As you start your search for auto insurance, an important question you may have is how much an auto insurance policy will cost. The answer is that it can be difficult to estimate, as each car insurance company has its own method of determining rates. companies use your individual qualifying factors, such as where you live, the type of car you drive, and how much you drive annually, to determine how much risk you have and, in turn, how much you’ll pay for car insurance.
The average cost of an auto insurance policy is $1,771 per year for a full-coverage policy, according to analysis of average premium data from Bankrate Quadrant Information Services. however, your rate will likely vary from that amount due to the qualifying factors that companies will base their rate on. In fact, you may not have a clear estimate of how much your coverage will cost until you start applying for and comparing auto insurance policies. To help you get a head start on estimating your car insurance premium, Bankrate researched average insurance rates across the country and compiled a list of common qualifying factors and tips on how to lower your auto insurance premium. automobile.
Reading: How to estimate insurance for a car
what determines your auto insurance rate?
Due to economic and social influences, auto insurance rates are projected to rise in 2022. Inflation plays a role in this, as do supply chain disruptions, labor shortages, and changes in driving habits. You may also see statewide rate increases playing a role, reflecting increased risks faced by drivers in these states. as insurers see cost increases, that cost will be passed on to policyholders. In general, these are some of the factors that play a key role in determining your rate:
- Your Driving Record: The more accidents and traffic violations you have on your record, the higher your premium will be. For example, a dui can almost double your premiums, and even a simple speeding ticket can mean a rate increase of more than 20%. Similarly, if you’re a new driver with no established driving record, you’ll likely pay more than a more experienced driver with a clean driving record.
- how much do you use your car: the amount of time you spend on the road can affect your insurance premiums. If you spend a lot of time behind the wheel or drive long distances, you can expect to pay more than someone who drives less often. If you’re an infrequent driver, pay-per-mile or usage-based car insurance can help you save money.
- your location: car insurance rates they vary by state and may even take into account your ZIP code, depending on your state’s insurance laws. drivers in urban areas may pay more due to a higher risk of being in an accident as there are more cars on the road. the incidence of accidents, vehicle theft, vandalism and the severity of these claims in a given area could make your insurance higher or lower. for example, where you park your car (on the street or in a secured garage) can also make a difference in what you pay.
- your age: because older drivers Younger drivers tend to have less experience behind the wheel, they are more likely to have accidents than mature drivers. If you’re under 25, you’ll likely pay more for car insurance than someone older. In addition, rates can begin to rise again after age 70. However, Hawaii and Massachusetts prohibit the use of age as a qualifying factor.
- Your gender: Women are statistically less likely to have serious traffic accidents than men. As a result, women tend to pay lower car insurance premiums. however, the following states prohibit gender as a qualifying factor: california, hawaii, massachusetts, michigan, montana, north carolina, and pennsylvania.
- your credit score: your Credit can affect your auto insurance premium, depending on your state. drivers with low credit-based insurance scores may be more likely to file claims than drivers with higher scores. insurance companies often charge more if you have a low credit score to compensate for the higher risk. however, the following states prohibit the practice of using credit as a qualifying factor: california, hawaii, michigan, and massachusetts.
- the type and amount of coverage you have selected: While you have to purchase at least your state’s minimum levels of coverage to drive legally, you can choose to purchase higher limits or optional types of coverage. Generally, increasing limits and adding endorsements will increase your premium, although the coverage provided may offset the increased cost. purchasing comprehensive coverage, which adds both collision and comprehensive coverage, provides more financial protection than minimum coverage in the event of an incident.
- the discounts you qualify for: the Most auto insurance companies offer discounts that could help you save money, like savings when you bundle your auto and home insurance with the same company or a discount for signing up for eStatements. some discounts have more effect on your premium than others. Talking to your agent or company about possible discounts could help you maximize savings opportunities.
It’s important to remember that while each factor can play a role in determining how much you’ll pay for your policy, each insurer evaluates each factor differently. Getting quotes from multiple companies can help you find the coverage you need at a competitive price.
How do coverage types affect your auto insurance rate?
Auto insurance policies are packages of various types of coverage, and most of those types of coverage can be purchased at different limits. Generally, the more coverage you choose and the higher the limits, the more expensive your auto insurance policy will be.
Several different types of coverage can be included in one policy. Most states require that you have at least minimum levels of coverage, but each state has different insurance laws that dictate what types and levels of coverage you must purchase. State minimum coverage is often the cheapest auto insurance option, but it provides less financial protection if you cause an accident.
The minimum state coverage is usually “Liability Only,” depending on where you live. however, you may choose to purchase liability limits above the minimum limits for your state. For example, your state might require minimum bodily injury liability limits of $25,000 per person, bodily injury liability of $50,000 per accident, and property damage of $25,000, often represented as 25/50/25. you can choose to buy limits of 100/300/50, which would normally cost more.
