How Much Does Car Insurance Cost?
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UPDATED: Oct 28, 2019
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If you’re buying a new (or different) vehicle, or have never purchased a car before, one of the top questions you may have is how much is insurance going to cost?
There are a ton of factors that determine your insurance bottom line, and we will break down the top price factors in this article. But first, let’s take a look at the average cost of car insurance for a 40-year-old male driver who is a good driver, qualifies for good driver and claim-free discounts, and has $500 physical damage insurance deductibles. The rated vehicle is a new Ford Fusion, which overall has fairly average rates for passenger sedans.
For this example driver and vehicle, car insurance costs approximately $1,418 per year for full coverage. That cost breaks down by coverage type to $316 for comprehensive insurance, $590 for collision insurance, and $351 for liability insurance. The remaining premium consists of uninsured and under-insured motorist coverage, medical or PIP, and policy fees.
Top Five Factors Impacting Car Insurance Cost
Obviously, not every driver is going to fall into the same age or risk category, nor is the rated vehicle going to be identical. There are many different things that can impact the price on your auto insurance policy, but let’s take a look at the top five factors that can affect car insurance rates the most.
Where You Live
One of the largest factors that has an impact on how much car insurance costs is where you live. All states have different laws that affect the price of car insurance, and some states have higher incidents of claims which can drive up the cost.
Some states use a ‘no-fault’ liability insurance system, which can help prevent injury litigation, but it can also cause higher insurance rates due to insurance companies being required to pay claims regardless of fault.
The map below shows the average cost of car insurance in all 50 states for your average passenger sedan.
Monthly Car Insurance Cost by State
States like Michigan, New York, Louisiana, and other darker-shaded states tend to have higher overall car insurance rates. If you’re lucky enough to live in a state that has sub-$100 per month car insurance costs like Idaho, South Dakota, Ohio, or Vermont, you’re going to pay some of the cheapest rates in the country.
The Type of Vehicle You Drive
One of the biggest things that affect the cost is the make and model of car, truck, or SUV that you drive.
More expensive models and trim levels cost more to repair or replace, so premium rates will naturally be higher for vehicles like a Lexus LS 460, Audi S8 4.0T Plus, or a BMW ALPINA B7 xDrive.
High performance sports cars have a higher likelihood of liability claims and expensive repairs, so models like a Chevy Corvette Z06, Acura NSX, or Ford GT with have high car insurance costs to go along with the high purchase price.
If you’re like the rest of us who cannot afford those types of vehicles and prefer a more modest ride, the table below shows average insurance rates for a variety of popular vehicles.
|Make and Model||Annual Premium||Monthly Premium|
|Get Rates for Your Vehicle Go|
The table above demonstrates that the cheapest vehicles to insure are safer, smaller, and lower-cost than the more expensive vehicles. They generally have very good safety ratings and the purchase price is reasonable. Larger vehicles generally cost more and also tend to have higher costs for property damage liability insurance.
Your Choice of Insurance Company
The insurance company you choose can have a significant impact on your rates. Rates vary a lot between companies, even within the same state. Some companies have a higher tolerance for risk than others, and those companies will often be good choices for drivers who may have a couple of tickets or an accident or two.
The four largest car insurance companies in the U.S. are State Farm, Allstate, Progressive, and Geico. Between them, they insure over half of all vehicles insured in America. The table below ranks them based on different criteria, and shows some of the optional policy coverages available from each.
|U.S. market share||18.3%||10%||8.8%||11.4%|
|A.M. Best rating||A++||A+||A+||A++|
|Rate for vehicle usage||Yes||Yes||Yes||No|
|Uber and Lyft insurance||Yes||Yes||Yes||Yes|
|Emergency roadside service||Yes||Yes||Yes||Yes|
|New car replacement||No||Yes||No||No|
|Compare Prices Go|
The Coverages You Choose
Drivers have many coverage options when it comes to buying car insurance. They can go with a basic liability-only policy, add in comprehensive and collision for full coverage, and even add optional coverages like replacement cost coverage, towing and roadside assistance, higher limits for custom paint or wheels, and even medical coverage for pets if injured in an accident.
Higher liability limits, lower deductibles for physical damage coverage, and more optional coverages, all contribute to a higher auto insurance bill.
If you buy full coverage, the deductibles you buy on your policy will have the greatest impact on how much you pay. A deductible applies to both comprehensive (also called ‘Other Than Collision’ or OTC) and collision coverage, and is the amount of money you have to pay out of pocket if you have a claim.
Deductibles range from anywhere from $100 up to $1,500, but each company has their own specific amounts and you may find policies offering both higher and lower amounts. Low deductibles will cost you more money, as that means the insurance company will have to pay more of a claim. High deductibles save money, because you are shouldering more of the claim payment.
