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What to Expect to Pay for Auto Insurance Premium Coverage

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Things to Remember...

  • It’s always a good idea to review your current auto insurance policy if you have one as your circumstances may have changed recently, and as a result, you may require different or more extensive coverage for your vehicle
  • At a minimum, you are required to carry liability insurance, which will cover financial damages that people or property incurred in an accident that you are found to have caused
  • While your credit rating might not seem relevant to your abilities as a driver or the traffic conditions you typically face, your record in terms of paying your bills can also affect your car insurance rates
  • If you’re driving a more expensive vehicle, which will cost more to repair if it is involved in an accident, then the premiums to insure the car will likely be higher

The experience of a driver and the circumstances they face may vary dramatically from each person to person. As a result, determining what someone will pay for their car insurance without having their pertinent information is not an easy.

That said, after considering several factors, a driver can get a sense of what to expect in regards to their auto insurance premiums. Some of these factors include the type and amount of coverage you require, where you reside, the vehicle you drive, and your driving record and credit rating.

Find out more about the affordable car insurance rates that are available by entering your ZIP code into the FREE insurance quote tool above!

While there are several things to consider when you’re shopping for car insurance, the experience can be relatively painless and rewarding, as there are extensive resources online regarding auto insurance rates and the overall industry.

It’s always a good idea to review your current auto insurance policy if you have one, as your circumstances may have changed recently, and as a result, you may require different or more extensive coverage for your vehicle.

Average Insurance Rates

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While each person’s own car insurance rates will depend on the aforementioned factors, by compiling and analyzing figures from across the United States, it’s possible to arrive at a national average for premiums.

According to the Insurance Information Institute in a recent 2012 report by the National Association of Insurance Commissioners, the average expenditure an American driver makes towards their car insurance annually is $785.

This average is based on data that was collected and analyzed in 2009. In 2008, the national annual average for auto insurance premiums was $789.

Accordingly, based off this mathematical calculation, the odds are that your car insurance premiums will be somewhere in the range of $785. Depending on your own personal circumstances, however, your car insurance rates could be much more or less, than what the average American pays.

Amount of Coverage

One of the key contributing factors, in terms of what your car insurance premiums will be is the amount of coverage you’re either required or have decided to purchase for your vehicle.

At a minimum, you are required to carry liability insurance, which will cover financial damages that people or property incurred in an accident that you are found to have caused. The amount of liability insurance you’re required to purchase for your car, however, may vary from state-to-state.

If you’re not sure what the minimum requirements are in your state, typically you can find out what they are by referring to your state government’s website, which will refer you to the correct department.

For example, in Arizona, the Department of Insurance provides information about the state’s minimum requirements and other issues related to car insurance. In Florida, it is the Department of Highway Safety and Vehicles.

Many people elect to purchase additional insurance coverage for their car to further protect themselves and their families from costly damages that can result from automobile accidents.

While liability insurance will cover the costs of another motorist or person that result from an accident you’re legally found to have caused, it will not pay for any damages your vehicle might incur. Although adding collision insurance to your coverage will raise your premiums as a result, many drivers consider it a worthwhile and financially prudent expense.

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Comprehensive and PIP Coverage

Another type of coverage many motorists purchase is comprehensive insurance, which will cover potentially costly damages that your car might incur from an accident that does not involve another motorist.

For example, if your car is damaged by an act of nature, like a flood, fire or hailstorm, which although it might seem unlikely, could completely ruin your vehicle.

Comprehensive insurance will also cover damages to your car that happen as a result of theft, vandalism, or an act that occurs while your car is parked, like falling debris. Once again, taking out a comprehensive policy will add to your insurance premiums, but could save you thousands of dollars in the future.

An additional kind of insurance that some drivers elect to purchase is Personal Injury Protection coverage, which is a type of policy that will help cover the long-term costs and medical bills that might arise from a car accident.

