Blog Post


How Much Does Auto Insurance Cost? 

How Much Does Auto Insurance Cost?

Auto insurance is that monthly cost that we despise, but we immediately look for in the aftermath of a car accident. A recurring auto insurance cost can be a monthly drain on your budget. However, unless you’re a resident of Virginia or New Hampshire, you’re required to have a form of auto insurance coverage by law.

If you’ve been wondering what the average cost of auto insurance looks like, it’s around $1,674 annually, or about $139.50 each month. In short, there’s no escaping it. And, honestly, if you pick the right car insurance plan for your needs, you’ll come to love and treasure it for all the perks and security it can provide.

If what you’re currently paying is rather far away from the national annual range, then don’t worry. You’ve come to the right place. Keep on reading to learn all about the different factors that can directly affect the average cost of auto insurance.

Auto Insurance Cost 101: Financial History

Before we start delving into the nuances of what can hike up your auto insurance premiums, let’s begin with the key factor that haunts all of our financial dreams and aspirations: your credit score.

If you’re a driver with good credit, you’ll find that your rates will revolve around $1,592, that’s with a clean driving record. You can expect the rates to go up after a DUI, with your annual costs reaching about $3,000 or more.

Yet, you’ll want to keep in mind that those rates are for full coverage insurance. Therefore, those are plans that include collision, liability, comprehensive, and uninsured (or underinsured) motorist protection, as well as any other bells and whistles that fall under your state-mandated coverage.

On the other end of the coverage spectrum, we have the minimum required coverage. Those will start at about $565 for those with good credit and a superb driving record. After a DUI, you’ll start finding your annual costs breaking the $1,000 benchmark.

Car Insurance Cost by Age

Next, we have the second-most influential element that can affect your car insurance premiums, and that is your age.

The basic rule of thumb in the car insurance industry is that the younger the driver, the more expensive it can be to insure them. It might seem a bit unfair, especially to those who are rather good drivers but are young.

Yet, insurance companies tend to look at the average statistics. And, the risk always seems to decrease as people grow older. Drivers under the age of 40 can expect to pay more than the national average.

The national crash rates of teenage drivers are about four times those of more experienced drivers. You can’t respect the insurance companies to be reducing the car insurance premiums any time soon.

Interestingly enough, once you’ve crossed on to the other side of 60-years-old, the rates will start to increase again. As teenagers, the elderly are more likely to get into a car accident than their middle-aged counterparts.

However, whether you belong to the teenaged or the elderly category, there are always options that can help you offset the slightly higher rates. This is why it’s always essential to make use of online car insurance comparison tools. You’d be surprised at what you can find available to you on the market.

You can always check out usage-based driving programs and other good student or away at school discounts for inexperienced drivers.

Other Factors Affecting Car Insurance Premiums

After covering the two critical factors that can reduce or increase your car insurance rates, it’s time to take a look at the other elements that car insurers will still take into consideration.

Other than your age and credit score, your driving experience, claims history, and mileage:

Driving Experience

For instance, you’re someone who’s been driving since you were 16. And now you’re a 30-year-old with a clean driving record. Then, you can expect to get much cheaper rates in comparison to another 30-year-old individual who just took up driving recently.

Therefore, it’s not just your age that’s considered. It’s also the number of years you’ve been insured.

Claims and Insurance History

The same idea applies to your coverage history. If you’ve been with the same insurer for a while, they’re more than likely willing to give you lower rates, especially if you’ve proved that you’re a good driver.

Moreover, even if you’re shifting from one insurer to another, you can always get better rates if you have a history of holding auto insurance plans without filing any claims in the past.

Car Mileage

If you tend to drive your car frequently, basic mathematics says that you have a higher chance of getting into a car accident. Specifically when compared with another individual with lower mileage.

Thus, if you’re trying to insure a vehicle with lower annual mileage than average, you have a higher chance of getting lower insurance rates.

How to Save Money on Car Insurance

We’ve already touched on student discounts, but you’d be delighted to know that car insurance carriers have many different discount programs that you might be eligible for.

The best way you can ensure that you’re not missing out on a discount program is to ask an agent about all the savings programs you are qualified for.

For example, there is a claims-free discount for folks with no claims on their record. Also, you can always ask about insurance bundling. It’s when you can bundle your home insurance and car insurance in one plan with the same insurance provider.

And, if you have the funds available, you can always opt for paying your car insurance premium in full. It’s guaranteed to save you on the interest rates for your monthly premiums.

Ready to Slash Your Auto Insurance Monthly Cost?

You might be just figuring out how expensive your auto insurance cost can be, or you may feel stuck with your current plan and actively searching for another.

Regardless of why you’re looking into how to decrease your car insurance costs, we hope that our article has shed some light on the different avenues available to you.

If you’ve enjoyed our article, make sure to check out the additional tips and strategies, all available to you in our money section.

Related posts