Am I Overpaying? How Much Is a Car Insurance Policy?
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If you're asking how much does car insurance cost, you've come to the right place. The average cost of car insurance in your area will tell you what you should expect in pricing. Auto insurance carriers may be overcharging you too. For instance, some insurers won’t tell you it’s okay to drop car insurance coverage that you no longer need. Others won’t mention that you can ask for lower car insurance rates based on your annual mileage. A few insurance carriers won't tell you that you can receive discounted premiums based on your profession. We're here to help you lower your auto insurance costs.
Comparing Car Insurance and Average Car Insurance Data
Do you believe comparing car insurance rates is too time-consuming, or it’s a complicated hassle to switch carriers? If this is the case, you’re definitely overpaying for car insurance. Various factors entitle you to a discount, but you may have to point them out to your agent to get the discount on your car insurance policy.
Below, you’ll learn several reasons why you may pay for auto insurance. We also have a round-up of the most overlooked ways to save money on your car insurance rates. If you’re interested in scoring some discounts, read the following tips below to save money on your premiums.
You can also use an online comparison tool, SmartFinancial, to compare auto insurance rates. SmartFinancial can help you find more affordable coverage that fits your needs. Just enter your zip code on this page, and you'll receive free car insurance quotes from local carriers in your area.
What Is the National Average Car Insurance Cost?
According to Quadrant Information Services, the national average for the average cost of car insurance is $1,674 for full coverage car insurance and $565 per year for minimum coverage. The national average will be higher or lower than your rate depending on your driving profile, demographic data, zip code and other information.
SmartFinancial has collected data from all 50 states and the District of Columbia. We've calculated the average car insurance rates in each state.
The Average Cost of Car Insurance in Your State
• Average Monthly Rate: $101.63/ per month
• Average Annual Premium: 1,219.56/per year
• Average Monthly Rate: $123.86/per month
• Average Annual Premium: 1,486.32/ per year
• Average Monthly Rate: $111.90/per month
• Average Annual Premium: $1,342.80/per year
• Average Monthly Rate: $114.98/ per month
• Average Annual Premium: $1,379.76/per year
• Average Monthly Rate: $158.81/per month
Average Annual Premium:$1,905.72/per year
• Average Monthly Rate: $138/per month
• Average Annual Premium: $1,660/per year
• Average Monthly Rate: $137.25/per month
• Average Annual Premium: $1,647/per year
• Average Monthly Rate: $128.64/per month
• Average Annual Premium: $1,543.68/per year
District of Columbia
• Average Monthly Rate: $169.40/per month
• Average Annual Premium: $2,032.8/per year
• Average Monthly Rate: $215.54/per month
• Average Annual Premium: $2,586.48/per year
• Average Monthly Rate: $141.92/per month
• Average Annual Premium: $1,703.04/per year
• Average Monthly Rate: $109.92/per month
• Average Annual Premium: $1,319.04/per year
• Average Monthly Rate: $72.52/per month
• Average Annual Premium: $870.24/per month
• Average Monthly Rate: $101.74/per month
• Average Annual Premium: $1,220.88/per year
• Average Monthly Rate: $86.78/per month
• Average Annual Premium: $1,041.46/per year
• Average Monthly Rate: $84.25/per month
• Average Annual Premium: $1,011/per year
• Average Monthly Rate: $113/per month
• Average Annual Premium: $1,356/per year
• Average Monthly Rate: $119.79/per month
• Average Annual Premium: $1,437.48/per year
• Average Monthly Rate: $206.80/per month
• Average Annual Premium: $2,481.60/per year
• Average Monthly Rate: $69.34/per month
• Average Annual Premium: $832.08/per year
• Average Monthly Rate: $160.26/per month
• Average Annual Premium: $ 1,923.12/per year
• Average Monthly Rate: $113.39/per month
• Average Annual Premium: $1,360.68/per year
• Average Monthly Rate: $161.29/per month
• Average Annual Premium: $1,360.68/per year