While PIP coverage varies from state-to-state, typically insurance of this nature will help cover medical costs if you have limited health insurance and any lost wages up to a certain point that you might incur because of a car accident.

Some PIP policies also provide financial compensation for funeral costs, physical rehabilitation and childcare expenses. Due to the extensive benefits PIP insurance offers, purchasing such a policy will also raise a driver’s insurance rates.

Where You Live

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Another contributing factor, in terms of determining auto insurance premiums, is the region and state you live in. Before providing you with a quote, insurance providers must evaluate the traffic conditions and environment you typically drive in.

If you reside in a less populated area with fewer cars on the road, the odds are that you’re less likely to be involved in an accident than someone who encounters hundreds of cars while driving daily.

As a result, people who live in higher risk regions, like a densely populated city, may have to pay for higher premiums.

Providers also consider how much and how far you drive. If you’re on the road more often and for longer periods of time than other drivers are, then statistically speaking, you’re more likely to be involved in a car accident.

For example, if you live in the suburbs and have an extensive commute, you will likely pay more than someone who lives downtown, walks to work and only utilizes their car on the weekends.

In addition, certain regions are more prone to less favorable driving conditions because of severe weather and natural disasters, and as a result, providers must prepare for the potential of extensive insurance claims being filed in that state by charging more.

For example, the states of Oklahoma and Louisiana have had some of the highest car insurance rates in recent years, which are both states that are prone to extreme weather.

While environmental conditions are not the only factor that determines insurance rates, they are another element that providers consider.

Certain states also require that drivers purchase coverage that extends beyond liability insurance.

For example, the state of Michigan coverage guarantees personal injury protection insurance payments to victims in car accidents, and as a result, providers must charge higher rates. The tax system in your state can also affect whether your insurance premiums are higher or lower than a driver from another state.

The Insurance Research Council home is an independent, non-profit organization that has extensive resources on the various insurance regulations and environments from state-to-state.

Driving Record and Profile

Of course, another pivotal factor in determining your auto insurance premiums is whether you have a good driving record. If you have a clean driving record and have demonstrated that you are a responsible and safe driver, then insurance providers understand that you’re less likely to cause an accident that they will have to cover damages for.

On the other hand, if you’ve been found responsible for causing an accident or two, then insurance providers will raise your premiums as a means to offset claims that are more likely to be filed.

In addition, if you have any traffic violations on your driving record, like several speeding tickets, an insurance company could see you as a high-risk driver and thus charge you more.

A person’s age and driving experience will also affect the kind of premium they will have to pay for their car insurance.

If you’re a younger driver without much experience behind the wheel, then you likely will have to pay more than someone who has established themselves as a safe and competent driver. In particular, drivers under the age of 25, typically pay higher premiums than other age groups.

Your Credit Rating Does Matter

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While your credit rating might not seem relevant to your abilities as a driver or the traffic conditions you typically face, your record in terms of paying your bills can also affect your car insurance rates.

If a provider can see that you’ve paid your car insurance premiums on time and have a solid track record in terms of making payments for your mortgage, car, and credit cards for example, then the more confident they will be offering you a lower rate.

Some Vehicles Cost More to Insure

What to expect for your car insurance premiums is also dependent on the kind of vehicle you drive, and in this case again, a provider will typically consider several factors.

If you’re driving a more expensive vehicle, which will cost more to repair if it is involved in an accident, then the premiums to insure the car will likely be higher. Older, less expensive cars that are not as valuable and less likely to be stolen, will typically command lower insurance rates.

Most insurance providers will also take into consideration whether a vehicle is equipped with modern safety features, which could help reduce any medical costs that might arise from a car accident.

In addition, vehicles that are more durable and not prone to requiring extensive repairs might also command lower insurance premiums.

Cars that are being leased are typically required to carry extensive coverage, which includes liability, collision and comprehensive insurance, and as a result, require higher premiums.

Click here to search for affordable car insurance rates now by typing your ZIP code into the FREE quote tool below!

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