Average Premium Costs of Auto Insurance

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Joel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/ciccom-live/41b5e36b-joel-ohman.jpg

UPDATED: May 24, 2016

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Here's what you need to know...

  • Several factors are considered when an insurance company is determining insurance premiums
  • Insurance requirements vary from state to state which can also adds to the fluctuation of insurance premium costs
  • Compare several companies to find the perfect insurance provider for your situation

You may wonder if you are paying too much for your car insurance or if your insurance premiums fall within the average, as well as what factors affect your car insurance premiums.

Type your ZIP code into the FREE tool box on this page to compare car insurance rates now!

Car insurance premiums are not black and white. There are many factors that affect rates including the following:

1. Vehicle Type and Car Insurance Premiums

Vehicle type plays a major role in determining car insurance premiums.

The vehicle type matters because the more power under the hood, the higher chance of the driver speeding or getting into a wreck.

Another factor considered is who is driving the vehicle. Small vehicles are often purchased by young drivers, so although they are small, they cost more to insure than bigger vehicles, like minivans.

The stereotypical driver of a small car is driving during busier times than the stay-at-home mom driving the minivan.

Insurance premiums on a sports car can be as much as $2,800 a year, whereas a minivan or small sports utility vehicle will cost you approximately $1,000 a year. A small sedan’s average car insurance premium is about $1,300 a year.

2. Age and Car Insurance Premiums

Young woman on a road trip.

Age is a huge factor in calculating car insurance premiums. Due to a lack of experience, young drivers cost more to insure than older drivers.

Drivers ages 16 to 25 are going to pay the most simply because of their lack of experience. Studies also prove that because of their inexperience, they are more likely to get in more car accidents than older drivers.

Young drivers are going to pay almost double of what a middle-aged driver would pay in premiums.

However, as our population continues to live longer, old age also becomes a factor in driving.

In fact, due to a variety of factors that coincide with growing old, the elderly are starting to see increases in their premiums.

Premiums for the elderly are very similar to that of young drivers. In fact, often insurance companies drop coverage if a driver is over the age of 65.

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3. Gender and Car Insurance Premiums

Gender is another factor in determining car insurance premiums. Studies have shown that males ages 16 to 25 are more likely to get into a car accident, get DUIs, or receive traffic violations.

The studies also reveal that males drive more than females and are often more aggressive and less fearful.

Average premiums for males are approximately 65% more expensive than for females.

However, elderly women are considered to be a higher risk than elderly men. An elderly woman will pay over 40% more in premiums than a 50 year-old man.

4. Marital Status and Car Insurance Premiums

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Your marital status also plays a role in your premium. Married couples pay less for car insurance than singles do.

A married couple in California might pay $968 a year for car insurance, while a single person pays $671 a year.

5. States and Car Insurance Premiums

Believe it or not, where you live plays a major role in your insurance premiums.

For example, you pay the least amount in insurance premiums if you live in the state of Maine. Average premiums for policyholders there are $823 yearly. However, if you reside in Maryland, your average insurance premium is $1,734 a year.

Premiums vary according to state because each state establishes its own minimum insurance requirements.

Premiums also differ from state to stae depending on the population. States that are more heavily populated provide more opportunities for car accidents to occur.

Finally, premiums fluctuate per state depending on the tax. These taxes are commonly called surcharges or fees by the insurance company.

6. Credit Scores and Insurance Premiums

Credit scores impact the cost of your insurance premium. The better the credit score the lower the premium will be. Studies have shown that individuals with good credit scores are less likely to be involved in accidents or to file insurance claims.

Individuals with good credit scores can save up to 40% on their insurance premiums.

7. Driving Record and Insurance Premiums

Driving record is one of the most important factors in determining your insurance premiums. The better your driving record is, the lower the premium because the lower the risk to the insurance company.

Likewise, the worse your driving record is, the higher your premium will be because you are a greater risk.

For example, if you have a bad driving record you can look at paying $4,000-$5,000 a year in car insurance premiums compared to a middle-aged woman with a perfect driving record who pays only $300 a year.

Average car insurance premiums vary depending on many different factors.

Compare car insurance rates now by entering your ZIP code into the FREE toolbox provided below!

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