How Much Is Car Insurance?

Shawn Plummer

CEO, The Annuity Expert

Many of us are familiar with the importance of car insurance, but how much does car insurance cost you? With prices varying wildly depending on various factors, it’s essential to understand the components that make up the cost of car insurance to find the right policy for your budget and needs. In this guide, we’ll be taking an in-depth look at the cost of car insurance and all the elements to consider.

The Average Cost Of Car Insurance

The average car insurance cost can vary widely based on location, age, gender, vehicle type, driving record, and credit score. The national average cost for auto insurance in the United States for 2023 is around $2,100 per year for full coverage car insurance. However, please note that this is a broad average, and individual rates can be much higher or lower.

How Much Is Car Insurance

How Do I Purchase Car Insurance?

Here are some general steps to guide you through the process of purchasing car insurance:

  • Understand Your Needs: Consider the type of coverage you need based on your driving habits, the value of your car, your risk tolerance, and legal requirements in your state or country. Common types of car insurance include liability insurance, collision insurance, and comprehensive insurance.
  • Check Your State’s Minimum Requirements: Most states in the U.S. require you to carry a minimum amount of car insurance. So make sure you’re at least meeting those requirements.
  • Research Various Insurance Companies: Check out different insurance companies online and read reviews. You can also ask friends and family members about their experiences with their insurers.
  • Get Quotes: Reach out to the companies you’re interested in and ask for quotes. This usually involves providing information about yourself, your car, and your driving history.
  • Compare Quotes: Take some time to compare the quotes you’ve received. Pay attention not only to the price but also to what’s included in each policy. For example, some policies may offer additional benefits like roadside assistance or rental car coverage.
  • Consider Deductibles: The deductible is the amount you pay out of pocket before your insurance coverage kicks in if you have a claim. A higher deductible usually means a lower premium, but it also means more costs out-of-pocket in the event of an accident.
  • Contact the Insurer to Purchase: Once you’ve chosen an insurer and a policy, you can usually purchase the insurance online, over the phone, or in person if the insurer has physical locations.
  • Review Your Policy: Once you’ve purchased your insurance, review your policy. Ensure you understand your coverage and your responsibilities as a policyholder.
  • Keep Proof of Insurance: Most states require drivers to carry proof of insurance in their vehicles. Therefore, the auto insurance company will typically send you a card as proof of insurance.
  • Re-evaluate Periodically: Your insurance needs might change over time, so re-evaluating your coverage periodically’s a good idea. You might also find better deals if you shop around occasionally.

How does a driving record impact the cost of car insurance?

Your driving record has a significant impact on the cost of car insurance. Insurance companies consider your driving history to assess the level of risk you pose as a driver. The specific factors they consider include:

  • Accidents: If you have been involved in at-fault accidents, especially multiple accidents, it indicates a higher risk of future accidents, and your insurance premiums may increase.
  • Traffic Violations: Tickets for speeding, reckless driving, DUI (Driving Under the Influence), or other serious violations can lead to higher insurance rates. These violations suggest disregarding traffic laws and increase the likelihood of accidents.
  • Claims History: Previous claims filed with your car insurance company can affect your premiums. If you have a history of filing numerous claims, especially for at-fault accidents, insurers may view you as a higher risk and raise your rates.
  • Driving Experience: Insurance companies also consider your years of driving experience. If you are a new or inexperienced driver, you may be perceived as a higher risk, resulting in higher premiums.

How Does Gender Affect Car Insurance Rates?

Gender can be a factor that influences auto insurance rates. Traditionally, statistics have shown differences in driving behavior and accident patterns between males and females, leading insurance companies to consider gender when determining premiums. However, it’s important to note that insurance practices regarding gender can vary depending on the country and specific regulations in place.

Historically, young male drivers have been statistically more likely to be involved in accidents than young female drivers. This difference is often attributed to risk-taking behavior, aggressive driving tendencies, or higher mileage. As a result, young males have typically faced higher insurance premiums than young females.

How Does A DUI Affect Car Insurance Rates?

