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The average driver in the U.S. pays $121 per month for auto insurance, according to Insurify’s analysis of recent data. However, car insurance premiums vary among drivers, based on several factors, like your ZIP code, age, and vehicle type.
While some rating factors are out of your control, you still have ways to save money on your car insurance policy. Learn more about what factors affect your car insurance premium and how you can reduce your insurance costs.
Every driver pays a different rate for car insurance based on their unique profile.
Factors like age, credit score, ZIP code, and driving record can affect car insurance costs.
You have many ways to save money on car insurance, including discounts, improving your credit, and raising your deductible.
Insurance companies base car insurance rates on individual drivers’ profiles. Insurance companies consider various factors when calculating your auto insurance premium. Here are some criteria that insurance providers use.
Your location greatly affects your car insurance costs. If you live in an area with severe weather, natural disasters, or a high rate of vehicle theft, you might pay more for your policy. Insurance companies also use your ZIP code as a rating factor. It’s possible that the cost of car insurance in your ZIP code might be higher or lower than the next ZIP code over.
Car insurance companies consider your age when you apply for an auto insurance policy. In most cases, teenagers and young adults pay the highest rates for car insurance, due to their lack of experience behind the wheel. Drivers 16 to 19 years old have the highest accident rate among drivers. As you get older, car insurance rates decrease steadily.
Your gender can also affect the cost of your car insurance. Women are generally less likely to get into accidents, including serious accidents, so they typically pay lower car insurance rates than men. However, this assumes that all other factors, like age, location, and credit score, are equal.
California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania prohibit car insurers from using gender as a rating factor.
Vehicle make and model
If you’ve ever insured multiple vehicles, you probably know that a car’s make and model can have a major effect on the cost of insurance. Used cars tend to be cheaper to insure than new cars or sports cars because they have less value and are less expensive to repair. Also, if your car has advanced safety features, you might be able to qualify for special discounts.
One of the most notable factors that can affect the cost of car insurance is your driving record. In general, people with a clean driving record pay the lowest rates. If you have any auto accidents, speeding tickets, DUIs, or other traffic violations on your record, you’ll probably pay a much higher rate for insurance.
When you purchase auto insurance, you get to choose your own coverage limits. High coverage levels equate to higher premiums. While lowering your coverage levels can help you save money, most states require a minimum amount of coverage. Additionally, a minimum-coverage policy may not cover the full cost of an at-fault crash.
When you file a comprehensive or collision insurance claim, you typically pay a deductible before insurance covers the rest of the costs. Choosing a higher deductible will result in a lower monthly premium. However, having a high deductible means you’ll receive a smaller payout in the event of a claim.
In most states, car insurance companies are allowed to use credit-based insurance scores. The only states that don’t allow credit-based rates in car insurance are California, Hawaii, Maryland, Massachusetts, and Michigan. Drivers with excellent credit typically pay lower premiums than drivers with poor credit because low credit scores are linked with higher insurance claim rates.
The less time you spend on the road, the less likely an accident is. Drivers who use their cars infrequently often pay lower car insurance rates. Some car insurance companies even offer mileage-based insurance policies, also called pay-per-mile insurance, which can help infrequent drivers get cheaper auto insurance.
If you’re wondering why your car insurance is so high, your insurance company might be to blame. Car insurance companies charge different rates for the same types of coverage and weigh rating factors differently. Using a quote-comparison platform allows you to compare rates from multiple insurers in one place, so you can see which company is the cheapest for your situation.
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Take advantage of discounts to lower your car insurance premium
Most car insurance companies offer discounts, which help people save money on their premiums. Every car insurance company offers different discounts with varying savings potential. Here are some of the most common car insurance discounts you can find from many national and regional insurers:
High school and college students who get good grades or maintain a minimum GPA can often qualify for a lower car insurance rate.
Safe driver discount
Many insurers provide a discount to safe drivers. You might be able to get cheaper car insurance if you have no recent claims, no violations on your record, or if you complete an approved defensive driver course.
If you insure multiple vehicles on the same car insurance policy, you can often get a lower premium. An insurance agent can tell you how much you’ll save for insuring more than one car.
Vehicle equipment discount
With a vehicle equipment discount, you can potentially get a lower rate if your vehicle has airbags, anti-lock brakes, an anti-theft device, or other advanced safety features.
If your insurance company offers payment discounts, you can usually get a cheaper premium for paying your annual premium in full, enrolling in automatic payments, or signing up for paperless policy statements.
Taking advantage of car insurance discounts is a great way to save money on your policy. But you can also reduce your insurance costs in several other ways.
Bundle insurance policies
It’s common for insurance companies to offer savings when you bundle your policies. For example, if you purchase a car insurance policy and a home insurance policy from the same insurer, you can often get a lower premium. Some companies offer a discount when you combine any property insurance policy, like renters or condo insurance, with an auto insurance policy.
Increase your deductible
If you want to get a lower car insurance premium, consider raising your deductible. Choosing higher deductibles for policies like collision or comprehensive insurance will lower your monthly premium. Before raising your deductible, however, be aware that it will increase your out-of-pocket costs in a covered claim.
Improve your credit score
Boosting your credit score can often help you save money on your car insurance policy. When you increase your credit score, it indicates to insurance companies that you’re less likely to file claims. Make on-time payments, pay down debt, and lower your credit utilization ratio to increase your credit score.
Paying all your bills on time and in full every month is the single best thing you can do to improve your credit.
Pay your premiums in full
If you can afford to pay your annual car insurance premium up front and in full, it could help you save money on your policy. Some insurance companies offer a discount if you pay up front instead of in monthly installments.
Shop around and compare rates from multiple insurers
Because car insurance companies charge different rates for coverage, it’s a good idea to shop around and compare quotes from several insurers. You can get personalized quotes from individual insurers or use a quote-comparison platform to get matched with multiple quotes using a single application.
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Car insurance cost FAQs
Still have questions about how auto insurance rates are calculated and how to save money? Check out answers to these frequently asked questions for more information.
Car insurance companies increase rates for a few reasons. Your premium might go up if you get into an auto accident, file a claim, increase your coverage limits, or lower your deductible. Changes to your credit score can also lead to higher rates.
In most cases, your insurance rate will increase if you get into an accident, especially if you were responsible. The rate increase will depend on several factors, like the severity of the crash. If your insurance provider offers an accident forgiveness endorsement, you may be able to avoid rate hikes after your first collision.
The main reason why younger drivers pay high rates for car insurance is that they are newly licensed and have a high accident rate. Data shows that drivers between 16 and 19 years old have a higher risk of accidents than any other age group. Because of that risk, insurance companies charge higher rates for young drivers.
Males tend to pay higher car insurance rates than females because generally, males file more insurance claims and get into more accidents. Males are also more likely to drive under the influence than females. However, some females might pay higher rates than males depending on personal factors like their driving record, credit score, and age.
MetLife is one of the cheapest car insurance companies overall, according to Insurify data. MetLife’s average premium for liability insurance is almost 20% less than the national average rate. However, the cheapest insurance company is different for every driver based on your unique situation and coverage needs.
Insurance Institute for Highway Safety. "Males and females." Accessed February 27, 2023
Elizabeth Rivelli is a freelance writer covering insurance and personal finance. She has extensive knowledge of various insurance lines, including property and casualty, health, and life insurance. Her byline has been featured in dozens of publications, including Investopedia, Forbes, Bankrate, NextAdvisor, and Insurance.com.