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UPDATED: Mar 13, 2020
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While the average cost of auto insurance is around $150 per car per month, it can vary widely from person to person based upon a number of factors, ranging all the way from $50 to $250 a month for normal drivers. Some of the determining factors relate to the driver, some relate to the insured vehicle, and others relate to external factors like the location in which the car is driven and the insurance company itself.
The driver is probably the biggest determining factor in the cost of auto insurance. The driver’s age, marital status, driving history, credit rating and driving habits all affect the premium. In addition, a driver may qualify for discounts based on occupation, club memberships, customer loyalty, education, or many other factors.
The make, model, and price of vehicle can greatly affect the rate, as well. In general, newer and more expensive vehicles cost more to insure. In addition, the safety features of a vehicle can affect the insurance premium—for instance; there is usually a discount for air bags, anti-theft systems, or anti-lock brakes.
Auto insurance rates also vary by geographic area. If you live in a more expensive insurance state, like Louisiana or Michigan, you could end up paying an average of over $125 per month more than someone pays in Maine or Vermont, two of the cheaper insurance states.
How can I lower my auto insurance costs?
You can lower your insurance costs by adjusting your policy or by making personal changes. For your policy, the biggest adjustment you can make is to shop around and find a cheaper insurance company. If you’re getting a competitive rate from your current company, it might also be wise to see if you can get other needed insurance through them, like life insurance or home insurance, because most insurers will give multiple policy discounts.
Raising the deductible is a great way to trim dollars off your car insurance premium, but beware – that means you will pay more out of pocket if you get into an accident. You can also look at your policy and make sure you don’t have more insurance than you actually need. Many times people buy a new car and the loan company requires maximum coverage, then when the car is paid off, the owner never lowers the coverage to the level they really need.
Finally, sitting down with an agent, or at least calling them, is a good idea so that together you can make sure that you are getting all the discounts in which you qualify. Your life is always changing, and insurance companies don’t always adjust for things like marriage or change in driving habits if you don’t tell them. It’s also good to check and make sure that they are aware of all of your car’s safety features, especially if you add something after-market, like an anti-theft system.
In terms of personal changes you can make, nobody expects you to run out and get married to lower your car insurance premium, but there are still a few things you can change. First, drive more safely. Your driving history, including tickets and accidents, has a huge impact on your insurance premium.
Other personal changes you can make include driving less frequently – lower mileage can lower your insurance premium. Switching to a different type of vehicle, like a less expensive one or an older one could help lower your car insurance rates, too. It might also be worthwhile to reconsider the type of vehicle that you drive.
Which vehicles are the cheapest to insure?
In general, if you want to lower your car insurance premium, lower your car payment. Cheap cars are cheap to insure. Family sedans are cheaper to insure than sports cars, trucks and SUVs, which can be as much as 12% more expensive to insure than cheaper cars.
Another factor to keep in mind is how attractive a car is to thieves. A car not on the “top ten most stolen list” is going to be cheaper to insure than those cars that are most wanted. It’s interesting to note that there often appears to be no rhyme or reason to which cars the thieves target in a given year.
Is it cheaper to pay for car insurance by the month, the quarter, the half-year, or the year?
The easy answer to this is that the fewer bills the insurance company has to send out, the cheaper it will be for you. Monthly insurance premiums, then, are the most expensive; yearly premiums are the least expensive and everything else falls in between. You could pay as much as $60 in fees for the privilege of paying your car insurance monthly.
Does car insurance keep getting cheaper as I get older?
Car insurance premiums are on a curve, starting out very high when we’re young and risky due to inexperience, and then slowly lowering throughout our life until they begin to climb again as physical impairment and slowed reflexes make us a driving risk again. The biggest changes usually occur when you reach the age of 25, when the premiums drop significantly, and when you reach 65 when the premiums go up significantly.
Who regulates the premiums of auto insurance companies?
States regulate insurance companies. Each state has a commissioner of insurance, who makes sure that insurance companies deal fairly with their clients. They publish a list of insurance companies and complaints against them on the state website, in most cases.