What is the average cost of car insurance?

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life...

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UPDATED: Mar 13, 2020

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Multiple factors influence the cost of car insurance, and no two people will pay identical premiums. Because of this, average figures can be somewhat misleading. The average cost of car insurance varies from one state to the next, and rates are dependent upon the insured’s driving history, credit score and other factors as well. Nevertheless, there are some general guidelines for insurance cost.

What factors influence the cost of car insurance?

On a geographic level, car insurance companies determine rates based on the cost of insuring a given city, state or neighborhood. This means that the driving habits of the entire population play a role in determining the cost of policies for that area. Some of the major influence for car insurance prices in an area are the number of uninsured motorists in the state, how many DUI accidents occur each year and the total overall number of traffic collisions. Auto theft also plays a role in calculating car insurance premiums, as do weather trends and other factors that might cause vehicle damage.

On a more personal level, car insurance premiums are determined by a driver’s risk. The more likely a driver is to be involved in an accident, the more the insurance policy will cost. People with multiple traffic violations, accidents or DUI convictions will pay more for auto insurance than those with a clean driving record. Young drivers will pay higher premiums than more experienced drivers.

The vehicle being insured also makes a difference in the cost of premiums. Vehicles that cost more to repair will also cost more to insure. Exotic and luxury vehicles are more expensive to insure than domestic sedans due in large part to the cost of parts and labor whenever these cars are involved in accidents. Vehicles with high safety ratings will also cost less to insure.

Coverage also plays an important role in the cost of car insurance. The more an auto insurance company is expected to pay in the event of a claim, the more the policy will cost to maintain. This means that full coverage auto insurance will cost more than a liability-only policy. Similarly, policies with high limits and low deductibles will be more expensive than those where the insured pays more out of pocket.

The Average Cost of Car Insurance

Based upon a general survey of auto insurance premiums across the country, the average car insurance policy costs anywhere from $900 to $3,000 per year, with the overall average working out to $1,500. This means that a policy will generally cost just over $100 each month. Average figures are always changing, however, as rates fluctuate across a population. It’s always best to rely on an accurate and personalized insurance quote rather than make assumptions about the cost of coverage based solely on the average cost.

Finding Affordable Car Insurance

Because rates are determined by the driving habits of an entire community, you can do your part to keep rates down in your area by maintaining auto insurance, driving safely and observing traffic laws. Over time, if enough people carry insurance and drive safely, the rates for the area will begin to drop. This will encourage more people to purchase auto insurance, which will lead to better rates for everyone.

When searching for an auto insurance company, it’s important to compare similar policies in order to get the most accurate quote. If one company offers six month terms and another provides 12 month terms, it makes sense that the cost of an insurance term will be dramatically different between them. Similarly, be sure that any quote you receive is for the amount of coverage you really need; a company may advertise a low price for liability insurance when the full coverage cost is much higher.

Once you’ve found a promising company, be sure to discuss your needs with the agent or customer service representative. He’ll be happy to discuss the policy options and work within a budget to provide the best coverage for the most reasonable price.

Also be sure to ask if there are any discount programs you might qualify for. Most companies offer safe driving discounts, multi-policy discounts and other ways to reduce the cost of premiums. After several years of safe driving, the insurance policy will begin to go down in price.

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