• Average Monthly Rate: $112.28/per month
• Average Annual Premium: $1,347.36/per year
• Average Monthly Rate: $101.19/per month
• Average Annual Premium: $1,214.28/per year
• Average Monthly Rate: $109.16/per month
• Average Annual Premium: $1,309.92/per year
• Average Monthly Rate: $106.83/per month
• Average Annual Premium: $1,281.96/per year
• Average Monthly Rate: $91.55/per month
• Average Annual Premium: $1,098.60/per year
• Average Monthly Rate: $143.52/per month
• Average Annual Premium: $1,722.24/per year
• Average Monthly Rate: $97.28/per month
• Average Annual Premium: $1,167.36/per year
• Average Monthly Rate: $169.56/per month
• Average Annual Premium: $2,034.72/per year
• Average Monthly Rate: $119.50/per month
• Average Annual Premium: $1,434/per year
• Average Monthly Rate: $205.63/per month
• Average Annual Premium: $2,467.56/per year
• Average Monthly Rate: $75.77/per month
• Average Annual Premium: $909.24/per year
• Average Monthly Rate: $99.45/per month
• Average Annual Premium: $1,193.40/per year
• Average Monthly Rate: $87.07/per month
• Average Annual Premium: $1,044.84/per year
• Average Monthly Rate: $135.33/per month
• Average Annual Premium: $1,623.96/per year
• Average Monthly Rate: $105.35/per month
• Average Annual Premium: $1,264.20/per year
• Average Monthly Rate: $125.18/per month
• Average Annual Premium: $1,502.16/per year
• Average Monthly Rate: $156.76/per month
• Average Annual Premium: $1,881.12/per year
• Average Monthly Rate: $110.29/per month
• Average Annual Premium: $1,323.48/per year
• Average Monthly Rate: $108.82/per month
• Average Annual Premium: $1,305.84/per year
• Average Monthly Rate: $86.25/per month
• Average Annual Premium: $1,035/per year
• Average Monthly Rate: $133.98/per month
• Average Annual Premium: $1,607.76/per year
• Average Monthly Rate: $105.93/per month
• Average Annual Premium: $1,271.16/per year
• Average Monthly Rate: $84.77/per month
• Average Annual Premium: $1,017.24/per year
• Average Monthly Rate: $96.08/per month
• Average Annual Premium: $1,152.96/per year
• Average Monthly Rate: $99.27/per month
• Average Annual Premium: $1,194.24/per year
• Average Monthly Rate: $128.91/per month
• Average Annual Premium: $1,546.92/per year
• Average Monthly Rate: $88.24/per month
• Average Annual Premium: $1,058.88/per year
• Average Monthly Rate: $121.68/per month
• Average Annual Premium: $1,460.16/per year
A Note on the Average Cost of Car Insurance
As you can see, the average car insurance rate varies per state. The average car insurance premium is just a ballpark figure for what you'll be paying. The average cost of car insurance is much higher for drivers with a DUI or multiple traffic violations, poor credit score and a host of other factors that may increase your car insurance costs. Here's more on what determines your car insurance cost.
Ten Rating Factors Carriers Use to Calculate Car Insurance Costs
Car insurance companies create demographic profiles of their customers . They also use rating factors to develop these data profiles which determine what auto insurance rates to charge their customers. According to the Insurance Information Institute, carriers use the following information to determine pricing on car insurance premiums:
1. Driving Record – Your driving history, or motor vehicle report, is a collection of public records about your driving history and it impacts your car insurance costs. Your state’s Department of Motor Vehicles gathers this driving data when you get your driver’s license. Insurers look at your driving history to learn if you have traffic infractions in the past five years. For instance, drivers with a DUI will have higher auto insurance costs. People with clean driving histories have lower average car insurance costs.
2. Driving Experience - Your experience behind the wheel matters to insurers. Carriers believe that more mature drivers pose a lower risk of getting into a car accident because they have more years on the road. These drivers receive lower than average car insurance rates because they don’t file as many claims. The average cost of car insurance is higher for young drivers, who have the highest rates of accidents.
