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Edited by Jackie Cohen
Last Updated June 15, 2022
Why you can trust Insurify
If you’ve ever had that feeling that you might be paying too much for car insurance, you probably are. Unfortunately, most policyholders don’t check more than one or two insurance companies when shopping for auto insurance.
But shopping for competitive car insurance quotes is easier than ever. With Insurify, you’ll get to compare car insurance quotes from dozens of companies in minutes. Then, you can compare quotes and options to choose the best car insurance for your needs and budget.
- Auto insurance rates hinge on many factors, including the vehicle, driver demographics, and the amount of coverage desired.
- Find out if you’re paying too much for car insurance by comparison-shopping.
- Insurify checks dozens of insurers and applies discounts so you get the lowest auto insurance prices.
Car Insurance 101
How much is too much for car insurance?
Cost for car insurance depends on the car you drive and your coverage needs, but, according to Insurify data, the national average cost of car insurance is about $121 per month.
Insurance is a way to shift the risk of loss (car damaged in an accident, health crisis, house fire) from the individual to an insurer. In exchange for accepting the risk, insurance companies require individuals to pay the premiums. With car insurance, an insurance provider promises to pay when any loss covered on the policy occurs.
Every state must approve car insurance prices proposed by insurance companies. But each company has different requirements regarding how generous they are to riskier drivers.
Insurance companies evaluate how much risk a driver poses and how likely they are to file a claim. For example, people who have a history of speeding tickets or at-fault accidents pay more for car insurance than good drivers. Likewise, inexperienced and young drivers pay more for insurance because they have not yet proved themselves as safe drivers.
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Why does car insurance cost so much?
On average, U.S. drivers pay $121 per month for car insurance, according to Insurify’s proprietary data. However, car insurance prices are different for each person based on vehicle, location, and driving history. Types of coverage and state minimum liability requirements also play a role.
Types of Insurance Coverage
Auto insurance premiums depend on how much coverage you buy. If you are willing to take on more financial risk yourself, you might get a lower rate by buying less coverage. Then again, if you want to lower your out-of-pocket expenses, buying more coverage means the insurance company will cover more of the costs if something were to happen to your car.
Car insurance includes several elements that make up a policy:
- Liability insurance: pays to repair or replace someone else’s property
- Bodily injury insurance: pays medical bills for people in your car or in another involved vehicle
- Comprehensive coverage and collision insurance: pays to repair or replace your vehicle
- Personal Injury Protection (PIP): pays for medical bills, lost income, alternative transportation, and child care expenses caused by an accident
- Uninsured/underinsured driver insurance: pays for your medical bills and car repairs if another driver causes an accident
Some policies include optional extra coverage like:
- Gap insurance
- Rental car reimbursement
- Roadside assistance
- New car replacement
- Rideshare driver insurance
- Classic car insurance
It’s up to you to determine how much car insurance is right for you. However, most states have laws that require all drivers to own a minimum amount of car insurance. Each state has different rules, but most require liability coverage.
For example, your states may require you to have:
- $15,000 to $25,000 bodily injury liability insurance per person involved in the accident
- $30,000 to $50,000 bodily injury insurance per accident
- $25,000 to $50,000 of property damage liability per accident
- Uninsured/underinsured motorist insurance
The amount you need depends on your state of residence. Of course, these are the state minimums. You can buy more liability insurance to better protect your assets. However, if your car is financed or leased, the lender/lessor may require more coverage to protect the vehicle. Check your finance terms to determine how much car insurance your lender requires.
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How Car Insurance Is Priced
Many factors go into determining your car insurance premiums. In addition to how much car insurance coverage you want, rates are also determined by your:
- State of residence: From California to Michigan to Florida, each state has different laws.
- Neighborhood and local crime rate: Higher-crime areas translate to higher insurance rates.
- Vehicle: Prices depend on the make, model, year, mileage, miles driven daily, and safety features like anti-theft devices and antilock brakes.
- Demographics: Age, gender, credit score, homeownership, and marital status all affect rates.
- Driving record: History of accidents, speeding tickets, and DUIs is a factor.
- Claims history: More claims mean higher rates.
How do you get cheap car insurance with all these elements affecting prices? Fortunately, we have some tips on how to find the best rates on auto insurance.
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How to Save Money on Car Insurance
Car insurance prices seem inflexible, but you can get away from higher premiums if you know where to look. You might ask for auto insurance discounts, improve your credit and driving history, raise your deductible, reduce coverage, and shop around for the lowest prices on car insurance.
Ask for Discounts
Discounts are a quick and easy way to lower your premiums almost instantly. Most car insurance policies come with discounts, such as:
- Safe driver
- Bundling with other policies like homeowners insurance
- Defensive driving course
- Professional or employer affiliation
- Good student
- Good credit
- Paperless billing
- Automatic payment
- Customer loyalty
They may not be automatic; it’s always worthwhile to ask for discounts when shopping for car insurance.
