Car insurance rates have been skyrocketing. That change in cost might not be something you’ve budgeted for and may lead you to reconsider your provider or the things your coverage includes. Although qualities like your age, gender, and state of residence are out of your hands, other factors that influence your car insurance cost are in your control.
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Understanding the cost of car insurance
Forbes found that the average person pays about $2,150 for their insurance premiums each year. Among the list of the cheapest auto insurers, US News and World Report found the average cost of car insurance hovers around $1,547 a year. The average cost has been rising, with the Consumer Price Index registering a 22% jump in one year.
What you pay depends on a wide variety of factors like your age, driving history, and where you live. Knowing what to expect and what to look out for can help you get the best deal for your particular situation.
Cheapest states to get car insurance
Where you live affects how much you’ll have to pay for your car insurance. In some cases, that could be a good thing. Here are some of the cheapest states for insurance rates per year for full coverage, according to Forbes:
- Idaho: $1,021
- Maine: $1,216
- Iowa: $1,238
- Indiana: $1,454
- Alabama: 1,809
Most expensive states to get car insurance
On the opposite end of that spectrum, here’s what you could pay for a year of full coverage auto insurance in the most expensive states in the U.S.:
- Illinois: $2,345
- California: $2,462
- Colorado: $2,489
- Louisiana: $3,629
- Florida: $4,326
9 factors that affect the cost of car insurance
The amount you pay for car insurance won’t be the same throughout your life. It’ll fluctuate.
1. Age
One of the fluctuations every driver sees in their car insurance rate is due to their age. In general, your insurance is most expensive if you are very young. Drivers in those age ranges are considered higher risk because they tend account for more accidents. Car and Driver has information about average costs for full coverage auto insurance.
| Age | Avg. annual cost for full coverage | Avg. annual cost for minimum coverage |
| 16 | $7,203 | $2,511 |
| 18 | $5,242 | $1,480 |
| 20 | $3,532 | $1,174 |
| 30 | $1,785 | $563 |
| 40 | $1,682 | $538 |
| 50 | $1,581 | $510 |
| 60 | $1,511 | $500 |
2. Gender
Statistically, women are in fewer accidents than men. Insurance companies sometimes charge women less as a result. When you combine those differences with insurance premiums adjusted for a driver’s age, the discrepancies can be substantial. For instance, a 16-year-old girl pays, on average, around $5,969 for their insurance each year. A 16-year-old boy, in contrast, may be charged $6,701. Those gaps lessen as people age, however. For example, a 60-year-old woman pays about $1,421 on average for her insurance, compared to $1,438 for a 60-year-old man.
3. Driving record
Your driving record has a significant impact on your insurance premiums. Drivers with clean driving histories and fewer traffic violations or accidents typically pay lower insurance rates, as they are considered lower-risk by insurance providers. On the flip side, you may be able to leverage a safe driving record for discounts on your insurance rate.
Speeding tickets
Speeding tickets are an offense committed while your vehicle is in motion. Liberty Mutual says a recent speeding ticket can raise your rate by an average of 25%. Estimates below are based on the average cost of insurance according to Forbes and Bankrate, adjusted by Liberty Mutual’s average impact of a speeding ticket.
| Type of policy | Clean record(Avg. annual cost) | Recent speeding ticket (Avg. annual cost) |
| Full coverage | $2,150 | $2,687.50 |
| Minimum coverage | $644 | $805 |
At-fault accident
An at-fault accident is a car crash that investigators determine you caused. Insurance.com has found that nationwide, car insurance rates go up 52% after just one at-fault accident.
| Type of policy | Clean record(Avg. annual cost) | After one at-fault accident (Avg. annual cost) |
| Full coverage | $2,150 | $3,268 |
| Minimum coverage | $644 | $978.88 |
DUI conviction
Nationwide, a Forbes analysis of nationwide car insurance rates found a DUI conviction can raise your rate by about 70% on average.
| Type of policy | Clean record (Avg. annual cost) | After one DUI conviction (Avg. annual cost) |
| Full coverage | $2,150 | $3,655 |
| Minimum coverage | $644 | $1,094 |
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4. Credit score
Insurance companies that promise to cover you in an automobile incident also want to make sure that you’ll pay your premiums on time. Your credit score indicates how likely you are to repay a loan and your bills on time and is used as an indicator for premium rates.