3. Car Insurance History – Your insurer will check into your history with other carriers. They will see if you’ve had missed payments or lapses in coverage. An insurance provider is likely to raise your auto insurance costs or decide not to renew your policy if you have a poor payment history. Average car insurance costs for people with lapses in coverage is higher.
4. Claims History – Insurance carriers also use your claims history to see if you present an increased financial risk to them. If you file a higher number, they’ll charge you higher rates, in return.
5. Location – Your zip code can significantly impact your car insurance premiums. Insurers use statistics about your city to calculate your auto insurance rates. It includes population data, weather patterns, accident rates, crime trends and other variables. Carriers charge lower rates if they believe people in an area will file fewer claims.
6. Credit History – Your credit rating will also affect how much you pay for your insurance premiums. Most insurers will charge you lower premiums if you have a good credit score because they view them as more reliable. People with poor credit scores haver higher than average car insurance costs because insurance carriers believe they’ll file more claims.
7. Marital Status – Car insurance carriers have found married people pose less of a risk on the road than single, divorced or widowed drivers. They are less likely to be in accidents and file claims. The National Institutes of Health also learned that married couples don’t have as many auto accidents. Four states forbid insurers from a person’s marital status to determine car insurance rates: Hawaii, Massachusetts, Michigan and Montana.
8. Age and Gender – Insurers also use gender as a rating factor since women and men pose different levels of risk on the road. New drivers also have higher than average car insurance costs.
9.Your Car – Auto insurance companies also factor in the cost of your vehicle and potential repairs. They’ll use other variables like how likely someone will steal your car, its size, its overall safety record. Insurers will also ask if you have any safety equipment installed.
9. Mileage – You’ll have a lower chance of getting into an accident if you drive less. If you commute long distances, you may pay higher premiums to your car insurance company.
10. Amount of Auto Insurance – The coverage you purchase will impact how much you pay. For instance, the cheapest policies are liability-only coverage, which pays for another driver’s damages and injuries if you’re at fault in an accident. If you have full coverage car insurance you'll pay more, but perhaps less in the long run.
There are metrics that insurance companies can't use when calculating rates. It is illegal to use race, religion, or ethnicity to determine someone’s insurance premiums.
Reasons Why You May Pay Too Much For Car Insurance
The cost of auto insurance varies, and average car insurance rates are just that, averages. If you’re paying higher than average car insurance costs, ask yourself the following questions we’ve listed below. If you answer “yes” to any of them, they may provide a clue about why your car insurance rates are higher than average.
These reasons may seem unfair or controversial; however, many insurance companies consider these factors when determining your rates. We’ll also provide a few solutions that can help you score a lower car insurance rate.
1. Do you have a less-than-perfect driving record?
As mentioned earlier, car insurers use your driving history to determine your car insurance rate. Although you may believe the speeding ticket you got during your vacation was a big deal, your insurance company might feel differently.
Violations aren’t weighed the same by every carrier. Some insurers won’t raise premiums after your first ticket; others aren’t as forgiving. Your rates can increase 20 to 40 percent for minor traffic infractions like speeding, depending on the carrier. An insurer may increase your rates by 79 percent for reckless driving or 73 percent for a DUI.
These infractions will typically affect your car insurance rates for two to five years, depending on the violation and the state where you live. Afterward, these points will fall off of your record, and your rates will return to normal.
A carrier may decline your coverage when you have multiple traffic infractions and points on their records. If this situation occurs, you’ll likely have to purchase coverage from a carrier that sells insurance to high-risk customers.
Companies like State Farm, USAA and Nationwide offer the lowest rate increases to drivers with DUIs and other traffic infractions.
Did your rate increase after getting a speeding ticket? Your best defense is to shop for lower rates using an online insurance comparison tool, like SmartFinancial.
2. Are you a young or an inexperienced driver?
Getting a driver’s license is a rite of passage for many teenagers and young adults. After receiving their license, new drivers feel they have a green light to hit the roads.
