How much it costs to insure a car? Knowing the answer to this question is the first step to getting the insurance policy that works best for your budget and driving habits. The simple answer is that it all depends on what kind of rates are available in your area along with a wide variety of other factors. Policy Genius explains that it’s quite a bit goes into determining insurance costs, so make sure to consider all the factors when shopping around for the best estimates.
Car Insurance Rate Factors
According to The Zebra, several major factors go into determining the car insurance rates available in your area. These factors determine how much of a risk you are for an insurance company to cover. Here are the most important factors to keep in mind:
- Driving Record: Your driving record is one of the best indicators of risk that an insurance company can examine. Someone with a clean driving record is less risky by default because they’ve never caused an accident. You can check your own official driving record by ordering a Motor Vehicle Report from the state.
- Age: Younger drivers are far more of a risk than older drivers due to their lack of experience. It’s not uncommon to see average insurance rates skyrocket when it comes to teen drivers. Only drivers who reach age 25 with a clean record will start seeing those rates come down.
- Marital Status: While there is no direct established causation between marital status and being a risky driver, insurers work off of correlated statistics. Married people are statistically less likely to be involved in accidents than single people.
- Car Value: The more expensive your car is, the more costly it will be to insure. This is simply because the amount of car value that can be lost in an accident is greater. This value can contribute to your insurance costs, as can integrated safety features.
- Credit Score: Credit score is often used as a measure of responsibility, so those with a better credit score will get better rates.
- Zip Code: Your location plays a major role in insurance rates. If you live in a more urban, accident-prone area, your rates will be higher.
Types of Insurance
Per NerdWallet, another major factor in insurance costs is how much coverage you opt for. Several kinds of insurance are available, and they all offer different levels of coverage. Some states require a minimum amount of insurance that you have no choice but to get if you want to drive. Here are the types of insurance you should be aware of:
- Liability Insurance: This insurance covers the victim of an accident that was your fault in terms of property damage and physical injury.
- Personal Injury Protection: This insurance covers your medical bills should you be injured, as well as those of your passengers.
- Collision Insurance: With this coverage, you’ll be reimbursed for any damages to your vehicle incurred in an accident, often regardless of who’s at fault.
- Comprehensive Insurance: For all other ways your vehicle can get damaged besides accidents, comprehensive insurance has you covered. This includes damage from severe weather, theft, and vandalism.
- Uninsured/Underinsured Motorist: With this insurance, the difference between the cost of damages incurred and what the other driver is able to pay for will be covered.
Average Costs by Insurance Amount
Looking at average insurance costs is helpful for getting an idea of how much you may have to pay. The amount of insurance you get is the primary factor, so be sure to consider all the averages with that in mind.
Liability insurance is basic insurance that’s more often than not required by law. The average liability policy includes about $50,000/$100,000 of bodily injury coverage and $50,000 of property damage coverage. While not required, most policies also include comprehensive and collision insurance, each with deductibles around $500.
According to The Zebra, averages based on the amount of coverage can vary quite a bit. If you just opt for the state-minimum requirements, you’ll find yourself paying monthly premiums around $51. Adding comprehensive and collision to that with a $500 deductible will more than double your premium to around $121. Adding more liability coverage won’t increase your premium all that much, as 100/300/100 bodily injury/property damage coverage coupled with comprehensive/collision with a $500 deductible will run you about $136 per month in premium costs.
Average Costs by Age
Considering how impactful age is on insurance premiums, it’s important to look at the averages you can expect based on your age group. With every year that passes, you’ll be in a better position to get cheaper rates based on age. Consider shopping around every time you celebrate a birthday to ensure you’re getting the best deals available.
Drivers ages 50-59 have the lowest rates on average. This is the best age because it comes with decades of driving experience without suffering the effects that age has on motor skills. On average, this age group pays a monthly premium of around $108. Once you reach 60, however, your rates will start to increase after constantly decreasing since you were a teenager. Even so, you’ll never approach teenager-level costs ever again. On average, drivers ages 16-19 pay $435 a month, over four times what drivers ages 50-59 pay.
Average Costs by State
Your location plays a major role in insurance costs as well. The national average for car insurance is about $606 per year for minimum coverage, but many states don’t even come close to that. Michigan, in particular, is especially costly, with an average rate of $1285 for minimum coverage. Iowa, on the other hand, is remarkably affordable, with an average annual cost of $309 for minimum coverage, according to NerdWallet.
How much it will cost to insure your car varies quite a bit, but there are a few constants you can hold onto if nothing else. Remember that accidents will always increase your premiums if you’re at fault. Paying annually can reduce your rates, as can opting for a less valuable car. With all this in mind, you’ll be in a much better position to find the best insurance policy for your vehicle.
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