This is, again, because of the inexperience teen drivers bring to the road and the greater risk than older drivers carry. Both populations are more likely to be in an accident.
Even though insurers know the risks that both of these populations present, young drivers still usually cost more to insure than an older motorist. The youngest drivers – those who are still in their teens – can pay up to three times more than the national average since they are up to four times as likely to be involved in an accident.
Fortunately for parents who pay for their children’s insurance costs, things like good grades in school, driver’s education courses, and pay-per-mile type insurance plans can help mitigate some of the high costs.
Men usually pay higher car insurance rates than women because they are more likely to engage in riskier driving habits. This is not always the case, and the average gap between men’s car insurance rates and women’s car insurance rates usually lessens as men age. Even men with clean driving records under the age of 25 can pay up to 15% more than women on average.
Compared to other factors that affect insurance rates, gender does not usually pose as substantial of a difference as things like age, driving record, and state of residence. Some states like California, Michigan, Montana, North Carolina, Massachusetts, Pennsylvania, and Hawaii do not allow higher rates based on gender alone.
State of Residence:
Your state of residence influences car insurance rates almost as much as age and driving record. This is mainly due to varying regulations from state to state. As mentioned before, New Hampshire and Virginia are the exceptions to the rule since they do not require drivers to carry auto insurance.
All other states require some form of auto insurance policy, and many require a full coverage insurance policy with liability insurance. Those states that do not require full coverage while requiring some form of insurance coverage provide the option of minimum coverage, usually costing drivers about two times less than regular full coverage policies.
Maine wins the prize for offering the lowest average car insurance rates of any other state, offering full coverage insurance for an average of less than $1,000 per year. Other states that follow closely behind include Hawaii, Ohio, Idaho, North Dakota, and Washington.
The most expensive state for average full coverage auto insurance is Louisiana. Average rates soar to well over $1,500 more per year than in Maine. New York, Nevada, Michigan, Kentucky, and Florida round out the rest of the highest paying states.
On an even more granular level, certain areas and specific zip codes within each state can require higher premiums than other localities based on accident rates.
Perhaps the most understood and widely accepted difference in car insurance rates comes from the fact that different companies simply offer different insurance rates, insurance premiums, and various insurance coverage package options. This is what makes insurance shopping so important and getting insurance quotes from different insurance companies a must.
Generally speaking, USAA – an insurance company reserved for only those in the armed forces – offers the cheapest car insurance. They are closely followed by companies like Amica, State Farm, and Travelers. Insurance companies like Geico, Progressive, and Nationwide tread the middle of the road. MetLife, Allstate, and Farmers round out the list of insurance companies with the most expensive average rates.
The type of vehicle you drive affects your insurance rate. Contrary to popular opinion, red vehicles do not necessarily cost more to insure than any other color vehicle, but vehicle types fall within a wide spectrum. The costlier, more performance-oriented, and more dangerous a vehicle is, the higher the average insurance rates tend to be.
Sports cars often fall within this category since they often have more powerful engines, can cost more than normal vehicles, and often have fewer safety features than the average family car. In contrast, a normal four-door sedan like a Honda Accord will usually come with a lower insurance rate since it is relatively safe, relatively inexpensive, and comes with a relatively small engine.
Luxury cars and trucks can also fall into the more expensive category since they cost more to repair if damaged in an accident. Most new cars also tend to bring higher insurance rates than older cars because they cost more to buy. As cars age, their value drops, allowing less necessary insurance coverage to repair or replace parts.
A credit score tends to affect full coverage insurance premiums, both positively and negatively. Those with poor credit can pay as much as $1,500 more per year than those with good credit. Credit history is one of the lesser-known factors in determining insurance premiums, but it can double insurance rates for drivers in Arizona, New Jersey, Michigan, South Carolina, and Utah.
Similar to gender-based insurance rates, California, Massachusetts, Michigan, and Hawaii ban higher auto insurance rates based on credit history. Different insurance companies also treat credit differently, another good reason to get insurance quotes when shopping for a new insurance coverage provider.
Insurance Policy Type and Coverage Amount:
The type of insurance policy you choose to purchase and the coverage amount included in that policy are what affect insurance rates the most. Buying a full coverage policy – one that usually includes liability coverage, comprehensive coverage, personal injury protection, collision coverage, and uninsured driver coverage – can be well over twice the cost of a minimum insurance coverage policy.
On top of this, many insurance companies offer extra options within insurance policies. These can include additional items such as roadside assistance, a low deductible option, gap coverage, new car replacement, and rental car coverage in the event of an accident or vehicle repairs.
As its name implies, minimum coverage is cheap car insurance that only handles the minimum amount of legal car insurance coverage one needs to carry in any given state. It usually only covers personal property damage and bodily injury. It should be noted that minimum coverage in one state may be as costly as full insurance coverage in another. It is important to research insurance rates before moving to a different state to understand what is expected.
Miscellaneous Factors that Influence Car Insurance Rates
Several other relatively minor factors influence insurance rates including policy bundling, amount and type of discounts, marital status, occupation, miles driven per year, education level, and payment options. Each may play a small role in affecting rates while some do not affect rates at all, depending mostly on your state of residence and insurer.
Most auto insurance companies offer several types of discounts, but these are not consistent across the board. Some companies offer more discounts than others and the amount of the discount varies as well. Homeowners who bundle several different insurance policies into one and safe driving are two universal methods of earning discounts.
Home and Personal Life:
Occupation, level of education, and housemates, including marital status, can all affect your insurance rates. Those who are single or are divorced usually pay higher rates than those with spouses.
Annual Miles Driven per Year:
Driving your vehicle more often equates to being at greater risk for an accident; therefore, those who drive more miles per year than average often pay higher insurance rates than those who drive fewer miles.
As with many other things, auto insurance coverage often costs less when paid in full than if it is paid over a series of months or weeks.
Lowering your Insurance Premium:
Insurance rates have been steadily increasing over the past five years, but there are plenty of ways to decrease your insurance premiums depending on which insurer you call your own. Almost all insurance companies offer other discounts beyond safe driver and insurance bundling discounts.
Student and young driver-specific discounts like driver education can lower rates for student drivers, but earning good grades in school is another way to lower high rates for young drivers. Proof of good grades is usually required in the form of transcripts, and it is well worth the trouble of submitting since young drivers already have much higher insurance rates by default.
Safe driver discounts can be monitored and rewarded based on claim-free time periods and devices fitted to vehicles that monitor driving behavior, but the two discounts are not always the same. The longer you go without filing a claim, the more likely you are to receive some kind of discount.
Vehicle Features Discounts:
The more safety equipment you have on your vehicle, the better it can be for you. More safety equals less chance of injury, and a vehicle equipped with more advanced safety features and high safety ratings can often pay off when it comes to your insurance policy.
Putting it All Together
Even though the national average car insurance rate is over $1,600 a year, this is not very indicative of insurance rates as a whole. This is because there are so many different factors that play into individual insurance rates including state of residence, types of insurance coverage, age, gender, insurer, marital status, and many more.
When shopping for the best insurance, it is important to shop at different companies, inquire about discounts, do some research into what your home state requires, and get several insurance quotes to make sure you get the most out of your specific policy.
https://www.autolist.com/guides/average-car-insurance-cost Average Car Insurance Cost