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UPDATED: May 7, 2020
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|Average Cost to Own and Operate a 2019 model vehicle||$9,282||AAA|
|Average insurance cost for medium sedans in 2019||$1,251||AAA|
|Average 2017 expenditures for auto insurance||$1,004.58||National Association of Insurance Commissioners|
|Average 2016 expenditures for auto insurance||$944.36||National Association of Insurance Commissioners|
|2017 least expensive state for auto insurance||North Dakota|
|National Association of Insurance Commissioners|
|2017 most expensive state for automobile insurance||Louisiana $1,443.72||National Association of Insurance Commissioners|
Everyone wants to make sure they are paying a fair price for car insurance. The top car insurance companies are competing for your business and a big part of that is trying to offer the best rates. You want to get the best deal on your coverage, but how do you know if you’re being offered fair auto insurance rates? What makes a rate fair?
As the car insurance customer, you have the opportunity to shop around and compare car insurance rates. While you may not be able to change most of the factors insurance companies use to rate drivers, you can choose the company that offers affordable car insurance for you. In other words, a company with the best car insurance rate based on you, your car, and your driving habits.
The best thing about a free insurance market? You can shop around and compare rates. Enter your ZIP code right now find fair car insurance quotes for free.
What is a fair price for car insurance?
What is a fair price depends on a lot of different factors. A fair price for you is a very different number than what’s fair for your sister or your neighbor. Car insurance companies use a complex system to determine rates for each individual situation. As a result, which company is cheapest for car insurance really varies.
A State Farm car insurance rate quote won’t look the same as the rate quote from Geico, and one company may have a cheaper rate for you than for another driver.
Each car insurance company may consider similar factors when trying to set insurance premiums for their customers, but the companies themselves do not always give each factor the same weight when determining how much to charge for auto insurance.
Individual car insurance companies set their own rates for coverage and weigh each factor differently.
Car insurance companies do have to abide by state laws regarding rates. You can use this National Association of Insurance Commisioners resource to contact your state insurance department if you have questions or concerns about how your rates are being calculated.
Let’s start with some basics. The question of whether you’re paying above or below the average auto insurance rate is not hard to answer. Let’s take a look at some car insurance averages throughout the United States right now:
- Full coverage for a single adult with good credit — $1,427
- Full coverage per month — $119
- After a DUI — $2,610
- Average percent increase after DUI — 80 percent
- Average percentage increase after an at-fault accident: 31 percent
The formulas that car insurance companies use are confidential and likely complicated, but there are some factors that you can assume they consider when you apply for your coverage.
You can get an idea of what you should be paying by using a car insurance cost calculator and then comparing the rate quotes you’re receiving to that number.
It’s best to keep in mind that the process for determining car insurance rates is always changing. Today, electric cars exist, as do cars with dozens of cameras attached, and, soon, fully automated vehicles. These things will influence car insurance rates in the future, and in some cases already do.
What is the average cost of car insurance?
While averages do not explain all things, they can help here. The average cost of car insurance in the U.S. is $1,758. Let’s look at the average rate by state in the following chart.
|State||Average Annual Car Insurance Premium||Average 6-Month Car Insurance Premium|
|District of Columbia||$1,876||$748|
As you can see, there can be substantial disparities between rates from state to state, ranging from under $900 to over $2,000. From there, it breaks down further by city and zip code. Which zip code is more expensive for car insurance in your state? Check out our car insurance guides by state for all of the specifics.
Next, we will cover some of the factors that affect your rates.
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Factors that Affect Fair Auto Insurance Rates
Car insurance companies consider many different factors when determining auto insurance rates for their customers. This video outlines many of them:
One of the main factors that a car insurance company will consider when setting insurance rates is your driving record.
For example, a new or inexperienced driver is more likely to be involved in a car accident, and they present a higher risk to insure. A driver with a lot of points on their license will also pay higher auto insurance rates.
Marital status also impacts rates. Why do single people pay more for auto insurance than married individuals? This is because insurance companies view single individuals at a higher risk, based on statistics.
Along with your marital status and driving record, your age, credit score, and even your commute time can all influence the cost of your auto insurance. Let’s take a closer look at the factors that affect fair auto insurance rates.
Average Car Insurance Rates by Age and Gender
Newly-licensed and young drivers will pay the highest insurance rates for their coverage.
Companies that sell car insurance know that teen drivers, especially young male drivers, have the highest risk of being involved in a car accident. For that reason, they pay the highest rates of any auto insurance customer.
You can still find fair auto insurance for young drivers, and the good news is that once a young driver reaches the age of 25, their car insurance rates should drop. While it may not seem fair, car insurance companies look at the demographics of a driver when determining coverage.