Most insurance companies, however, see these inexperienced drivers as a risk, and statistics back up their beliefs. New drivers have an increased chance of getting into a crash during their first year on the road.
Additionally, drivers ages 16 to 19 have crash rates four times greater than those 20 years and older. Inexperience is the leading contributor to these crashes. Their chances of getting into an accident dramatically drop after the first twelve months.
If you’re a young driver (or just inexperienced), expect to have higher than average car insurance rates. To lower your premiums, you can:
• Find a company that charges young drivers lower than average car insurance rates.
• Do well academically since carriers will reward you with Good Student discounts.
• Enroll in a driver’s education program. Some insurers provide discounts for the cost of car insurance if you participate.
• Enter a graduated license program that helps you gain more experience behind the wheel.
3. Have you filed multiple claims with an insurance carrier?
Insurance companies are running a business. They want to do everything possible to increase their profits and minimize their risk of financial payouts.
Unfortunately, people who file higher claims on average cost them more money than those who don’t. Carriers don’t like policyholders that submit many claims since it affects their profits and raises the cost of car insurance for everyone else they insure.
What are multiple insurance claims? Your insurance history defines it as two or more claims submitted by a policyholder within three years. It doesn’t matter if you’ve filed them two months apart or two years apart. Insurers still consider them as multiple claims and it'll raise your cost of car insurance.
A claim can be as simple as getting a cracked windshield on the road. It can also be incidents like car crashes or collisions with an animal. Filing the claim can increase car insurance premiums quite a bit. Storm damage is considered an exception to your claims history.
Types of Claims that Affect Auto Insurance Rates
• At-fault claims – You have been at fault for two or more claims within three years. When this occurs, your insurer may not renew your coverage.
• No-fault claims – Many states don’t allow your carrier to see claims you file against another person since you filed them against the policy of an at-fault party. An insurance company may surcharge a driver for three or more claims within three years.
• Comprehensive claims – It will depend on your carrier how these claims affect your car insurance premium. Most insurers will not ding you for these claims unless you submit three or more within three years. Check with your car insurance policy terms or speak with a local agent to learn how your carrier treats them.
This advice may seem obvious but drive more carefully to avoid filing multiple driving claims. If an unavoidable accident happens, you can also pay for your damages out of pocket to avoid being penalized by your car insurance carrier.
4. Do you have a poor credit score?
Car insurance companies use a credit-based score to determine how much to charge their customers. These are different from the typical credit score ratings used by FICO and VantageScore. Regular credit scores predict whether a person may be late on an upcoming payment within the next 24 months.
Insurance-based credit scores determine whether a person will file a future claim with an insurance company. According to the National Association of Insurance Commissioners (NAIC), these scores include factors like:
• Payment history,
• Outstanding debt,
• Credit history,
• Pursuit of new credit and
• A mix of credit.
A University of Texas study found that insurance-based credit scores are accurate. Drivers with poor credit scores (under 600) who miss more payments are twice as likely to file more claims than those with good credit.
As a result, individuals with poor credit scores get charged higher rates; drivers with good credit receive lower ones.
Several areas prohibit the use of credit scores as a factor for carriers to calculate car insurance rates. They include the following states: California, Hawaii, Massachusetts and Michigan.
5. Do you have car insurance coverage you don’t need?
Most states require auto owners to meet a specific financial responsibility requirement before they can drive a car. This minimum liability coverage pays for another driver's damages when you have an at-fault accident.
Average liability limits for coverage usually start at $15,000/$30,000. Four basic coverages that drivers must buy include:
• Property Damage Liability – This liability coverage pays for another driver’s property and car when you have an at-fault accident.
• Bodily Injury Liability – This insurance covers another person’s medical expenses or bills when you have an at-fault accident. Bodily injury liability will not pay for your hospital bills.
• Uninsured or Underinsured Motorist (UM/UIM) – This liability coverage reimburses you for damages caused by drivers with little or no insurance. UM/UIM Bodily Injury Liability pays for bodily injuries. UM/UIM Property Damage Liability covers property damages.