You can also choose to purchase comprehensive coverage, which adds comprehensive and collision coverage. These types of auto insurance coverage add protection against damage to your vehicle in a wide variety of situations, including theft, vandalism, hail, and hitting a stationary object or vehicle, while minimum coverage insurance does not pay for damage to your vehicle. vehicle. If you have a loan or lease, you’ll probably need to purchase comprehensive coverage to protect the lender’s assets. Because you’re adding additional coverage, your premium will generally be higher than if you purchased the minimum amount available.
Finally, some types of coverage are generally optional. optional coverage can help address your individual circumstances. Do you have an unreliable vehicle? you may want to consider roadside assistance. Do you rent or finance your vehicle? You may want to purchase gap insurance, which pays the difference between what you owe on your new vehicle and its current value in the event of theft or full in a covered accident.
Your state may require uninsured or underinsured motorist coverage, but they’re usually optional and add coverage for your injuries and possibly damage to your vehicle if you’re hit by someone who doesn’t have insurance or doesn’t have enough coverage to pay for your damages. Other optional coverage types include rental car coverage, new car replacement, or rideshare coverage. each company will offer a different range of optional coverage options.
Auto insurance can often be customized to meet your unique needs. You can choose state minimum limits, add comprehensive coverage while maintaining state minimum liability levels, purchase liability-only coverage with higher liability limits, or choose more add-ons. Because each company charges a different amount for these types of coverage, it can be hard to figure out how much you could pay. But a general rule of thumb is that the more coverage options you add and the higher the limits you buy, the more your auto insurance will cost.
how to calculate your car insurance estimate
The best way to find out how much your car insurance should cost is to check the average cost of car insurance in your state. That will give you a general idea of how much a policy costs in your area. then getting auto insurance quotes from multiple companies will help you understand how their rating factors affect your rates.
However, you may be able to get an idea of the cost of your auto insurance by thinking about your qualifying factors and what type of coverage you need:
- Decide how much insurance you need. Before you shop for coverage, it may help to know how much coverage you need and what types of optional coverage you’re considering. if you’re not sure how to resolve this, it may help to talk to an agent.
- Think about your individual circumstances. If you have to insure a teen driver, have one or more accidents or tickets on your record, have a DUI conviction, or live in an area where car accidents are common, you should probably expect to pay more for insurance than drivers without these factors. Understanding your qualifying factors can help you find companies geared toward drivers like you.
- Learn what discounts you can take advantage of. If you have a home and auto policy, get quotes from companies with multi-policy discounts could be a good move. If you have a teen driver, looking for a company with numerous teen driver discounts could help you save.
After considering each of these factors, you can begin requesting quotes and comparing insurers. One of the best ways to get an accurate estimate of your car insurance premium is to request a quote. quotes aren’t exact, but they can give you an idea of how much you’ll pay. A licensed insurance professional can help you finalize rates after you get your quote, which can be a beneficial step in the insurance buying process.
factors to consider when comparing quotes
When comparing auto insurance quotes, make sure you’re making apples-to-apples comparisons. In terms of coverage details, it may be easier to determine the best option for your needs if you get a quote from each of the providers you’re considering. From there, you can compare the options and determine which one is right for you. some things to look for include:
- Coverage types and limits: Make sure your bodily injury and property damage liability coverage, as well as your medical payments coverage, are the same when you compare quotes from different providers. if you’re buying coverage for your vehicle, you should also make sure your comprehensive and collision deductibles are the same when comparing options.
- optional add-ons: most companies will offer rental reimbursement and towing coverage as optional coverage that can be added to your policy, but many also have unique options to choose from. This could include gap coverage, accident forgiveness, new car replacement, and more.
- Discounts: Ask what discount opportunities are available with each insurer and which ones you might qualify for. keep in mind that even though a company may offer more discounts, it’s more important to see how it affects the final premium to see which policy is cheaper.
- company summary: most of the major insurance companies are rated by agencies such as am best for financial strength and j.d. energy for customer satisfaction. these scores and ratings can be important to ensure you’re working with a company that will pay claims and put the customer experience first.
- Policy Administration Features: If you want to be able to to manage your car insurance online or through a mobile app, this could be another consideration. You may also want to speak with a company representative or claims adjuster 24 hours a day, 7 days a week, or have a local agent help you manage and review your policy.
frequently asked questions
why is it so hard to estimate my insurance costs?
how do I know how much coverage to buy?
how does my vehicle affect auto insurance rates?
how much does it cost to add a teen driver to my policy?