Maintaining good credit could help you secure better rates on your car insurance premium. In fact, one estimate suggests that drivers with poor credit pay 115% more for full coverage car insurance than those with excellent credit.
A credit score of 800-850 is considered excellent; 740-799 is very good; 670 to 739 is good; 580 to 669 is fair; 300 to 579 is poor.
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5. Vehicle type
Certain types of cars tend to get in accidents more often. That may be due to the style of the car and its power, what it is intended for, or how people drive it — a person likely handles a sports car differently than a family car, for instance. The insurer factors in safety features, too. Newer cars tend to be more expensive to insure.
A Toyota Rav4 costs $1,869 on average for full coverage. A Tesla Model 3, in contrast, costs $2,557 on average.
6. Coverage selection
How much coverage you elect raises or lowers your costs. Full coverage runs about $2,150 per year, but meeting only the minimum requirements for your state could be closer to $467.
7. Annual mileage
Driving less can get you lower insurance. A person who drives 10,000 miles in a year pays around 4% less than someone who drives 12,000 a year. Driving only 7,500 miles a year could lower your premium by as much as 10% compared with someone driving 10,000 miles a year.
8. Insurance history
Having a gap in coverage can raise your rates significantly. Missing just one month can raise your rate by as much as 9%, and missing closer to two months could push the price up by as much as 48%.
9. Number of policy members
Adding family members to your policy just means you get one lump bill; each person’s rate is based on their individual risk factors. For instance, if you add a teenager to your plan, you can expect their rate to be higher than yours.
How to lower your car insurance
You can make changes to your policy or your lifestyle to lower your car insurance rates.
- Adjust coverage: Make sure your policy is tailored to your individual needs. Don’t waste money on frills.
- Increase deductible: Taking the risk and offering to pay more in the event of a crash can lower your monthly rate.
- Raise your credit: Having a better credit score could lower your insurance premium.
Types of car insurance discounts
Insurance companies offer several discounts. Knowing about them in the first place could save you money.
- Bundle your policies: Many insurance companies give better rates if you get multiple things insured with them, like your car and house.
- Low-mileage discounts: Get a better rate for driving under 12,000 miles a year.
- Military discount: Some companies offer discounts for service members and veterans.
- Advanced safety features: Many insurers offer discounts if you have safety features like alarms that help keep your car safe, lowering the likelihood of you filing a claim.
- Safe driver discount: Sign up for a program that monitors your driving in exchange for savings.
- Teen driver discount: Insuring teenagers is expensive. Some companies offer teenage driver discounts to offset the cost.
- Good student discount: Prove you or a student on your policy is maintaining a B-average or higher and you’ll get lower rates.
- Paperless discount: Some companies knock a few bucks off if you operate only online instead of getting bills mailed.
- Automatic payment: You may get discounts if you set up autopay.
- Homeowner discount: Some companies discount your rate for owning a home.
Insure wisely
Remember that you can lower your car insurance premium with consistently good driving. Being responsible for an accident or getting a speeding ticket can raise premiums. Being a responsible driver is the best bet for lowering insurance costs.
FAQ
What is the average cost of car insurance in the U.S.?
Progressive estimates car insurance costs to be between $81 and $146 a month on average.
Is $100 a month expensive for car insurance?
Paying $100 per month for car insurance is below the average cost of $147.
How much does car insurance go down after 1 year of no claims?
Your car insurance might not be heavily impacted after just one year following a claim. After 3-5 years, it should go back down.
Does car insurance drop once the car is paid off?
The coverage required on a car with a car loan is often higher than what’s required by the state. When you pay your car off, you can choose to lower your coverage amount.
Will insurance pay more than the car is worth?
If your car is totaled, the insurance company pays the market value of your car rather than paying for repairs. That can wind up less than you believe the car is worth.
