Learning the Cost of Car Insurance

Car insurance costs depend on the company, driver, vehicle, and coverage. Use our quote comparison tool below to find the lowest car insurance costs in your ZIP Code.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 26, 2021

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Here's what you need to know...

  • There are many factors that determine the rate of car insurance
  • Your driving history helps determine your premiums
  • The kind of car you drive also has an impact on what you will pay for insurance
  • The fees to watch out for if considering changing insurance companies are early cancellation fees and downpayments

How much your car insurance will cost will be determined by what insurance company you choose as well as a variety of other factors.

Enter your ZIP code now and get FREE online car insurance quotes!

What you pay for car insurance is relative to a number of factors that directly involve you. Because there are so many factors involved, you could pay a lot more or a lost less for your car insurance than what the national average happens to be.

What are some of the factors that determine how much my car insurance will cost?

Here are a few of the factors:

  • State laws – Because the laws for car insurance vary from state to state, this is a major factor in the cost of your car insurance. You can move from one state to another with no other changes to your driving status and still get an increase or a decrease in your car insurance.
  • Your driving record – If you have no driving history, but you are an adult, in most states this will equate to a lower rate, even if you have no driving experience at all.
  • How long you’ve had your license – In some states, such as North Carolina, you will find that your rates will be their highest for the first 3 years that you have your driver’s license regardless of your age.
  • History of accidents – If you have been responsible for multiple accidents, received a lot of traffic tickets and so on, then this will cause your rates to increase as well.
  • History of claims – Insurance companies also take into account the number of car insurance claims that you have made when determining what your rates will be. If you are someone who has a lot of claims on record, expect to pay more for your insurance.
  • Type of car you drive – A safe car cost less to insure than a car with no safety features. An older safe car costs less to insure than a newer safe car. The lower the value of the vehicle the less it will cost to insure and so on.

Sports cars are usually the most expensive cars to insure simply because the risk factor for accidents increases when someone has a sports car. This is especially true if a young driver has a sports car.

A teen driver with a sports car can expect to pay four times more for their insurance than an experienced driver with a sports car.

Each car insurance company has their own system in place for determining how much your car insurance will cost, which is why you should always shop around before buying your car insurance.

The rates will vary at least slightly, and sometimes greatly, between different insurance companies.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

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Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

 Secured with SHA-256 Encryption

How much does it cost to change insurance companies?

If you get a quote and you find out that you can get your car insurance for less elsewhere, the cost of doing this will depend on a couple of factors.

First of all, it depends on whether or not you signed a contract with your current insurance company that enacts a fine if you cancel your policy early.

You see, because so many people are recognizing their ability to change their insurance company if they don’t like their rates, some insurance companies are responding by charging an early cancellation fee.

This fee will be mentioned on your policy and if you don’t agree with it, then you shouldn’t agree to purchase your insurance with that company.

Some companies only charge a small fee, such as $25. However, there are some insurance companies that charge a percentage of your remaining balance on your entire policy.

This means the earlier you are in your policy the higher the fine is that you will have to pay; conversely, the later in your policy it is the less you will have to pay.

If you have a policy with a company that doesn’t charge an early cancellation fee, you will be entitled to a refund from your insurance company for the balance remaining on your policy that you have already paid.

If you pay monthly, which most people do these days, your refund will probably be small.

The other factor that is involved in determining how much it will cost to change insurance companies is how much of a down payment your new insurance company charges when you start a policy.

Do I have to make a down payment for car insurance?

There are some insurance companies that have no down payment requirements at all. Instead, they charge slightly more a month for the first six months you are with the company. After that, your rates should reduce slightly to make up for the lack of down payment requirement.

Some insurance companies simply require you to pay one month of premiums as your down payment.

So, if your premiums are $85 a month, then your first payment would actually be $170.

Other than that, there will be no other charges when you change insurance companies. It is perfectly legal to change insurance companies at any time.

Just keep in mind that if you have a habit of changing insurance companies you will stop qualifying for the lowest rates; in fact, if you switch too much, some insurance companies may refuse to insure you at all.

Before you switch insurance companies, take the time to talk with your current insurer to see if you can get a reduction in rates. While in many cases they will not negotiate with you, there are some that will value your business enough to try to work out a lower rate with you.

Just remember, they are confined by their own rules and may not be able to work with you.

When is it time to change car insurance companies?

The truth is that you should try to stay with the same insurance company for at least a year so that you can qualify for the lowest rates.

Every year, when it is time for you to renew your policy, you should use a free quote tool to compare the rates between multiple companies.

If you are paying for your policy online, your insurance company will most likely automatically renew your policy at renewal time.

You need to pay attention to when your policy expires so that you can time your change correctly, if you do choose to make that change.

Getting free quotes online is easy and using a quote tool like the one that we offer here allows you to compare rates from multiple companies without having to leave the comfort of your home or visit multiple car insurance websites.

Enter your ZIP code below and start the process of getting your FREE car insurance quotes today!

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

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