What is the average price of auto insurance?

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Things to Remember...
  • There are so many variables that go into calculating car insurance premiums that it’s virtually impossible to come up with an average figure
  • No matter how long you’ve been driving, blemishes in your driving history automatically make you a higher risk driver and result in higher insurance price
  • Highly regulated states like New York and California will have higher insurance rates than less regulated states like Wyoming and Idaho
  • Most insurance companies employ a practice called “stacking”, which allows older incidents to be forgotten
  • If you can’t afford high insurance rates, think about it a less expensive car

What is the average price of auto insurance? I’m not a car insurance agent but I’d be willing to wager large sums of money that this is one of the most frequently asked questions in the industry. Unfortunately, there is no easy answer.

There are so many variables that go into calculating car insurance premiums that it’s virtually impossible to come up with an average figure. We’ll talk about some of those variables, and numbers, in this article.

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Before we get into the variables, there are some ball-park numbers we can look at based on certain factors.

So, in a perfect world where a middle-aged male driver is married with children, has no history of car accidents or violations, drives a car in the median price range, has only a minimum liability coverage, and drives only to and from work, the average annual premium would be somewhere in the neighborhood of $836.

For a female, under the exact same conditions, the rate would be closer to $772. But with all those conditions included, do you see why this is so complicated?

What are the most important variables determining car insurance prices?

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By far, the single most important variable in determining your auto insurance rates is your experience as a driver. This works in a couple of ways.

First of all, consider your age and the total length of time you’ve had a driver’s license. The smaller both of those numbers are, the riskier a driver you are considered to be by auto insurance companies.

Your rates will be proportionally high. Conversely, as you get older and gain more experience, your rates go down.

The second part of this has to do with your history of accidents and violations. A long history of experience behind the wheel becomes useless if your record is littered with issues.

No matter how long you’ve been driving, blemishes in your driving history automatically make you a higher risk driver and result in higher insurance prices.

The combination of age, experience, and an unblemished record is the best formula for low insurance prices.

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How long does an accident or violation affect my insurance price?

Although having an accident or a violation is not good for your insurance rates in the short term, it’s not the end of the world. Most insurance companies employ a practice called “stacking”, which allows older incidents to be forgotten.

To understand this principle, simply picture in your mind a stack of papers.

Every accident or violation is like one piece of paper added to the stack. After enough time passes some of those pieces of paper begin to fall out of the bottom of the stack until they’re eventually all gone.

As long as you maintain a clean record after an accident or violation, it will eventually be taken off your record and your rates will drop.

But if you continue incurring new incidents, you’re simply adding new papers to the stack as fast as the old ones drop off.

If you’re a really bad driver, you might even add to the stack faster than it’s reduced. So the idea is to keep your nose clean after an accident or violation so your record will eventually be completely purged.

Are there any other variables I need to worry about?

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There are other variables in this equation; some have control over, some you don’t.  Among the ones you can control is the make and model of the car you drive. If all you’re purchasing is a minimum liability this won’t matter so much.

But if you’re purchasing collision, fire and theft, or comprehensive coverage, the more costly your car is in the current market, the higher your insurance price will be. If you can’t afford high insurance rates, think about it a less expensive car.

Another factor, and one you probably can’t do anything about the short-term, has to do with the state where you live. Different states have different auto insurance laws, and that’s reflected in the prices.

Highly regulated states like New York and California will have higher insurance rates than less regulated states like Wyoming and Idaho.

Though you probably wouldn’t move to a new state just to get a lower insurance price, this might be something to take into consideration if you’re planning to move anyway.

In summary, we’ve barely scratched the surface in talking about things that affect how much you pay for your auto insurance. Hopefully, you can now see why it’s so difficult to give an average price across the country.

The best way for you to find out what you’ll pay is to simply start shopping around.

You can begin your search for auto insurance rates right now by simply entering your zip below!

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