The precise impact of a DUI on insurance rates can vary depending on several factors, including the insurance company’s policies and the laws and regulations of the specific region. However, here are some common effects of a DUI on car insurance:

  • Higher Premiums: After a DUI conviction, insurance companies typically view you as a higher-risk driver and adjust your premiums accordingly. The increase can vary significantly, but it is not uncommon for premiums to double or even triple.
  • SR-22 Requirement: In many cases, individuals with a DUI conviction must file an SR-22 form. This form is proof of financial responsibility that demonstrates you have the required liability coverage. However, the SR-22 requirement can result in additional fees and administrative costs.
  • Policy Changes or Cancellations: Some insurance companies may choose to change your policy or even cancel it altogether following a DUI conviction. This can make it more challenging to find affordable coverage, as you may need coverage from a high-risk insurance provider.
  • Required Ignition Interlock Device: In certain jurisdictions, individuals with a DUI conviction may be required to install an ignition interlock device (IID) in their vehicles. This device measures the driver’s blood alcohol content (BAC) before allowing the vehicle to start. Insurance companies may factor in the presence of an IID when determining premiums.

Does Bad Credit Affect Car Insurance Rates?

In the United States, credit history can indeed affect car insurance rates. Many insurance companies in the U.S. use credit-based insurance scores as a factor when determining premiums. These scores are derived from information in your credit report and help insurers assess the risk associated with insuring you.

A credit-based insurance score considers various factors from your credit history, such as payment history, outstanding debt, length of credit history, and types of credit accounts. Based on this information, insurers assign a score that is used along with other rating factors to determine your premiums.

A poor credit score or adverse credit history, as evaluated by the IRS, can result in higher car insurance rates. Insurers perceive individuals with lower credit scores as riskier and charge them higher premiums, while those with good credit scores may qualify for lower premiums due to lower perceived risks.

What other factors can affect average car insurance costs?

Several factors can influence average car insurance costs. In addition to your driving record, insurance companies consider the following factors when determining your premiums:

  • Location: Where you live can affect your insurance costs. Areas with higher population densities, urban environments, or crime rates tend to have more accidents and thefts, leading to higher premiums. Additionally, some states have higher insurance requirements or regulations, which can influence costs.
  • Vehicle Type: The make, model, and age of your vehicle are factors in determining your insurance rates. Expensive cars or those with high repair costs generally have higher premiums. Similarly, vehicles with good safety ratings or advanced features may qualify for discounts.
  • Usage and Mileage: The more you drive, the higher the risk of an accident. Insurance companies may consider your annual mileage when determining your premiums. Commuting long distances or using your vehicle for business can increase rates.
  • Deductible: The deductible is the amount you pay out of pocket before your insurance coverage kicks in. Choosing a higher deductible can lower your premiums, but it means you’ll have to pay more in case of an accident.
  • Insurance History: Your previous insurance coverage and lapse in coverage can impact your rates. Continuous coverage without breaks or gaps demonstrates responsible behavior and may result in lower premiums.
  • Marital Status: Married individuals often have lower insurance rates than single individuals. This is because married people statistically have fewer accidents and are more stable drivers.
  • Occupation: Some insurance companies consider your occupation when determining rates. Certain professions may have a lower risk of accidents, resulting in lower premiums.
  • Claims History: Your previous claims history plays a role in determining your premiums. If you have a history of filing multiple claims, insurers may consider you a higher risk and charge higher premiums.
Car Insurance Companies

How Can I Lower My Car Insurance Rates?

There are several steps you can take to lower your car insurance rates. Here are some strategies to help you reduce your premiums:

