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how much does car insurance cost
28 Jul 2018

How Much Does Car Insurance Cost on Average?

There are a lot of variables that contribute to your car insurance rate.

Different companies have different variables that affect prices in different ways, and people typically have a feeling that they could be getting more bang for their buck.

Whether you’re looking to switch vehicles, get off of your parent’s insurance, or you think your car insurance quote looks too high, you’re going to want to know how much your insurance should cost. You don’t want to be paying too much for a number of services that you don’t even need, but you don’t want to be stuck without good coverage either.

So, how much does car insurance cost? Well, that depends on a few things. Read on to figure out how much you should be paying for car insurance.

Really, How Much Does Car Insurance Cost?

When thinking about the cost of your car insurance, you first need to ask yourself a few personal questions. Most rates are dependent on factors related to the individual.

What is Your Demographic?

Who are you on paper? Car insurance companies use mass amounts of data to correlate personal factors to insurance risks. While things like age and sex may not affect the way that you drive, the research shows that different demographics are liable to different risks.

People below the age of 25 tend to pay more for car insurance. The number goes up when you are male and unmarried. Generally, the less mature you are on paper, the more likely you are to have to file an insurance claim.

Insurance costs for 16-year-olds are the highest by far. Rates keep declining slowly until a person reaches the age of 55, at which point the cost of car insurance kind of plateaus, if not rising only marginally.

Males have also showed to file more claims with car insurance companies. For whatever reason, this holds true and it’s smart to for insurance providers to adjust their rates based on mass amounts of data. Women are also less likely to get into DUI accidents, which keeps their rates lower.

Where Are You From?

The state that a person lives in is a huge factor in the price of their car insurance. Each state has different laws that regulate insurance providers, meaning that providers must adjust their policies to accommodate to state laws. For example, if a state had a particularly high rate of crash-related deaths, insurance companies need to ask themselves why that is happening.

Increased fatalities could be a result of relaxed driving laws, alcohol laws, or a number of other things. Either way, the cold-hard data shows that if you live in that state, you have a higher likelihood of crashing. For that reason, your rates will be slightly higher than the rates of people in other states.

Urban areas and city centers are also places that have higher rates. Because cities are more densely populated, there is a higher risk of accidents. Additionally, states that are susceptible to natural disasters may prompt insurance providers to up their rates.

What Car Are You Driving?

The car that you choose to insure is also crucial to your rate.

Different cars have unique risk factors that make them more or less expensive to insure. Cars that are more expensive, faster, and harder to repair are most likely going to be more expensive.

If a car is extremely fast, the odds of a person blazing down the road and crashing are much higher than those of someone driving an old conversion van. On the same note, the parts of someone’s crashed Ferrari are going to be much more expensive to replace than those of a Ford Explorer.

The color of the car also plays a role in insurance costs. For example, red cars are more likely to be noticed speeding. Or, maybe people who buy red cars are more likely to put themselves at risk speeding. Who knows?

Either way, because the data shows a higher risk for drivers or red cars, the cost of insurance for those cars is slightly higher. There are a number of cars that are consistently cheap to insure. If you’re looking to get the lowest rate, consider choosing one of the most cost-effective cars to insure.

As a rule of thumb, old cars are usually cheaper to insure. Also, keep an eye out for cars with high safety ratings. Additionally, cars that are known to be cheap to repair will bring you a lower rate.

This is kind of fortunate because you have an incentive to buy a more secure car that’s cheaper to insure, as opposed to a more fast and flashy one that will put your family at risk.

How Is Your History as a Driver?

It’s pretty clear that if insurance companies are going to insure you, they want to know who you are and how you drive. A large factor of your rate is going to be whether or not you’ve experienced a lot of trouble on the roads.

This could mean tickets and road violations, crashes or other incidents. The more times you get caught speeding, the higher your rates will be. That being said, if you get caught running a red light or driving a little too fast, your rates will only rise marginally.

The real hits come when you get a DUI or are driving recklessly. In those situations, rates have been known to jump to twice what they were before the incident.

If you have a bad track record you aren’t totally out of hope. Your rate will likely start pretty high, but some insurance companies have ways of tracking your driving and rewarding you if its good. Whether its a device that monitors speed, blood alcohol content, or any other factor that can judge your driving, you may be able to get a reward for improved performance on the roads.

How is Your Credit Score?

It doesn’t seem like it should be relevant, but your credit score is an important aspect of your rate. There’s the obvious fact that if you don’t pay your bills, your credit begins to suffer, and insurance companies need you to pay your fees on time. It’s more relevant that the data shows people who have worse credit scores are more likely to file a claim.

If you haven’t noticed, the goal of insurance providers is to not have you file a claim. They get to keep the money that they make and pay out less in the long run. In order to have a good idea of who is likely to file a claim, they have to look at research that doesn’t often seem relevant, but might have a correlation.

Poor credit is a pain to improve, but it is definitely worth it to start raising your credit score. If you want good credit, start chipping away at those old credit card fees and start paying your bills on time. If you have a large amount of credit card debt from multiple sources, consider consolidating it into one accountthat may have a lower interest rate.

All of the factors listed above are standard things that providers look over before giving you your rate. In reality, their computer system puts your information through an algorithm that pumps out a rate based on your risk factors. Beyond that point, your rate is dependent on what kind of coverage you choose.

Different Levels of Coverage

Considering your coverage is extremely important. It may seem smart to get the cheapest option now, but when you’re looking at thousands upon thousands of dollars in car repairs, you might wish you would have paid the extra twenty bucks a month.

The essential coverage is liability. This takes care of the costs of damage that you might inflict on others and their vehicles. You, however, are on your own if you only have liability coverage.

Collision insurance helps you to cover the damages of your car if you get into an accident. You may even be able to replace your vehicle if it’s totaled in the collision. Another standard form of insurance is comprehensive insurance.

This insurance covers collisions as well as damages to your car from natural disasters, vandalism, or any other externality that might require you to make repairs. In the event that you collide with someone who has no insurance, you can also get uninsured motorist insurance.

This means that even if the person at fault has no way to cover your expenses, you will still be able to get coverage for the repairs. There are also a number of insurances that are specific to the kind of car you have, or the experiences that you have after a crash.

Each additional piece you add to your policy will cost you more. It is impossible to say what the normal price of car insurance is, because everyone’s policy is going to be unique.

Get Your Finances in Order

It’s difficult to answer the question “how much does car insurance cost?” There are just so many factors that could alter your rate that you need to do some research across the board and see which providers have the lowest rates for you.

If your car insurance quotes are coming in through the roof, there’s a chance that its due to bad credit. If you’re experiencing difficulty finding ways to pay insurance, or need a way to get your credit back to a healthy score, there are ways to get into a better position.

Keep reading our learning center for more financial tips.