The money you spend for car insurance coverage is known as your premium. Depending on your insurance carrier, you can usually pay your auto insurance premium in monthly, bi-annual, or annual installments.
Here's what you need to know about vehicle insurance prices and how to save money on them:
How Are Car Insurance Premiums Determined?
When setting vehicle insurance prices, insurance firms consider a number of pricing criteria. The following are the most common factors:
Your driving record
One of the most important variables in deciding your vehicle insurance price is your driving record. A driving record contains information about at-fault car accidents and moving traffic offenses, such as speeding fines.
Drivers who have had recent at-fault accidents or severe traffic offenses will have to pay more for coverage than good drivers. Depending on your state, your insurer will normally look at the past three to five years of your driving record when determining your auto insurance rates.
Expect your auto insurance rates to rise as a result of a speeding ticket. According to a Forbes Advisor analysis, a driver with a speeding ticket pays 24% more, or around $380 per year, than a driver with a clean driving record.
If you were at fault in an accident, you can also expect your vehicle insurance rates to rise. According to a Forbes Advisor analysis, the average increase for accidents resulting in property damage is 45% and 47% for incidents resulting in casualties.
Your auto insurance coverage selections
The coverage you select is also an important component in determining auto insurance prices. Liability, collision and comprehensive coverage, and uninsured motorist coverage are the three primary types of vehicle insurance. Don't cut corners on coverage that you require only to save money. That oversight could end up costing you in the long term.
For example, the minimal liability auto insurance required in your state is most certainly insufficient. If you cause a car accident that results in several injuries, you may soon exhaust the policy limit, forcing you to pay for others' medical expenditures and other bills out of pocket. In general, you should purchase enough liability insurance to cover what you might lose in a lawsuit, such as your savings.
Your car insurance deductible
When you file a claim, such as a collision or comprehensive insurance claim, your deductible is deducted from your insurance check. For example, if your vehicle repair estimate is $2,000 and you have a $500 deductible, you will receive a $1,500 insurance check.
In general, the higher your deductible, the lower your auto insurance costs. This is because if you file a claim, your insurer will pay less.
There is no deductible on automobile insurance for liability claims brought against you if you cause an accident.
The type of vehicle you drive
Another element in auto insurance pricing is the make and type of your vehicle. To analyze repair costs, payments received for comprehensive claims, and theft rates, your insurer examines previous claims from similar models.
Related: The most and least expensive cars to insure
Your age and driving experience
Because they are more likely to be involved in a car accident, young and inexperienced drivers will pay more for auto insurance. Car insurance costs for young drivers begin to fall around the age of 25. Your rates are typically lowest in your 40s and 50s, but they begin to rise again around the age of 65.
Related: How age and gender affect car insurance rates
Where you live
Another key pricing aspect is your ZIP code. Due to the increased incidence of car accidents, theft, and vandalism, city drivers typically pay more than suburban drivers. Your insurer also considers weather-related claims (such as hail) in your area.
Other considerations associated with location include:
- The expense of medical treatment
- Car repair expenses
- The number of vehicle accident lawsuits
Your credit
In jurisdictions where it is legal, many vehicle insurance companies use your credit-based insurance score to help determine your premiums. California, Hawaii, Massachusetts, and Michigan all prohibit the use of credit in determining auto insurance rates.
Other car insurance pricing factors
When determining premiums, car insurance companies frequently include non-driving criteria such as:
- Whether or not you own your home
- degree of education
- Occupation
- Relationship status
- Gender
The use of non-driving criteria in vehicle insurance prices is debatable. Some consumer advocacy organizations have expressed their worry that this technique is inherently biased.
How Much Is a Car Insurance Premium?
According to a Forbes Advisor survey of auto insurance prices among prominent insurance firms, the national average cost for "full coverage car insurance" is $1,569 per year. Your rates will vary according to the type of coverage you select as well as other cost factors. See the state averages below.
| State | Average car insurance premiums for good drivers |
|---|---|
| Alabama | $1,546 |
| Alaska | $1,325 |
| Arizona | $1,731 |
| Arkansas | $1,803 |
| California | $2,466 |
| Colorado | $2,034 |
| Connecticut | $1,463 |
| Delaware | $1,767 |
| Florida | $3,158 |
| Georgia | $1,686 |
| Hawaii | $1,157 |
| Idaho | $1,171 |
| Illinois | $1,693 |
| Indiana | $1,296 |
| Iowa | $1,243 |
| Kansas | $1,940 |
| Kentucky | $2,233 |
| Louisiana | $3,544 |
| Maine | $1,022 |
| Maryland | $1,790 |
| Massachusetts | $1,836 |
| Michigan | $2,470 |
| Minnesota | $1,686 |
| Missouri | $1,834 |
| Mississippi | $1,655 |
| Montana | $1,501 |
| Nebraska | $1,718 |
| Nevada | $2,176 |
| New Hampshire | $1,066 |
| New Jersey | $2,332 |
| New Mexico | $1,692 |
| New York | $1,780 |
| North Carolina | $1,275 |
| North Dakota | $1,372 |
| Ohio | $1,171 |
| Oklahoma | $1,840 |
| Oregon | $1,543 |
| Pennsylvania | $1,790 |
| Rhode Island | $1,934 |
| South Carolina | $2,025 |
| South Dakota | $1,889 |
| Tennessee | $1,323 |
| Texas | $1,574 |
| Utah | $1,514 |
| Vermont | $1,174 |
| Virginia | $1,220 |
| Washington | $1,427 |
| West Virginia | $1,582 |
| Wisconsin | $1,299 |
| Wyoming | $1,452 |
How Can I Lower My Car Insurance Premium?