The following news report covers teen drivers with teen passengers.
The average car insurance rates by age and state do differ – and there are a few states with laws that don’t allow the use of age and gender by car insurance companies. In fact, a bill was introduced to Congress in 2019 to address discrimination in car insurance rating, with age and gender among the issues.
However, in most states, rates are determined by perceived risk factors — age and gender factor into that equation, like in the chart that follows, for Alabama.
|Company||Married 35-year old female||Married 35-year old male||Married 60-year old female||Married 60-year old male||Single 17-year old female||Single 17-year old male||Single 25-year old female||Single 25-year old male|
|Travelers Home & Marine Ins Co||$1,501.32||$1,524.86||$1,407.98||$1,403.64||$8,037.20||$12,641.31||$1,422.13||$1,631.77|
|Nationwide Mutual Fire||$1,739.15||$1,761.83||$1,583.95||$1,641.07||$4,558.03||$5,880.92||$1,929.78||$2,158.89|
|Mid-Century Ins Co||$2,391.72||$2,374.46||$2,137.64||$2,269.18||$9,212.40||$9,480.84||$2,718.78||$2,828.88|
|State Farm Mutual Auto||$2,934.88||$2,934.88||$2,651.27||$2,651.27||$8,835.43||$11,068.85||$3,314.66||$3,821.44|
|Safeco Ins Co of IL||$3,086.86||$3,335.34||$2,530.47||$2,830.81||$11,250.27||$12,511.44||$3,289.13||$3,504.83|
Notice how the rates for ‘Single 17-year-old male’ and ‘Single 17-year-old female’ are the highest out of all age demographics no matter what company. The pricing is based on probability, as well as the person’s personal history.
Imagine the mentality of yourself or someone you love at the age of 17. Probably a little reckless in comparison to your mentality and worldview now, right?
Well, insurance companies take that mentality into account when picturing teens behind the wheel. While it may be blanket-term thinking, these companies have to operate based on averages and statistics.
Before moving on, let’s look a little more into age in relation to insurance premiums.
|95 and up||$1,955|
As you can see, 16-year-olds pay the most by a fairly substantial margin. Even with just a one year increase in age, the premium is decreased by over $500.
The cheapest average age range was 65–69. Insurance companies believe this to be the lowest risk demographic behind the wheel.
Many other factors outside of age and gender are taken into account. In fact, many states now forbid taking gender into account as that criteria is in the process of being phased out.
Auto Insurance Rates by Commute Time
Perhaps it is criteria you may not even realize was a factor, such as how pleasure driving and commute time can influence your auto insurance rates.
The following table shows average car insurance rates for those with a 10-mile commute and a 25-mile commute in various California ZIP codes compared to the state averages of $3,363.65 and $4,015.59 respectively.
|ZIP Code||City||10 Miles Commute,|
6000 Annual Mileage
|Compared to Average||25 Miles Commute,|
12000 Annual Mileage
|Compared to Average|
As you can see, for each and every ZIP code shown, a 25-mile commute yields the result of a higher premium in comparison to a 10-mile commute.
Imagine you have to drive 25-miles after a long day of work. Not even taking traffic into account, doesn’t a 10-mile commute every day sound much better? People are tired at the end of the day, and the longer the commute after an arduous day, the higher the probability of an accident occurring.
Auto Insurance Rates by Credit Score
A big factor in calculating car insurance costs is one’s credit score. Our credit score affects a lot of what we do. It partially determines what homes we buy and, yes, what cars we buy. So how does a poor credit score affect auto insurance rates? Let’s take a look at the next table showing multiple ZIP codes in Phoenix, Arizona, and how they compare to the state averages of good ($2,953.86), fair ($3,473.21), and poor ($5,003.01) credit scores.
|ZIP Code||Good||Compared to Average||Fair||Compared to Average||Poor||Compared to Average|
As you can see, for each of the 10 ZIP codes shown, a good credit score yields a cheaper auto insurance premium in comparison to a fair credit score. The interesting part comes with a poor credit score, which causes premium rates to skyrocket.
The average credit score in the U.S. is 703, according to Experian. If you’re in that range, you probably don’t need to worry.
Auto Insurance Rates by Coverage
Moving on, we know there isn’t just one set coverage level, right? Let’s take a look at this table that compares low, medium, and high coverage levels in five ZIP codes in Arizona. For comparison, the state averages are $4,103.99 for high coverage, $3,867.94 for medium coverage, and $3,458.15 for low coverage.
|ZIP Code||High||Compared to Average||Medium||Compared to Average||Low||Compared to Average|
It certainly stands to reason that the higher the coverage level, the higher the premium, right? Well, it is so. Insurance companies will always push the highest coverage possible, and it is up to you to see just what coverage level would be right for you.
