How Much Should You Expect to Pay for Car Insurance?

Car insurance costs are frequently changing, which can make finding the right policy quite tedious. Premiums also differ based on factors like age, driving history, insurance company, type of vehicle, and your home state.

So it makes sense to refer to a car insurance estimator to understand how much you’ll pay for your policy. These online tools also help car owners set expectations when it comes to premiums, thus allowing them to plan their budgets accordingly.

Below is more information on the average cost of car insurance in the U.S.

Average Car Insurance Costs in the U.S.

Based on recent data, the average cost of car insurance in the U.S. is $1,630 per year. As mentioned above, credit rating can play a crucial role in determining your premiums.

Some states allow companies to access an individual’s credit scores to calculate premiums. States like California, Hawaii, Massachusetts, and Michigan restrict insurance companies from using credit scores to determine car insurance premiums. But in states where it is legal, insurance companies can charge high premiums for individuals with a bad credit score.

Average Car Insurance Rates for Full Coverage Policies

Average Car Insurance Rates for Full Coverage Policies

A driver with good credit will only spend $1,630 per year, while those with poor credit may pay as much as $2,792 annually. Someone with a good credit rating but a recent DUI may spend $3,139 annually.

Meanwhile, a driver with a recent at-fault accident and good credit will shell out $2,462 per year for full coverage car insurance. On average, a DUI can increase the cost of a full coverage policy by up to $1,650 per year. However, a speeding ticket will only bump up annual insurance costs by $367.

Premiums can also go up for at-fault accidents unless the insurance provider has an accident forgiveness program. This program prevents premiums from increasing after a driver’s first at-fault accident.

Average Car Insurance Rates for Minimum Coverage Policies

A driver with good credit and no major accident history can get an entry-level or minimum coverage car insurance policy for as low as $561 per year. The amount jumps to $973 annually for individuals with a decent driving record but poor credit. A driver who was part of an at-fault accident and has good credit can get a minimum coverage policy for $862 per year. Drivers with good credit but a DUI record will shell out the most, at $1,134 per year.

These average nationwide rates illustrate how full coverage plans cost almost three times as much as their minimum coverage alternatives. But these are only averages, and the actual cost may vary based on your driving history and the specific requirements you have from the policy, including add-ons.

Car Insurance Costs By State

Each state has its own regulations on car insurance. So the average car insurance price in one state could be much higher or lower than in the other. Based on available data, New York, Louisiana, Florida, Nevada, and Michigan have the highest car insurance premiums in the U.S. By contrast, states like Maine, Vermont, Idaho, New Hampshire, and Ohio have the lowest premiums in the country.

Do Premiums Vary Based on Car Insurance Companies?

The short answer is yes. Auto insurance companies have their own way of calculating insurance costs. It makes sense to get quotes from as many insurance companies as possible to ensure you’re getting the best coverage for your money. Shopping around and collecting multiple quotes let you compare rates and coverage benefits between multiple providers.

Premiums also differ based on the coverage you want for your automobile. For instance, a minimum coverage car insurance policy costs less than a full coverage policy.

Insurance Costs Depend On the Type of Vehicle

Insurance Costs Depend On the Type of Vehicle

Not only do insurance costs vary from company to company, but premiums may also vary based on the type of car you own. Insurance providers consider factors like cost of labor, parts availability, and even the likelihood of accidents based on the vehicle’s safety before setting premium amounts.  

This means you end up paying higher insurance costs for luxury vehicles such as sports cars or other high-end automobiles. Sports cars have higher maximum speed limits compared to traditional vehicles. This makes them more expensive to insure as they have a higher chance of being involved in accidents. Pickup trucks or SUVs can also be hard to insure, especially when compared to a sedan.

Insurance costs for economy cars are significantly cheaper than their luxury siblings. However, customers may end up shelling out more for a comprehensive policy. Considering the high number of economy vehicles on the road, insurance companies predict that these cars are more likely to end up in accidents.

Other Factors That Can Impact Car Insurance Rates

Insurance providers go through a rigorous process in determining the insurance premiums. Companies tend to charge you less if you’ve been a license-carrying driver for an extended period of time.

Premiums can also be cheaper for motorists who don’t drive their cars too much. Driving fewer miles means the vehicle is less likely to get into an accident, so the premiums are lower than usual.

The Bottom Line

In conclusion, buying car insurance is a rigorous process. But it’s necessary to know what you’re getting into. It is recommended to get quotes from both national and state-level providers. This will help you to find something that suits your preferences and budget.

Companies have different methodologies for determining premiums. But car owners will gain a decent understanding of the average car insurance costs after obtaining and comparing quotes from multiple insurance companies. It is encouraged to compare quotes that include similar packages. If done right, this could also help you save on premiums.

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