How Much is Car Insurance?

Fran
Lucy Lazarony
October 13, 2020

The average cost of car insurance in the United States is $1,348 per year or $112 a month, according to S&P Global Market Intelligence. Wondering about the cost of a six-month car insurance policy? Just take the monthly rate of $112 and multiply by 6 and you get $672. So $672 is the average cost of six-month car insurance policy in the United States. Auto insurance is regulated at the state level so the state where you live plays a big role in the car insurance coverages you are required to buy. Beyond the state required insurance coverages, you have plenty of additional choices. The coverages you choose affect how much you pay for your car insurance policy. And there are plenty of other factors as well, including your driving record. If you’ve been a good driver you’ll pay less and even qualify for discounts. If you have tickets or DUIs or have been at-fault in an accident, you’ll pay much more for your car insurance. Here is a closer look at the cost of car insurance.

Top 10 Car Insurance Companies

Insurance companies charge different rates for auto insurance policies. And that is why it is so imperative to shop around. Not sure where to begin? Here are the top 10 car insurance companies in the United States.

State Farm is tops followed by Geico and Progressive. Allstate and USAA and finish out the top five. And six through 10 are Liberty Mutual, Farmers Insurance, Nationwide, American Family Insurance and Travelers.

These insurance companies do a lot of car insurance policies and they want your business. But make them earn it by shopping around.

Shop Around with SmartFinancial

To get a good deal on car insurance you will need to shop around. You want to compare rates from several different insurance companies. SmartFinancial makes it easy to do. Just input a zip code to get started. Next, answer a few quick questions and you’ll be comparing car insurance rates near you in no time.

SmartFinancial has access to more than 200 insurance companies so you are bound to find the coverage you are looking for at the price that you want.

Not sure of the coverage that you need? Let’s take a look.

Understanding Car Insurance Coverage

As mentioned earlier, car insurance is regulated at the state level so there are some car insurance coverages you are required to buy in your state. For example, liability coverage. What is liability coverage? If you ever cause a car crash, liability insurance pays for other people’s injuries and property damage up to your liability limit. Most states have minimum liability insurance requirements for the drivers in their state.

Some states also require uninsured motorist coverage and underinsured motorist coverage. Uninsured motorist coverage helps you pay for damages caused by a driver who doesn’t have car insurance. Underinsured motorist coverage protects you in the event of an accident where the other party is at fault and doesn’t carry enough insurance.

Some states require their drivers to carry personal injury protection (PIP). Also known as no-fault insurance, this coverage pays the cost of lost wages and medical bills up to the policy limit. PIP will pay these expenses regardless of who is responsible for the accident.

What insurance coverages are required by your state? Be prepared to pay these policies.

Beyond State Minimum Coverage

The state liability limits are so low that you won’t be protected enough if you should be at fault in a serious accident. And you’ll be responsible for paying other people’s medical and other expenses out of your own pocket. And that is why insurance experts recommend higher liability limits. The Insurance Information Institute recommends $100,000 bodily injury liability per person, $300,000 bodily injury liability per accident and $100,000 property damage liability.

Lender-Required Insurance Coverage

Are you financing your car? Your lender may require that you carry collision coverage and comprehensive coverage. Collision insurance is coverage that helps to repair or replace your car if it’s damaged in an accident with another vehicle or object such as a tree or a fence. Comprehensive insurance covers events that aren’t covered by collision coverage. These events include fire, theft, vandalism and damages from weather such as a windstorm, a hailstorm, a hurricane and a tornado.

See How Much You Can Save on Car Insurance

You’ll need to carry both insurance coverages for the life of your auto loan. Once the financing ends, it is up to you whether you want to keep these coverages.

Both coverages require deductibles. A deductible is the amount you need to pay before your auto insurance company begins to pay for your car or losses. The higher the deductible you choose, say $1,000, the lower your auto insurance premium. So if you feel comfortable with a bigger deductible you can save money on your car insurance. Whatever the deductible that you choose, put the deductible amount in a small emergency fund. This way the money will be there should you need to make an auto insurance claim.

Beyond your coverage choices there are other factors that impact the cost of your auto insurance. Let’s take a look at them.

Good Credit Scores Means Lower Rates

In most states, you’ll pay more for car insurance if you have a bad credit score since car insurance companies use credit data to determine insurance rates. Good credit scores mean low insurance rates for good credit drivers. Only Hawaii, California and Massachusetts prohibit credit scores from being used in auto insurance pricing.

Your Age Matters

Drivers who are younger than 25 and older than 65 have more serious accidents and pay more for their auto insurance. Drivers of the ages in-between pay less for their car insurance.

Your Gender Matters

Female drivers pay lower auto insurance rates than male drivers because male drivers have more accident claims.

Your Neighborhood Matters

If you live in a safe neighborhood with a low crime rate and low auto theft and low accident claims then you will pay less on your car insurance. Live in a neighborhood where there is high auto theft and accident claims and you’ll pay more for car insurance.

Married Drivers Save Money

If you are married, you will pay less for car insurance. There is a correlation between being married and exhibiting safe driving behavior. Because of this, married drivers pay less for car insurance than singles.

Low Mileage Drivers Pay Less

If you are a heavy commuter, racking up the mileage each week, you will pay more for your car insurance. If you are a low mileage driver you will pay less for your car insurance. So drive less and save money on your car insurance. Your state-required coverage choices and your additional coverage choices will help determine how much your car insurance will cost. These personal factors play a role as well. So look at all aspects of your life and driving history when thinking about how much your car insurance is going to cost.

Get a Free Auto Insurance Quote Online Now.

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