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How to Get Fair Auto Insurance Rates
If you have accidents and/or moving violations on your driving record, you can expect to pay more for auto insurance coverage for between three and five years after the incident. Maintaining a clean driving record is one thing that you can do to qualify for lower car insurance rates.
For instance, having a DUI on your record will drastically increase your rate. The same goes for one simple speeding violation, as seen on this chart displaying changes in average California car insurance rates when you have specific incidents in your driving history.
|With 1 Speeding Violation||$3,272.95|
|With 1 Accident||$3,721.56|
|With 1 DUI||$5,184.72|
As you can see, having anything from a speeding ticket to an accident on your record substantially increases your rates. This is applicable to each and every state in the country.
The following video goes into detail regarding speeding and auto insurance rates.
How can I lower my auto insurance rates?
Here are some areas where you can control the car insurance rates you are quoted:
- Make and Model – Choose to drive cars with the cheapest insurance rates. You have the right to drive whatever type of vehicle you wish — but you do need to consider whether the one you want is worth the extra premiums you will need to pay. If you’re driving a sports car or a car that is difficult or expensive to repair, you will pay more for your auto insurance rates.
- Location – Where you live affects your auto insurance rates. The insurance company is looking at the likelihood that you will make a claim when it sets rates. If you happen to live in an area that is prone to car thefts or has had problems with vehicles being vandalized, you will pay more for your car insurance coverage.
- Rural living –This has its advantages for car insurance purposes. Fewer cars on the road mean a lower risk of being in a car accident and having to make a claim against the policy. In contrast, if you live in an urban area with lots of activity on the road, you present a higher risk to insure, and your rates will be higher as a result.
- Safety features – You can lower your rates for car insurance coverage by driving a car that is outfitted with safety devices. Seat belts and airbags reduce the likelihood that you will be seriously injured in a car accident, and can save you money on the cost of your coverage as well.
- Anti-theft devices – Installing an anti-theft device in your vehicle should also mean that you qualify for better pricing. Be sure to contact the insurer to let the company know that you have done so, and ask that your policy information be updated.
- Driving school — Some insurance companies offer better rates to customers who have completed a defensive driving course. Drivers of any age or level of experience can take an approved program to ensure that their skills are sharp and that they don’t have any bad driving habits.
This next table will show you a substantial amount of ways that you can receive a discount on your car insurance.
|Vehicle Discounts||Driver/Customer Discounts||Personal Discounts|
|Active Disabling Device||Claim Free||Emergency Deployment|
|Adaptive Cruise Control||Continuous Coverage||Family Legacy|
|Adaptive Headlights||Defensive Driver||Family Plan|
|Anti-lock Brakes||Driver's Education||Federal Employee|
|Audible Alarm||Driving Device/App||Further Education|
|Automatic Braking||Early Signing||Good Student|
|Blind Spot Warning||Full Payment||Homeowner|
|Daytime Running Lights||Good Credit||Life Insurance|
|Electronic Stability Control||Multiple Policies||Membership/Group|
|Farm/Ranch Vehicle||Multiple Vehicles||Military|
|Forward Collision Warning||New Customer/New Plan||New Address|
|Garaging/Storing||Occasional Operator||New Graduate|
|Green/Hyrbid Vehicle||Online Shopper||Non-smoker/Non-drinker|
|Lane Departure Warning||On-Time Payments||Occupation|
|Newer Vehicle||Paperless/Auto Billing||Recent Retirees|
|Passive Restraint||Paperless Documents||Stable Residence|
|Utility Vehicle||Roadside Assistance||Student Away|
|Vehicle Recovery||Safe Driver||Student or Alumni|
|VIN Etching||Seat Belt Use||Volunteer|
All of these options are possibilities. Inquire with your chosen car insurance provider to see if any of them apply to you.
How to Shop Around for Fair Auto Insurance Rates
There’s nothing wrong with being a bargain shopper. You certainly don’t want to take the first option made available for the sake of saving time. Maybe you’re moving to a new state and need to switch policies, or maybe you’re just seeking a change. Look through the car insurance companies in your area and see what they have to offer.
Make them sell themselves to you. Remember, you are the consumer, and while you do require car insurance coverage, you still can hold the cards.
So, how can you find out whether your auto insurance rate is fair? Comparing rates online is the easiest way. Which comparison site is best for car insurance? In our humble opinon you don’t need to look anywhere else. We’ve got you covered.
Enter your ZIP code right now to compare rates and feel confident that you’re paying a fair price for car insurance.