How Much Does Car Insurance Cost on Average?
How much does car insurance costs and what can I do to lower the cost of my policy? This is a common question among insurance shoppers, and it’s the topic of today’s blog post.
According to the National Association Of Insurance Commissioners, the average cost of car insurance in the United States is about $880 per year. This is mostly for the premium, however. When you factor in the deductibles, the cost of insurance is much greater — and also harder to track. As you may know from previous lessons here on our website, the premium is the amount that you pay month after month regardless of any claims you may or may not file. So, from an average cost standpoint, the premium is the most important factor.
So that answers the question, how much does car insurance cost? Now let’s talk about some of the things that may affect the cost of your policy.
8 Factors that Determine the Cost of Car Insurance
First of all, it’s important to realize that every insurance company is different. As a result, they all have their own internal methods for determining the cost of a car insurance policy. With that being said, there are certain factors that are common across all companies, and those are the ones I’ve listed below.
- Types of coverage — I’ve explained the different parts of an auto insurance policy in another article on this blog. Obviously, these have a big influence on the total cost of coverage. For example, one policy that includes uninsured motorist coverage will cost more than another policy that doesn’t include that component.
- Type of vehicle — This is another one of the major factors that will influence the cost of your car insurance policy. A convertible sports car, for example, is going to cost you a lot more in monthly premiums than a four-door family sedan. The type of car says a lot about the person who drives it, and insurance companies have known this for a long time. So they will adjust the cost of your policy based on the type of vehicle you drive.
- Driving habits — How often will you be driving your vehicle, and where will you drive on a regular basis? These are questions your insurance company will want to know, and the answers to these questions will partly determine the cost of your car insurance coverage. For example, if you drive on a daily basis through congested areas with a high rate of accidents, your coverage will cost more than somebody who works at home and only drives to the store and back.
- Your age – It’s probably no surprise to you that drivers under the age of 20 have a higher rate of accidents than most other age groups. Because of this, the cost of insurance is higher for teenagers than it is for adults. Statistically speaking, we start as bad drivers, then we get better, and then we get worse again. Drivers between the age of 50 and 65 have a lower accident rate than most other age groups. But after 65, the accident rates start to go up again. The cost of insurance premiums rise and fall in relation to these accident rates.
- Marital status — Accident statistics show that married drivers have fewer accidents than singles do. As a result most insurance companies will discount the cost of coverage for married people.
- Your gender — Guess what guys? On average, we pay higher insurance premiums than women do. That’s because statistics show that women are safer drivers than men. This gender difference is reflected in the cost of your policy.
- Credit score — In the past, this did not influence the overall cost of an insurance policy very much. But with each passing year, more and more insurance companies are using consumer credit scores to help determine the cost of an insurance policy. Personally, I don’t think the two things are related. But insurers don’t see it this way. Some states restrict this practice, preventing insurance companies from using credit scores as a pricing consideration. But these states are few and far between. Most states allow the practice, and an increasing number of insurers are using credit scores.
- Driving record — This is probably something you’re most familiar with. Obviously, the way you drive your car will determine the cost of your insurance coverage. If you have a long and safe driving record behind you, you’ll get breaks on your monthly premiums. On the other hand, if you have a history of accidents and other negligent behavior, the insurance company is going to charge you more — if they cover you at all.
So these are some of the main factors that influence the costs of car insurance in the United States. As mentioned earlier, the average driver in this country can expect to pay somewhere around $880 per year for auto insurance coverage. But remember, this is only the premium cost — it doesn’t include the deductibles drivers pay in the event of an accident.
Related article: Car insurance for a 16-year-old driver
How Much Will My Insurance Policy Cost Me?
Everything I just told you is somewhat theoretical. These are the average costs of a car insurance policy, and the various factors that influence them. But there’s only one way to find out how much your policy is going to cost you — and that’s to get quotes from car insurance companies.