If you’re a good driver with good credit, you’re probably paying close to the national average of $1,592 per year for car insurance. If you’ve caused an accident, or have bad credit, you’ll be paying upwards of $2,800.
But why is there so much variance in the cost of car insurance?
Car insurance prices vary by each individual driver and are affected by a number of factors. Read on to get a good idea of what affects your average monthly cost of car insurance and what you can do to lower your rate.
How Much Insurance Will You Buy?
Your car insurance cost will vary greatly based on how much coverage you have. We can group coverage into three main categories of minimum, good, and full coverage.
Opting for minimum coverage is the cheapest tier of insurance you can buy. With minimum coverage, you’ll have the lowest amount of coverage set by your state. While this option is attractive due to the low cost, you run the risk of not having enough coverage in the event of an at-fault accident and risk getting sued to cover damages.
Good coverage includes your minimum legal coverage amounts, plus extras like collision, bodily injury liability, and underinsured motorist coverage. With good coverage, your policy will cover the cost if you injure another driver. It will also cover your damages if you are hit by an uninsured or underinsured driver.
Full coverage is more expensive and is recommended if you have assets to protect, multiple drivers on your policy, or drive luxury cars. Be sure to review pricing between different insurance providers to get the best deal.
What Is Your Age?
Insurance rates vary by age, which means the youngest and oldest drivers pay the highest premiums. The average annual rate for a 20-year-old driver is $3,454 per year while the average annual rate for a 40-year-old driver is closer to the national average of $1,592.
Due to their inexperience, younger drivers are more likely to cause an accident which is why insurance companies charge them more.
Where Do You Live?
Car insurance prices will differ depending on where you live. Each state has a number of factors that determine the average price of car insurance. As a general rule of thumb, you’ll pay more for car insurance in more heavily populated areas than you would in rural areas. More drivers on the road equate to a higher risk of an accident.
Drivers in New York, New Jersey, Washington D.C., Michigan, and Louisiana pay the highest average monthly premiums.
What Type of Car Do You Drive?
Your cost of car insurance will vary widely depending on the vehicle to be insured. On average, trucks and vans are cheaper to insure than cars.
Convertibles, electric cars like the Tesla, and luxury cars are on the higher end of the spectrum.
What Is Your Average Monthly Cost of Car Insurance?
Your average monthly cost of car insurance will vary depending on your age, driving record, credit score, location, vehicle, type of coverage, and insurance provider. When shopping for insurance, compare prices between different providers to ensure you are getting the best rate available.
If you found this article helpful, check out the finance section of our blog for more great information.