• Personal Injury Protection – Pays for your injuries and medical expenses in no-fault states where this coverage is required.
Minimum coverage is the cheapest car insurance, but it may not pay for all of your expenses if you have a serious at-fault accident. Consider raising your liability limits to provide more protection.
A lender or finance company may require to purchase a full coverage car insurance policy as a contractual requirement.
This auto insurance coverage is not a standardized product since insurance coverage requirements differ by state. Full coverage car insurance policies generally include comprehensive and collision coverage.
• Collision insurance pays for damage to your car after a crash with an object. These include poles, trees, guardrails, fences, and other items.
• Comprehensive coverage covers non-collision events. These include floods, fire, vandalism, car theft and weather-related events. It also pays for damage caused by falling objects like rocks and branches.
After you pay off your loan, you can drop both collision and comprehensive coverage. You will no longer have full coverage insurance to cover your damages should an accident occur, but you will save money each month. Some insurers, however, will not sell minimum coverage liability coverage alone because you will not be covered in an at-fault accident without full coverage.
6. Are you in age or gender demographic brackets insurers consider risky?
In most states, it’s legal for insurance companies to consider a driver’s age and gender when calculating your rates.
Generally, men get charged higher rates when they are 25 years or younger. Several studies have shown young men are more likely to get into crashes when they are younger. These trends are due to their inexperience and riskier on-the-road behaviors, like driving under the influence of drugs or alcohol.
Around age 25 years and older, men and women adopt safer driving behaviors. A 2021 Quadrant Information Services study found men paid higher rates for their premiums until age 40.
A Consumer Federation of America study discovered that women pay slightly higher rates than men when they hit age 40s.
Rates for men begin to increase, again, around age 60, since older men have a higher rate of crashes than women. CFA, however, found that 60-year-old women with perfect driving records still pay higher premiums than their male counterparts.
States that don’t allow insurance companies to use gender to determine their rates include Hawaii, Massachusetts, Michigan, Montana, North Carolina and Pennsylvania.
7. Is your deductible too low?
Another reason why your insurance rates may be high is you’ve set your deductible low. A deductible is a cost that customers must share with their insurer. This fee is what you’ll pay before the insurance company starts paying for your damages. If you have minimum coverage, you do not have a deductible. You only have one if you have collision and comprehensive coverages.
If you've set your deductible low, your insurer will pay more of the costs if you have an accident. As a result, they charge you a higher rate to help shoulder those fees. It’s a great idea to set your comprehensive and collision deductibles high when you want to pay the least amount for insurance each month. Otherwise, you are overpaying.
Usually, insurers offer deductibles in tiers of $250, $500, $750 or $1000. Some carriers only offer $500 or $1,000 deductibles. The downside of raising your deductible is that you’ll have to pay a higher price upfront if you get into an accident.
8. Your Vehicle Affects Your Premium Rates
Insurance carriers charge more expensive auto insurance rates to some policyholders because they own vehicle models that have histories of higher losses, repairs costs, thefts or claim frequencies than others. These models include electric vehicles, sports cars and luxury vehicles. They also charge higher fees to autos with poor safety records or a history of recalls.
9. Do You Have High Mileage?
Insurance companies also consider your mileage when calculating your rates. You can expect to pay higher rates if you spend more time on the road since it increases your chances of getting into an accident.
Have you recently decreased your commute time to the office due to a move? Or do you have a remote job where you can work from home? People who lower their commute times can ask for a car insurance discount. When you drive fewer miles, your chances of getting into an accident decrease.
Using alternative transportation can also help decrease your rates. For instance, you may get reduced car insurance rates if you use different means to travel. These include buses, taxis or ridesharing options. Whatever your reasons are for keeping your mileage low, you probably pay too much for your auto insurance if you don’t find more affordable insurance or ask for a discount. We can help. Using an online insurance comparison service, like SmartFinancial, can help lower your rates. Just enter your zip code, and we can help get a quote from local insurers within your area.