Raise the Deductible
One way to immediately reduce your car insurance costs is by raising your deductible. The deductible is the out-of-pocket amount you spend before the insurance company kicks in to pay the claim.
Suppose your policy has a $250 deductible. Thus, you will pay for the first $250 of the repair costs if you make a claim, and the insurance company can cover the rest of the expense.
Raising your deductible to $500 or $1,000 can significantly reduce the cost of your car insurance. However, you would then have to cover the first $500 or $1,000 of a claim. Make sure to have emergency savings set aside to cover a higher deductible.
Lowering your coverage is another way to significantly reduce how much you pay for car insurance. Start by reviewing your policy to check your liability limits. Depending on your state laws and risk tolerance, you may be able to lower them. Ask your insurance agent if you’re unsure about your state’s minimum coverage requirements.
Also, consider whether you still need full coverage. For example, if you drive a paid-off older car, it might be worth it to drop collision coverage and comprehensive coverage. Finally, drop add-ons that you don’t need anymore, such as gap insurance, roadside assistance, and rental car reimbursement. Dropping these extras can add up to big savings year over year.
Improve Your Credit
Since car insurance prices consider your credit history, raising your credit score can pay off in the long term. The best ways to improve credit are to pay down outstanding debts and pay all your bills on time.
It’s no secret that safe drivers tend to pay less for auto insurance. Therefore, another important way to get low car insurance rates is by having a safe driving record.
Your claims history also plays a role in determining your premiums. The more car insurance claims you make, the more your insurance costs. Claims could trigger rate increases even if they’re not your doing, like a rock cracking the windshield or a tree falling on your car during a storm.
A clean driving record can help keep your insurance rates low, too. You might also receive a car insurance discount if you take a driving course. Defensive driving courses only take a couple of hours and typically cost less than $100.
Shop Around for Auto Insurance
Shopping around to compare rates is the most effective way to pay less for car insurance. Requesting quotes from multiple car insurance companies can take hours. But there’s an easier way—use an online car insurance comparison tool.
You’ll typically enter information about your location, driving history, and car details. Then, you’ll see quotes from top companies like State Farm, GEICO, Nationwide, and Allstate. With so many options, you’re sure to find the lowest price available.
Don’t Pay Too Much for Car Insurance
Car insurance is an essential thing to have if you own a car. It protects the vehicle in the event of an accident and is a legal requirement in most places. But you shouldn’t be paying too much for car insurance.
With so many options to lower your auto insurance premiums, it’s easy to find an affordable policy that will work for you and your family. Start by heading to Insurify’s cutting-edge AI quote-comparison tool to get prices on dozens of the nation’s best auto insurance policies.
It acts as a matchmaker for drivers and insurance companies. You’ll get personalized rates based on your vehicle, location, and driver profile. Try Insurify’s car insurance comparison tool now.
Frequently Asked Questions
You can negotiate car insurance prices by asking for discounts and shopping around with other companies. By law, rates are regulated, but you can also modify your coverage amount and deductible to fit your budget.
Insurance prices depend on various factors. The only way to know if you have the cheapest rates is to shop around. Online comparison tools make it easy. You can compare auto insurance quotes side by side to find out if you’re paying too much.
For a car insurance deductible, $500 is pretty standard. You can raise your deductible to $1,000 or more to lower your insurance premiums. Remember that higher deductibles mean you pay more out of pocket when you file a claim. Set aside enough cash so you don’t worry about not being able to afford to fix your car.
According to our data, the average cost of car insurance is about $121 per month. How much you pay depends on several factors, such as your location, driving history, credit score, car type, age, and more. It’s simple to find out if you could be paying less—take 10 minutes to shop for a new policy using an online comparison tool.
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The car insurance quotes displayed are based on an analysis of Insurify’s database of over 40 million quotes from 500 ZIP codes nationwide. To obtain representative rates, Insurify’s data science team performs frequent comprehensive analyses of the factors car insurance providers weigh to calculate rates including driver demographics, driving record, credit score, desired coverage level, and more.
Insurify’s analysis also incorporates the Insurify Composite Score (ICS) assigned to each insurance provider. The ICS is a proprietary rating that weighs multiple factors reflecting the quality, reliability, and health of an insurance company. Ratings used to calculate the ICS include Financial Strength Ratings from A.M. Best, Standard & Poor’s, Moody’s, and Fitch; J.D. Power ratings; Consumer Reports customer satisfaction surveys and customer complaints; mobile app reviews; and user-generated company reviews.
With the above insights and ranking methods, Insurify is able to offer car insurance shoppers insight into how various insurance providers compare to one another in terms of both cost and quality. Note, actual quotes will vary based on unique attributes including the policyholder’s driver history and their garaging address.