  • Shop Around: Obtain quotes from multiple insurance companies to compare rates. Each insurer has its pricing methodology and considers various factors differently. By exploring different options, you can identify the most affordable rates.
  • Increase Deductibles: Opting for a higher deductible means you’ll pay more out of pocket in case of a claim, but it can lower your premiums. Assess your financial situation to determine an appropriate deductible that balances affordability with potential out-of-pocket expenses.
  • Take Advantage of Discounts: Inquire about available discounts with your insurer. Typical discounts include safe driver discounts, good student discounts, multi-policy discounts (bundling home and auto insurance), low-mileage discounts, and discounts for safety features installed in your vehicle. In addition, make sure to ask about any new discounts that you may be eligible for.
  • Maintain a Clean Driving Record: Safe driving without accidents or traffic violations can result in lower premiums over time. Avoiding speeding tickets, DUI convictions, and at-fault accidents demonstrates responsible behavior and reduces your risk profile.
  • Consider Usage-Based or Telematics Insurance: Some insurance companies offer usage-based insurance programs that monitor your driving habits using telematics devices or smartphone apps. If you are a safe driver, these programs can lower premiums based on your driving behavior.
  • Review Coverage Levels: Assess your insurance needs and determine if you have more coverage than necessary. If your vehicle is older or has depreciated significantly, you may consider reducing comprehensive and collision coverage. However, maintain the minimum required coverage per local laws and regulations.
  • Improve Your Credit Score: In regions where credit history is a factor, improving your credit score can help lower your insurance rates. Focus on paying bills on time, reducing outstanding debt, and maintaining a healthy credit utilization ratio.
  • Seek Group or Affiliation Discounts: Check if you qualify for any group discounts insurers offer. For example, some companies provide special rates for members of specific organizations, professional groups, alum associations, or other affiliations.
  • Drive a Safer Vehicle: Vehicles with safety features such as anti-lock brakes, airbags, stability control, and anti-theft devices are generally associated with lower insurance rates. So if you’re in the market for a new car, consider its safety features and their impact on your car insurance premiums.
  • Review and Update Your Policy Annually: Regularly review your insurance policy to ensure you have the appropriate coverage. Inform your insurer of any changes that may impact your rates, such as moving to a different location, no longer using your vehicle for commuting or changes in your driving habits.

Next Steps

Car insurance costs are essential when determining which policy is best for you. Shopping around for the best coverage and price is always recommended to get the proper protection at a rate that fits your budget. Various factors are involved in calculating the cost of car insurance, including age, gender, driving record, credit score, and more. It’s, therefore, essential to make sure you are taking into account all these variables when comparing rates from different companies. If you want to ensure you get the best car insurance policy for your money, contact one of our licensed agents today and request a free quote. We will help cover every angle of auto insurance so you can find the right combination of coverage and price that perfectly meets your wishes and needs ideally.

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Frequently Asked Questions

What are the average car insurance rates?

The average car insurance rates vary widely depending on location, driving history, vehicle type, and coverage options chosen. Therefore, it is best to obtain personalized quotes to determine accurate rates.

How much should you spend on car insurance per month?

The amount spent on car insurance per month varies greatly depending on factors like coverage levels, deductibles, location, driving history, and the type of vehicle. Obtain personalized quotes to determine accurate costs.

Why is car insurance so expensive?

Car insurance can be expensive due to various factors, including the risk of accidents, vehicle repair costs, medical expenses, fraud, litigation, coverage options, driving history, location, and the type of vehicle insured.

Is car insurance cheap in Tennessee?

Car insurance rates in Tennessee can vary depending on several factors. While it is impossible to provide a definitive answer, comparing quotes from different insurers can help determine affordability.

How can I get the best car insurance rate?

To get the best car insurance rate, you can compare quotes from multiple insurers, maintain a clean driving record, consider higher deductibles, bundle policies, and inquire about available discounts.

What is the cheapest type of car insurance?

The cheapest car insurance type varies depending on location, driving history, and vehicle type. Generally, liability insurance tends to be the most affordable option compared to comprehensive or full coverage.

How can drivers effectively compare car insurance quotes to find the best coverage and rates?

To effectively compare car insurance quotes, drivers should gather multiple quotes from different providers, consider coverage options, limits, and deductibles, and review customer reviews and ratings to find the best coverage and rates.

What factors determine the cost of full coverage auto insurance?

The cost of full coverage auto insurance is determined by factors such as the driver’s age, driving history, location, type of vehicle, coverage limits, deductibles, and additional optional coverages.

How does comprehensive coverage impact the overall cost of car insurance?

Comprehensive coverage can increase the overall cost of car insurance due to its extensive coverage, including protection against theft, vandalism, natural disasters, and other non-collision incidents.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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