How Much Does Auto Insurance Cost

12 Factors That Determine Your Auto Insurance Cost

While buying a car is straightforward, the auto insurance cost is anything but. 

Most states attempt to simplify auto insurance and protect the masses (including you) by requiring that all drivers purchase state minimum liability coverage (to protect themselves, their passengers and things they might hit). They also required you to have medical payments or personal injury protection (PIP) to protect other motorists, pedestrians, and object.

But when it comes to crafting your premium or auto insurance cost, the conversation becomes very personal very quickly, according to Michael Barry, spokesman for the Insurance Information Institute.

“The insurer wants to price the policy to reflect the risk it’s assuming on your behalf. The rating starts with who you are: your gender, your age and where you and your car live,” he explains.

What Determines Your Auto Insurance Cost

Initially, your auto insurance cost will vary based on 12 factors, including:

1. Your gender.

In all but six states, insurers can charge male drivers slightly more than female drivers. This is due to crash statistics that show men are more likely to be involved in an accident. The states that prohibit gender rating are Hawaii, Massachusetts, Michigan, Montana, North Carolina and Pennsylvania.

2. Your age.

Teenage boys and the elderly pay slightly more in most states due to their accident risk. However, young males are often offered a preferred rate after age 25.

3. Your neighborhood.

Insurers tend to nudge up your rate if your area has higher-than-average auto theft, insurance fraud, deer strikes, severe weather events or uninsured drivers.

4. Your car.

The year, make, model and safety features of your vehicle all impact your premium.

5. Your marital status. 

According to a study by the National Institutes of Health, single drivers are twice as likely to be involved in a car wreck than married drivers. Because of this, insurers will offer discounts of 5 to 15 percent to married clients, except in Massachusetts, which prohibits rating on marital status.

6. Your driving record. 

Suffice to say, auto insurers prefer safe, accident-free drivers. So, your auto insurance cost will be less if you have a clean driving record.

Learn more about how the C.L.U.E report affects car insurance quotes.

7. Your grades.

Teen drivers and students with higher grades and education levels may reap auto insurance discounts.

8. Your credit. 

Most insurers believe that the more responsibly you handle your finances, the greater the odds that you’ll be equally careful with your car. 

9. Your other insureds.

The more drivers on your policy, the greater the chance you’ll receive a discount. That said, more drivers can also translate to more miles driven, upping the risk to your ride.

10. Your health insurance. 

The more primary health insurance you have, the less medical coverage you may need.

11. Your home ownership.

Insurers prefer owners over renters. In addition, you may save money by “bundling” your home and auto policies with the same insurer.

12. Your prior auto limits.

If your previous auto policy included “100/300” liability limits preferred by carriers ($100,000 per person, $300,000 per accident), then you’ll likely be offered lower rates by your new insurer.

Not surprisingly, where you live figures prominently in what you pay for car insurance. Why? The math is simple: more cars + more congestion = more traffic accidents.

So what does it cost? The national average rate for U.S. auto insurance was $935.80 as of 2016, according to the National Association of Insurance Commissioners (NAIC).

The 2018 report by the NAIC found that states in the densely populated Northeast comprised seven of the 10 most expensive states for car insurance, based on 2016 sales, averaging between $1,086 (Connecticut) and $1,309 (New Jersey) in annual car insurance expenditures. Conversely, the less densely populated states in the South and Midwest proved the least expensive for auto insurance. They average between $600 (Idaho) and $700 (North Carolina) in annual car insurance expenses.

What’s the key to keeping your auto rates low? In addition to safe driving, Barry suggests reporting positive changes, such as marriage, homeownership, and retirement, to your insurer.

“Have them come back to you with a new quote,” he says. “If your mileage is lower and you can prove it, that’s another way to drive down your rate.”