How Much Is Car Insurance?

You are about to buy a new car or get to the road with your luxury motor. However, you are suddenly hit by the truth that your car needs insurance coverage. Still, you don’t know which are the best car insurance companies to work with. Besides, you also don’t know how much it will cost to get a full coverage car insurance. Worry no more because you are at the right place.

Getting an auto insurance policy can be a hectic process if you have no idea where to start. But with the correct information and connections, the journey can be as simple as you never thought. Of course, this begins by researching the average cost of car insurance and analyzing all the legal formalities needed. With this in mind, you will learn that the national average cost of auto insurance is around $1,548 per year or $130 per month. However, this quotation can vary depending on various factors such as your location, age, gender, and driving record, coverage types you seek, and the insurers you work with.

Car insurance rates

While getting a car insurance policy gives you the freedom and peace of mind whenever you drive your car on the road, working with a reliable insurer elevates your confidence, knowing that you have a backup plan in case of an emergency. However, before starting securing your vehicle, you need to equip yourself with vital information, including the average cost of car insurance?

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According to the National Association of Insurance Commissioners, the national average cost of car insurance is around $1,548 per year or $130 per month. However, these car insurance rates can also vary from state to state based on various determinants, as discussed below. Therefore, as a new car owner, you need to compare different auto insurance quotes to know how much to prepare for the whole process.

Average car insurance rates by the coverage types

When looking for an insurance policy, you need to choose among the provided coverage types based on your budget and the style of vehicle you drive. For instance, an insurance policy may include liability insurance with a limit of up to $100,000 for bodily injury and $50,000 for property damage liability. It may also have collision coverage and comprehensive insurance with $500 deductibles. You may also need a gap insurance policy if you are leasing or financing your car.

As such, here are the two main categories of coverage types for a six-month policy:

Full coverage car insurance

A full coverage car insurance policy can be further divided into the best and good complete coverage levels. The best full coverage policy covers you and your multiple drivers, especially teenagers, your assets, high-performance cars, and when you are leasing or financing your vehicle. Its liability limits of 100/300/100 are the highest of all. It also has a $500 deductible for both collision and comprehensive coverage. You can, however, increase the deductibles to reduce your annual premiums.

An excellent full coverage limits policy, on the other hand, works like the best full coverage policy, but with liability limits of 50/100/50 and a $1,000 deductible for both comprehensive and collision coverage.

Minimum liability coverage policy

Every state has its minimum liability rate, meaning every driver must have at least the set minimum level of liability insurance to drive in that state. This could be the cheapest tier of insurance even though it does not have comprehensive and collision coverage. However, it comes with certain risks, including:

  • A safe driver with minimum coverage only is likely to receive higher rates since most insurers view them as riskier clients.
  • In case of a fault accident and yet your liability limits cannot sufficiently cover the other driver’s property damage and personal injury protection, you are likely to be underinsured or even sued to pay for the remaining amount.
  • You will also lack coverage if your car gets damaged by an uninsured driver or by a comprehensive claim incident like theft, weather, homeowners, and animal-related damage.

Average auto insurance rate by age

Traffic safety data produced by various estimators showed that the driver’s age is also a reliable factor in estimating the cost of cheapest car insurance since it is associated with the risk behind the wheel. As such, young drivers, especially teenagers between 16- and 19-years, will face higher rates of about $381 per month than older drivers. This is because young drivers are assumed to cause more accidents due to recklessness than older drivers.

The risks reduce as the age increases; for example, those above 20 years pay about $224 as car insurance premiums while older people above 60 years pay about $150 for their monthly premiums. However, these assumptions will only apply if other factors remain constant.

Therefore, to understand how age affects car insurance rates, new car buyers are encouraged to check car insurance quotes based on the size and age of the car before settling for the ideal policies.

Average auto insurance cost based on driving experience

Your driving history also plays a significant role in determining your annual premium, as most auto insurance companies will check road activity when calculating their rates. Even a minor road violation can increase the cost of auto insurance. For example, last year, the average cost of car insurance increased by $335 for a six-month policy or $670 for an annual policy for drivers with at-fault accidents history.

The cost can also increase for three to five years for any driver who receives a speeding ticket or files an insurance claim. Other insurers will even refuse the insurance entirely if the driver does not have a clean driving record.

Average car insurance rate by credit score

According to the Federal Trade Commission (FTC), drivers with a poor credit score file more claims than excellent credit score ratings. As a result, their poor credit history caused them to receive higher insurance rates of around $237 per month than those with good credit, which paid about $107 per month.

Summarily, credit rating also plays a significant role in determining how much drivers will pay for their auto insurance. Therefore, to get a more reliable quotation, research how credit history affects car insurance companies policy.

Average insurance rates by gender

Wondering if gender is also considered in cheap car insurance estimation? As unrealistic as it sounds, the truth is some states look at the gender of the driver when making the quotation since some road accidents are associated with gender. For example, female drivers pay more annual premiums than men. Contrary, young men between 16 and 19 years pay about $672 more per year than women in the same age bracket.

However, this could be a minor observation in the calculation, considering other factors involved. Notably, states like California, Hawaii, Massachusetts, Pennsylvania, and Montana do not calculate the insurance premiums based on gender. However, other states have a difference of about 0.5% on a national average insurance cost.

The verdict

Are you now ready to get your first car insurance policy? Remember one more thing. Getting an affordable best cheap auto insurance quote can be a complicated task because different insurance policies are tailored to suit additional drivers. Auto insurance companies also modify their lower rates depending on the risks they present to them.

Therefore, while car insurance quotes are greatly influenced by the insurers and national average estimation, they are also affected by other external factors such as location, car model, profession, and marital status. Therefore, every car owner should learn various tips to reduce auto insurance rates and research different insurance discounts offered by insurers to get a friendly deal. Try, which is a free platform that reviews all of the insurance companies for you to give you a quote comparison.

Rose Rosie is a writer for the personal finance website, Joy Wallet, which provides readers with useful information, resources, and tools to help maximize their financial fitness.

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