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What is the average auto insurance cost?

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Things to Remember...
  • According to the NAIC, or the National Association of Insurance Commissioners, the average rate that a person should expect to pay for auto insurance is $795 a year.
  • Your past driving record is the biggest factor in determining premium cost because all insurance companies operate off a model of risk.
  • When you are buying your insurance coverage, you have the option to pay it monthly, bi-monthly, every 6 months or even for the entire year in some cases.
  • Auto insurance can be a long and tedious process, but getting the right coverage is essential if you want to protect yourself financially.

Shopping for a new auto insurance policy can be a daunting task to even the most seasoned of drivers. Most people do not understand what goes into a policy’s cost.

While a policy may seem like a great deal, when compared to other policies of similar rates, it may not offer the same amount of coverage. That is why it is best to know what the average auto insurance policy costs before you start to shop.

Use our FREE online tool to start comparing rates!

Standard Average Cost of Insurance

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According to the NAIC, or the National Association of Insurance Commissioners, the average rate that a person should expect to pay for auto insurance is $795 a year.

However, when looking at this number, you need to understand that it can vary greatly by state.

The state that has the highest cost for auto insurance is New York, with policy holders paying an average of $1,047.

While the average may seem low when you do comparison shopping, you need to understand why the average is the way it is.

The national average includes all cars in the United States – including luxury vehicles that exceed $100,000, as well as $2,000 commuter cars.

Why the Difference?

First of all, each state has their own laws on the minimum coverage that a person must carry in order to drive legally. Also, people carry different insurance policies based on what their vehicle is worth to them.

If a vehicle is only worth $2,000, most people will not carry full coverage insurance, but carry only the minimum that is required by law. That includes not carrying coverage if their car is totaled in a crash, or comprehensive and collision insurance.

Your past driving record is the biggest factor in determining premium cost because all insurance companies operate off a model of risk. The higher risk you are, the higher premium that you will pay.

Since all drivers are different, this also is a big factor in the average cost of insurance. If you have received tickets or had an accident recently, try to talk with local law enforcement first to reduce the number of points you have. This will lower your premium greatly if you can succeed.

Finally, costs vary greatly in each state depending on the region that you live in. If you live near a big city that has a high crime rate, dense traffic and a large number of vandalism cases, then you are going to pay a higher premium than others.

If you live in a small farm town with no problems whatsoever, you are going to enjoy lower average insurance rates.

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Starting the Process

Before you even start to look for insurance providers online, you need to determine what type of insurance you need.

Do you want to cover your vehicle if it gets totaled or needs serious work, or do you just want to cover the liability portion if you were involved in an accident?

If you are currently financing or leasing your vehicle, you will likely need to purchase comprehensive and collision insurance to take care of your vehicle since most lenders will require this.

Once you have determined the type of insurance you want, go online and start looking around at all the insurance companies that you can find.

There are a lot of companies available, so it may be efficient to find a site that compares multiple insurers.

This will save you a lot of time in the process because you won’t have to fill out your information at 10 different sites just to get a quote.

Selecting Your Coverage

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After you have found a site to get a quote, you need to select the type of coverage that you would like to have on your policy.

Many companies will try to help you by having many packages already pre-selected for you, which range from minimum coverage to the most comprehensive coverage.

While these packages are a great starting point, in order to be a smart consumer, you need to look into what these packages offer.

These following features can greatly change the average price of car insurance. Here are some things to look for in a policy:

  • Deductibles – If you don’t mind paying later, you can save a lot of money in the short term. The bigger deductible, or the amount you pay when you make a claim, the lower your insurance rates.
  • Maximum Coverage Amount – When you are purchasing liability, comprehensive or collision insurance, you will need to specify how much you want that policy to cover. Liability is required to drive, but the other two are optional.
  • Medical Benefits – This is a solid option for your insurance policy because you get a certain amount of money for medical bills, no matter who was at fault for the accident. It covers a variety of medical and hospital bills and adds very little to your monthly premium.
  • Uninsured/Underinsured Coverage – You may be a great driver, but not everyone on the road is like you. That means you may get in an accident with someone who doesn’t have insurance or they don’t have enough insurance; this coverage protects you against this.
  • Rental Car and Roadside Assistance – If you are going to need extensive work on your vehicle, this may be a good option to have. They give you a rental car when your car is being worked on.

Purchasing Your Policy

Now that you have gone through this rigorous process of researching policies, you will need to purchase your policy. This is not as straightforward as it may seem, as you now need to complete a good amount of paperwork in order to get your policy active.

Again, this is where the average cost of a policy can change.

When you are buying your insurance coverage, you have the option to pay it monthly, bi-monthly, every 6 months or even for the entire year in some cases.

Insurance companies encourage people to pay in full or in as little installments as possible, so they offer discounts again if you choose their favorable methods of payment.

Also, this is where you will enter your vehicle information, security protection for your vehicle and any driver courses that you may have completed recently. This can change the amount of your premium, so make sure to complete this important accurately.

Auto insurance can be a long and tedious process, but getting the right coverage is essential if you want to protect yourself financially. That is why it is important to understand why the average cost of insurance can vary so greatly.

Also, you will need to understand what coverage you may or may not need so that you are not paying for more insurance than you need. Whatever type of policy you decide to go with, be sure that you shop around first before making your final decision.

Use our tool below to compare multiple car insurance rates!

FREE Auto Insurance Comparison

Compare quotes from the top auto insurance companies and save!

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