Here are some steps you can take to reduce your car insurance premium:
- Look around. Often, comparing vehicle insurance quotes from many insurers is the best way to save money. Rates for the same coverage might vary by hundreds of dollars, so shopping around is an easy way to find out whether you're overpaying.
- Request discounts. You may be eligible for auto insurance savings such as good student or safe driver discounts.
- Consider taking a defensive driving course. A state-approved driving course may help you minimize any points on your driving record from traffic penalties, resulting in lower vehicle insurance. Drivers who have taken a driving safety course may be eligible for discounts from some insurance companies. Furthermore, in some states, a discount is required for drivers of a specific age who complete a safety course, such as those over 55.
- Boost your deductible. You can save money on collision and comprehensive insurance by selecting a higher deductible. Just be sure you have the financial means to meet increased out-of-pocket expenses if you need to file a vehicle insurance claim.
What Companies Have the Cheapest Car Insurance Premiums?
According to a Forbes Advisor review of the best inexpensive vehicle insurance companies, USAA auto insurance has the lowest car insurance on average. However, USAA auto insurance is only accessible to active military personnel, veterans, and their families. If you do not qualify for USAA, we discovered that Geico, State Farm, Erie, and Travelers provide competitive rates based on national averages. It's a good idea to check quotes from other insurance companies as well, because the cheapest firms differ depending on your state, driving record, and other considerations.
Car insurance premiums by company
| Company | Average annual car insurance premiums |
|---|---|
| USAA | $1,141 |
| Geico | $1,182 |
| State Farm | $1,402 |
| Erie | $1,419 |
| Travelers | $1,435 |
| Auto-Owners | $1,532 |
| Nationwide | $1,540 |
| Progressive | $1,892 |
| Allstate | $2,022 |
| Farmers | $2,124 |
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What’s the Difference Between a Car Insurance Quote and a Car Insurance Premium?
A car insurance quote is not the same as a car insurance premium. The main distinctions are as follows:
- A car insurance quote is an estimate of the cost of a policy.
- automobile insurance premium: The amount you pay the automobile insurance provider in exchange for coverage.
Your auto insurance rate may be higher than the amount you were quoted online. An insurance provider bases your quote on the information you submit, but the ultimate rate may differ for a variety of reasons, including:
- Your driving history If you forget to mention a speeding ticket, your final premium will be higher than your initial quote. Your insurer will check your driving record when finalizing your premium.
- Your car’s vehicle identification number (VIN) Your quote will be based on the year, make, and model of your car, but your insurer will need your VIN to finalize the premium.
- You added more coverage or changed the deductible. Your premium could be higher than the initial quote if you decide to buy higher policy limits, add optional coverage types, or lower your deductible.
- Your credit. Insurers will usually take a look at your insurance-based credit score, which could significantly impact your premium. The use of credit in auto insurance rates is banned in California, Hawaii, Massachusetts, Michigan, and Washington.
What Is a Car Insurance Premium vs. a Car Insurance Deductible?
The primary distinction between a car insurance premium and a deductible is as follows:
- The amount you pay for car insurance coverage is known as the premium.
- Deductible on auto insurance: If you file a claim, the amount withheld from your insurance check
How Often Do I Need to Pay a Car Insurance Premium?
Depending on your insurance company, you may be able to pay your auto insurance payment in monthly, bi-annually, or annual installments.
Most automobile insurance providers provide a discount for paying in full. According to a Forbes Advisor review, pay-in-full savings can commonly vary from 6% to 14%.
How Do I Pay a Car Insurance Premium?
A car insurance premium can normally be paid with a credit card, debit card, checking account, or savings account. Your insurance company may provide the following payment options:
- Online
- via phone
- via mail
You can normally get a 3% to 6% electronic funds transfer (EFT) discount if you pay your automobile insurance premium in installments and have your payment automatically withdrawn.
What Happens If I Do Not Pay My Car Insurance Premium?
If you do not pay your auto insurance premiums on time, your coverage will be canceled.
Depending on your state, your auto insurance company is usually required to give you notice via letter or email before canceling your coverage. Depending on your state, you normally have 10 to 20 days to make a late payment.
If you cancel your coverage, you have an insurance lapse, which can cost you even more money when you purchase another policy. Furthermore, if you are found driving without auto insurance, you may face severe financial and legal implications.
If you are unable to make a car insurance payment, please notify your insurer as soon as possible. Your insurance company might be ready to prolong the grace period or set up a payment plan. a payment plan.
Related: When can your car insurance be canceled?
What Causes Car Insurance Premiums to Increase?
When your coverage renews, your auto insurance rate may rise. Here are some common explanations for an increase:
- An automobile collision was your fault.
- You were issued a moving traffic citation.
- You filed an auto insurance claim.
- You increased the number of vehicles covered by your coverage.
- You increased the number of drivers in your coverage.
- In your location, there has been a surge in claims (such as car theft or weather-related claims).
- You relocated to a different ZIP code.
- You had a coverage gap.
- Certain deals are no longer available to you.
Not all car accidents raise your insurance rates. For example, if your car is hit while it is parked or if you are rear-ended at a red light, you will not face a rate hike.
Best Car Insurance Companies 2023
With so many vehicle insurance companies to choose from, it can be difficult to know where to begin in order to obtain the proper car insurance. We sifted through insurers to locate the finest auto insurance carriers, so you don't have to.
Methodology
Data from Quadrant Information Services, a provider of insurance data and analytics, was utilized to identify full coverage rates per company.
Rates are based on a 30-year-old female driver with a clean driving record insuring a Toyota RAV4 with $100,000 in bodily injury liability coverage per person, $300,000 per accident, and $100,000 in property damage liability, as well as uninsured motorist coverage and any other state-mandated coverage. The price includes collision and comprehensive coverage with a $500 deductible.