Reading Time: 4 minutes Factors That Affect Cost of Car Insurance
This is a contributed post on Car Insurance from Melissa.
Have you wondered why your car insurance costs what it does? Are you looking to lower your car insurance costs?
Car insurance is a regular expense that everyone with a car has to deal with. With registered vehicles being required to have a certain amount of car insurance in the majority of states, there is a big chance that you are spending a lot for insurance.
It’s hard to get a complete average cost of car insurance since there are so many factors. But there are clear patterns, trends, and cause-and-effects in the car insurance world that can influence the cost.
Sometimes, they can be used in your favor when you are figuring our your budget. This post looks at some common costs of car insurance, why they cost as much as they do, and how to find the most low-cost.
Table of Contents
Common Car Insurance Costs In General
Car insurance costs differ from state to state, according to Bankrate the average cost of car insurance is $1,655 annually for full car insurance. This comes out to about $138 a month. Bankrate states that minimum coverage averages $480 a year. Again, this may be the case for some states, while others can have nearly doubled this insurance rate.
At the same time, there are also several personal factors that affect the cost of car insurance. Those that pay the least for car insurance are those in the age range 35-40 with a good driving record and credit.
Factors That Affect Car Insurance Cost
With things like age, driving record, credit score, and state all being mentioned as factors that determine car insurance costs –we’ll want to add some structure to it. So, here is how exactly all these factors affect how much you pay for car insurance:
- Age – This isn’t exactly something you can’t help or use to budget out car insurance to your advantage since you can’t change when you were born. Car insurance companies all over the world use age as the primary factor of how much someone’s auto premiums will be. Age helps gauge driver experience, education, and total years behind the wheel. As a general rule of thumb, people between the ages of 16 to 25 are considered young drivers and subject to such premiums.
- State – Your state of residence, particularly zip code, is also a key factor in determining how much you pay for car insurance. Idaho is currently the state with the cheapest car insurance rates at about $1,027 annually for full coverage. Louisiana is the highest at $2,986. So Louisiana is early double Idaho. Typically, metropolitan areas have higher insurance rates than rural areas do because of more traffic and crime rates.
- Driving record – Naturally, how safe of a driver you are plays a role in determining insurance costs. Car insurance companies are in contact with state DMVs, where they have access to your driving record. They look for any accidents and other major traffic convictions like DUIs. These drivers are seen as high-risk –able to get car insurance but have to pay more than usual. Inversely, car insurance companies reward good driving habits and clean records with lower premiums and even discounts.
- Credit score – While not every car insurance company looks at credit scores, they are still important to keep in good standing. Having car insurance is all about making your monthly payments on time, similar to a credit card.
- Car – The make, model, and age of the car you are insuring will affect the cost of car insurance. This may seem obvious since the insurer has to pay out if they are damaged. Cars that are more expensive to fix because of certain parts are more expensive to insure for obvious reasons. A rule of thumb when it comes to cars is that cars with more safety features tend to have lower premiums.
Ways You Can Manage The Cost of Car Insurance
Some of the aforementioned factors can’t be changed. But there are some things that you can do to lower your car insurance costs.
- Discounts – There are several discounts in the world of car insurance. Examples are safe driving, bundled insurance policies, multi-car policies, and several others. Always ask your insurance agent to see which ones are available.
- Adjust deductible – Your car insurance deductible is the amount you pay when you file a claim for any reason. Deductibles are directly inverse to insurance premiums, so a higher deductible means lower premiums. You can set your deductible to a higher amount to offset the cost, but be sure you can afford it.
- Apply aspects of your life – Married couples have lower premiums than singles do.
- Drop unnecessary coverage – A good rule of thumb is that if you have a car at least seven years old, then you probably don’t need full coverage for it. Take a look at how much you are paying for insurance compared to what it would cost to replace the car. This is one of the most important things you can do when budgeting your car insurance cost.
In Conclusion: Car Insurance Costs
There are many factors that go into car insurance pricing. By understanding what drives car insurance premiums you can focus on how to reduce your costs.
ChaChingQueen is a lifestyle blog helping you live a happy and healthy life on a budget.