Eight Tips to Lower Your Average Car Insurance Costs
It’s possible to lower your car insurance premiums. In this section, you’ll learn some actionable steps you can take to lower your rates and pay less money.
1. Ask your insurance company about discounts.
You can ask your insurance agent about discounts you qualify for on your policy. Insurance companies offer these cost-cutting savings to ensure customers stay with their company. You can consider the following types of cost reductions.
Although discounts can help you save some money on your premium, there are a few tips you should remember:
• Your discount may apply only part of your insurance coverage, not the total premium. For instance, an insurer may give you a discount on your comprehensive coverage if you install a car alarm. They might offer a discount on your collision insurance for having airbags.
• The insurer may cap your discounts. Insurance companies can limit the total savings that you receive. For instance, you may qualify for multiple discounts that may add up to a 60 percent savings; however, the carrier may limit it to 20 percent.
• You may not receive a discount unless you ask for one. Many insurers don’t automatically give these savings. You’ll have to research available ones and speak with your carrier if you qualify for one. For example, you may have safety devices installed in your car. Your teenager may be a safe driver who excels in school. You’ll need to review your policy and speak to your insurance agent to receive these discounts.
2. Change your insurance payment plan to lower your cost of car insurance.
Do you pay off your premium in monthly installments? If so, you may have higher car insurance rates than drivers who pay their entire bill for the six-month premium period. You’ll receive a nice discount when you pay your six-month car insurance bill at once. If you can afford it, it’s a great way to save money. If you have the cash and are not paying the lump sum upfront, you’re overpaying for car insurance.
3. Consider using paperless billing.
You may be eligible for a discount if you opt for electronic billing and reminders. Most auto insurance companies will offer these savings, so contact an agent to find out if you qualify. Why are you wasting paper and paying too much for auto insurance? While you’re at it, check to see what car insurance rates are available to you here.
4. Become a member of an organization that gets discounts.
Did you know that certain memberships and affiliations can earn you a discount? You may even qualify for a car insurance discount if you work at qualifying companies. Take a few minutes to learn whether your alumni organizations, automotive clubs or trade memberships and see if your insurance company will give you a discount for any of them. Also, ask your agent about which memberships will earn you one.
5. Install safety features in your vehicle.
Safety features earn you discounts, so alert your insurance agent to any high-tech options you may have in your car. If you have a rearview camera, an auto alarm or even a vehicle locator, you may be entitled to a discount. If your insurer doesn’t offer one, others will. Again, visit SmartFinancial.com to get paired up with the right agent.
6. Take a Driver’s Education Class.
Your insurance company may give you a discount if you take a defensive driving course. These are certified courses approved by your state’s DMV and insurance company. Some carriers give up to a ten percent discount on car insurance rates when you take one of these classes.
7. Get discounts for multiple policies and bundling coverage.
If you have a renter’s insurance policy or a homeowners insurance policy with the same carrier, you may qualify for a discount. Your insurance company may not automatically give you this discount, so contact them and ask if you qualify for one.
If you have any other type of insurance with your car insurance (RV, boat, even business), you should always ask about multi-policy discounts. If several insurance carriers provide you auto insurance coverage, consider bringing your business to a single insurer. You may receive huge savings when you combine policies.
A bundle is similar to a multi-policy discount, and if you don’t have one, you’re paying too much for auto insurance. The usual bundling options are auto and homeowners or auto and renters or auto and condo insurance. You can also get a discount if you bundle your motorcycle insurance with home, renters or condo too.
8. Comparison shop for better car insurance rates.
If you are lazy about paying the least for the best insurance, you are probably paying dearly for mediocre coverage. The good news is that insurance companies need to stay competitive by charging reasonable car insurance rates.
There are many carriers out there, so you should compare auto insurance rates at least once a year. You also don’t need to do any of the footwork if you work with SmartFinancial. Just enter your zip code below, and you'll receive car insurance quotes from carriers within your area. We'll also connect you with a local insurance agent who can help you secure that rate.