Understanding Car Insurance Rates

To get the best possible car insurance rates, you need to shop around; however, trying to understand your car insurance cost can be challenging. Not only do rates vary by company, but they also vary from person to person. It can be tough to get a straightforward answer to the question, “How much is car insurance?”When shopping for car insurance, at a minimum, you should evaluate how much insurance companies charge in premiums for different levels of coverage, how much the deductible affects the premiums, and whether companies offer discounts applying specifically to you.

Understanding Car Insurance Premiums

Your premium is the cost of your car insurance. The method insurance companies use for calculating premiums is not especially intuitive or straightforward, with the amount you pay for your premium depending on a number of different factors.Most insurance companies require premium payments monthly, annually, or bi-annually. The average cost of car insurance in the United States is $1,758 annually, which breaks down to $146.50 per month. 

Car Insurance Premiums Factors

  • Driving history — A better driving record, with fewer accidents and violations, almost always translates into lower premiums.
  • Coverage level — Higher coverage levels, with more paid out in the event of a problem, will cost you more.
  • Location — If you live in an area with higher instances of accidents, car thefts, or vandalism, you’ll pay more on your premiums.
  • Credit score — Insurance companies use credit scores as a predictor of whether you’ll submit an insurance claim and how much that claim will be for.
  • Age and gender — Being under the age of 25 or a male makes it more likely you’ll be in an accident and results in you paying a higher insurance premium.
  • Marital status — Insurance companies view married individuals as more cautious drivers and charge them less for their premiums.
  • Vehicle — If you drive a vehicle with a high vehicle safety rating, you’ll probably pay less for your car insurance.
  • Mileage — Car insurance premiums are usually lower on newer cars with less mileage.
  • Safety features — If your car has any advanced safety features, your premium will be lower. 

Car Insurance Shopping Tips

  • Use the same coverage levels for every quote — Always make sure you’re comparing apples to apples when shopping for car insurance. When evaluating different quotes, confirm that the coverage being offered is the same.
  • Look out for discounts — Most car insurance companies offer discounts based on a variety of factors, such as the purpose of the vehicle, whether you own a home, and even whether you have a college degree. When shopping around, ask if there are any discounts available to you.
  • Be honest — You may be tempted to leave out key bits of information to get a lower insurance rate, but don’t do it. If an insurance company discovers that you’ve lied, it may significantly raise your premiums or even drop you altogether.

Tips for Lowering Car Insurance Rates

  • Research discounts — You may be able to get a discount based on your specific circumstances and needs. Research all available discounts by contacting insurance providers over the phone. For example, if you’re a student, in the military, or have taken driving courses, you may be able to lower your car insurance rate.
  • Pay attention to your deductible — Your deductible is the amount you must pay out of pocket before your car insurance will cover expenses. For example, if you have a deductible of $500 and car repairs cost $2,000, your insurance company will cover $1,500. The higher your deductible, the lower your premiums will be, and vice versa.
  • Consider bundling your insurance — Most insurance companies will offer you a discount if you bundle your home and auto insurance together, sometimes cutting as much as 30% off premiums. To learn the best insurance companies for bundling, check out this extensive guide.

How Age and Driving Record Affect Car Insurance Rates

Age and driving record are the two biggest players when it comes to car insurance rates. Statistically, these are the key indicators of how likely you are to be in an accident or file a claim. Rates will always be higher if you have infractions or accidents on record. Premiums also tend to be much higher for teens and 20-somethings, with prices dropping off once you reach middle-age.

Car Insurance Rates in Your 20s

Car Insurance Rates in Your 30s to 40s

Car Insurance Rates in Your 50s+

*Travelers and Nationwide don’t offer quotes for high-risk drivers online. If your record prevents you from getting online estimates, call the provider and an agent will determine your quote over the phone.

Frequently Asked Questions Regarding Car Insurance Rates

How does my driving record affect my car insurance?

The better your driving record, the lower your rates will be. Accidents and violations almost always cause rates to increase.

How does my coverage affect my car insurance?

Higher levels of coverage cost more in premiums but also result in greater payouts if repairs are needed.

How much is car insurance for female drivers?

The exact rates will differ from driver to driver, but as a general rule, rates for female drivers are lower than rates for male drivers.

How much is car insurance for drivers in their 20s?

While rates will vary depending on circumstances, they are almost always lower for drivers over the age of 25.

How much is car insurance in Florida?

The average cost of car insurance in Florida is $2,297.81 per year, or $191.48 per month.

What’s Next?

Ready to purchase car insurance? First, decide on how much coverage you need and how much you’re willing to pay for your deductible. Next, research various insurance companies to find the one that best meets your needs. Finally, get quotes from several different insurers and select the one that offers the best combination of coverage and price.

About the Authors

Stephen Altrogge is a business and marketing writer from Ashland, Ohio. His writing has been published in Fast Company, Zapier, Entrepreneur, Forbes, and a host of other publications. He has a degree in Management Information Systems from Indiana University of Pennsylvania. Before launching his own business, he worked as an auditor at a bank.