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How Much Does Car Insurance Cost, and How Can I Lower My Rates?

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How Much Does Car Insurance Cost, and How Can I Lower My Rates?

Car insurance rates are second only to housing costs in most household budgets, but there are methods to reduce them even as prices grow. You’ll want to check that you still have adequate coverage.

Continue reading to learn how to save money on vehicle insurance and how much coverage you get.

This article will cover:

  • Factors affecting vehicle insurance costs
  • Average vehicle insurance rates
  • Reduce your auto insurance premiums
  • How to insure a 16-year-old driver

How Much is Auto Insurance?

According to AAA’s 2021 Your Driving Costs research, full coverage insurance for a 2021 vehicle costs $1,342. Full coverage includes physical damage, liability, and medical insurance (where required).

However, rates might vary widely based on criteria such as location. It calculated average rates for drivers that meet a specific profile, including some favorable rating elements.

Drivers insured by AAA included:

  • Aged under 65
  • Drivers with over six years of experience
  • Accident-free
  • Insuring a new car

Consider each of these rating factors to see how rates may change for various drivers.

Driver Age Driver age affects vehicle insurance costs, with younger drivers paying more. Some insurers raise rates for drivers aged 70-75. Those under the age of 25 often pay more for coverage.

Driving Skills

Driving experience affects rates. An inexperienced driver can only be insured by adding them to the policy of a more experienced driver. Others may cover newer drivers, although the premium may be higher.

Accident 

Recent accidents increase insurance prices. If you haven’t had a recent accident, you should expect reduced rates. Insurers think we’re all risky, but they’re not sure how risky we are. Until we have a mishap. So they know. Accidents can raise rates for 3–5 years.

Location

Location affects auto insurance prices. While costs vary greatly between states, AAA’s study focused on drivers in urban and suburban areas. This rating factor is ambiguous. Urban drivers frequently pay more than suburban drivers, while rural drivers often pay less than the first two groups.

In this situation, insurance considers traffic congestion as well as theft and vandalism. Rather than looking at where you drive, insurers usually look at where you park at night. Those who reside in the suburbs and commute to the city may pay less than those who live and work there.

Car’s Age and Value

The drivers in the AAA survey insured a 2021 model. Insuring newer cars can be more expensive. However, improved safety measures might help offset the cost of insuring a more expensive car. Others provide a new-car discount.

Car Insurance Rates by NAIC

If you’re considering a new automobile, the $1,342 average insurance cost is a good benchmark. But many families have vehicles of varying ages, with varying insurance requirements.

For example, a paid-off older vehicle may not require physical damage coverage.

The NAIC also publishes a study on auto insurance costs, which breaks down costs by state and insurance type.

Here are the NAIC’s 2019 national average vehicle insurance premiums:

  • Liability Premium: $650
  • Collision: $381
  • Insurance: $172
  • Premiums Averaged: $1204
  • Average Cost: $1,070

These categories represent:

Injuries or property damage caused by our vehicles are covered by motor liability insurance. Collision and comprehensive insurance cover damage to your vehicle.

The combined average premium includes obligatory liability and physical damage coverage. Others require medical coverage. Dutzend states also need uninsured motorist coverage.

The average amount insured drivers pay. Because not all vehicles require complete coverage, the average cost is lower than the combined average premium.

My Car Insurance Can Be Reduced

Insurance rates reflect the risk of a claim from several sources. Some are wide risks, like traffic density. But rates also reflect our own risk.

Aside from negotiating with insurers, you may be able to get some discounts that can lower your overall insurance costs. Good driving practices can also help.

Each insurer has its own set of discounts, but many of them are comparable. Here are some popular insurance reductions.

  • A discount for buying both home and auto insurance is common.
  • Because each vehicle on your policy generates a discount, multi-vehicle savings can mount up rapidly.
  • Completing an approved defensive driving course might earn you a three-year discount.
  • Accident-free: Many insurance companies reward accident-free drivers.
  • An accident-free motorist may qualify for a safe driver discount, but most do not.
  • Less driving implies less risk. Fewer than 7,500 annual miles are often eligible for a discount.
  • Early enrollment may save you money if you don’t need coverage right away.
  • Save money with discounts for full payment, automated payment, and paperless billing.

Homeowner: Many insurers give homeowners a separate discount from the combined house and auto insurance discount.

Safety features including antilock brakes, anti-theft prevention, daytime running lights, and passive restraints can help you save money (airbags and seatbelts). New automobile buyers may also receive a discount.

More insurers are offering usage-based discounts. Telematics uses an in-car device to track miles driven, time of day, and other driving parameters to reward safer drivers with money-saving discounts.

What Else Affects Car Insurance Rates?

They look at more than simply your driving record. Coverage restrictions and types also affect expenses. But, before you snip your policy limitations, consider other factors that can affect your premiums. Last but not least, larger coverage limits safeguard you and your family.

Listed below are some determinants of auto insurance rates.

  • Credit score: In most states, auto insurance companies can use your credit history to rate you. If your credit score needs a boost, improving your credit history could lead to insurance discounts.
  • Moving offenses can cost more than just the penalties. Moving offenses can result in the loss of a safe driving discount or perhaps a surcharge that lasts for years.
  • Less annual mileage means less danger of a claim.
  • Car make and model: A Tesla Model S can cost twice as much to insure as a Honda CR-V. Before buying a car, find out how much insurance it would cost.
  • Continuous coverage for three years or more may get you better rates. A one-day lapse in coverage can result in years of higher insurance rates. Prevent coverage lapses by canceling the old policy after the new policy’s effective date and time.

A 16-Year-Olds Guide to Car Insurance

Car insurance rates might skyrocket if you have a teen driver.

If your new driver has a learner’s permit, you may not need to add them to your coverage. Your policy covers them for permissive use. To be safe, ask your insurer about their process and requirements for learners.

When your teen passes their driving test, you’ll need to add them to your coverage. Others urge young drivers to get their policies.

Adding your young driver to your policy is usually the cheapest option. But who owns the car matters. Unless you rent, you must own the car. If your teen owns an automobile, they must be insured. If the title has both names, you can ensure the car is in either name.

When adding your 16- or 17-year-old to your coverage, ask about these discounts:

Many insurers provide good student discounts for A and B students.

If the car stays home and the school is far enough away, young drivers might save on coverage (usually 100 miles).

Driver’s ed savings: Many states offer student driver education. Driver education discounts are widespread.

Driving school discount: In addition to a driver’s education discount, several insurers offer a defensive driving discount. These classes typically cost $20-$30 and can save up to three years.

Many insurers now offer in-car gadgets that track speed, braking, starts, turning, and other driving safety parameters. In many circumstances, you’ll get an immediate reduction plus future savings for safe driving.

Controlling Car Insurance Costs

Car insurance is one of several monthly expenses for many families, but there are ways to save without sacrificing coverage.

Most insurers advise annual or biannual policy reviews. Contact your insurer to discuss methods to save if you haven’t done so recently. If you’re looking for new coverage, ask your new provider about savings and how to qualify.

Christian Edet is a movie and gaming freak. An experienced writer whose interests include games, cars, insurance, and tech provides relevant information to all interested. He graduated from Anglia Ruskin University, Chelmsford, United Kingdom, and studied Business Information Systems (BSc.)