The chart below demonstrates the cost difference between $100, $250, $500, and $1,000 deductibles for different age groups.
As demonstrated by the chart, a 30-year-old driver could lower their car insurance rates from $1,924 a year with a $100 deductible down to $1,260 a year with a $1,000 deductible. That’s a savings of $664 a year or 35%.
Drivers who do not file many claims may save money in the long run by choosing the higher deductible. But insureds need to have an adequate amount of savings to be able to pay the higher deductible in the event of a claim.
Your Driving Record
The last factor that can have a major impact on insurance rates is your driving record, or motor vehicle report. If you have a tendency to get speeding tickets or have at-fault accidents, you will definitely pay more to insure your vehicle.
The chart below shows the difference in car insurance rates for drivers of various ages with a clean driving record, after receiving one and two minor violations, and after receiving one major conviction like a DUI, reckless driving, or driving on a suspended or revoked license.
In this example, the average cost of an auto insurance policy per year with no accidents and a clean driving record is $1,294 a year. Receiving two speeding tickets causes the cost to jump to $2,142, an increase of $848 each year, or $71 a month.
Drivers with major violations are considered higher risk than the average driver, and they will pay much higher rates even with just one conviction. Receive multiple major violations and your policy will likely be non-renewed and you will have to find coverage in the high-risk or ‘non-standard’ market.
Additional Rate Tables and Cost Comparisons
The tables below show how the rate you pay varies based on things like driver age, physical damage deductibles, policy liability limits, driver risk, and potential price discounts from your company.
Rates by Driver Age
Young drivers pay much higher rates than older, more experience drivers. The table below shows estimated insurance costs for different driver ages.
Full coverage, 40-year-old male driver, $500 deductibles
Rates by Deductible
Full coverage consists of both comprehensive and collision insurance, and a separate deductible is set for each coverage. This table shows cost estimates based on different deductible selections.
Rates based on 40-year-old male driver with clean driving record
Rates by Liability Limit
Drivers can buy different levels of liability coverage, with each state having a specific minimum requirement. The table below shows rate estimates at different liability coverage amounts.
Full coverage, male driver age 40, $500 deductibles
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Rates for High Risk Drivers
High-risk drivers pay the highest insurance rates with the exception of teenage drivers. Teen drivers with violations and/or at-fault accidents will pay incredibly high premiums.
Full coverage 40-year-old male driver, $500 deductibles, two speeding tickets, and one at-fault accident
Potential Rate Discounts
Insurance companies offer many discounts for things like being a good driver, being claim-free, bundling your policies, and quoting early and online. The more discounts you qualify for, the cheaper your rates will be.
|5-yr Accident Free||$108|
|5-yr Claim Free||$92|
|Paid in Full/EFT||$68|
All the rates shown in this article are based on the average rate of $1,418 for a 40-year-old driver, so a driver who qualifies for all the discounts shown above could save $610 a year and pay only $808 annually for full coverage.
Not every company offers the same discounts, and some of the discounts shown above may not be offered in every state. Your particular company may offer additional discounts for things like professional memberships, occupational organizations, active military, and much more.
It’s important to check with your agent or company to ensure you’re receiving all the discounts you qualify for. Some are easily missed and it’s savings that you’re entitled to, so it can pay to ask about it.
How to Save Money on Car Insurance
Now that you know the biggest factors that cause expensive car insurance rates, here are some tips on how to keep rates affordable.
- Drive safe and keep your driving record clean. At-fault accidents and traffic violations are the biggest controllable factors that result in high rates.
- Buy vehicles with good IIHS safety ratings. A good safety rating means less likelihood of passenger injuries in a crash, which means lower liability and medical/PIP rates.
- Only buy optional coverages that you really need. If you do not travel a lot with your vehicle, or you have an extra household vehicle, roadside assistance or rental reimbursement coverage may not be necessary.
- Consider raising your policy deductibles or eliminating full coverage all together if your vehicle is nearing 10 years old or when the annual cost of full coverage exceeds 10% of your vehicle’s actual cash value.
- Shop around with reputable insurance companies. Smart shoppers make a habit of comparing rates at least every other year. Insurance costs are dynamic and change regularly, so don’t get stuck with an overpriced policy when there are plenty of cheaper alternatives.
Drivers have a lot of options when it comes to buying car insurance, and it’s important to compare rates every year or two to make sure you’re not overpaying. Companies change rates regularly and if you do not pay attention to your bill, you may find that cheap rate you had a few years ago is now quite expensive compared to the competition.
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