How much should car insurance cost a year

One of the biggest factors for customers looking to buy car insurance is the price. Not only do prices vary from company to company, but insurance costs from state to state vary as well.

According to Insurify.com, the average annual cost of car insurance in the United States was $1,633 in 2021 and is projected to be $1,706 in 2022. However, your premium could be higher or lower depending on where you live and other factors. Average rates vary widely from state to state. Insurance rates are based on multiple criteria, including age, driving history, credit score, how many miles you drive per year, vehicle type, and more.

What are the Average Car Insurance Costs?

Relying on average car insurance costs to estimate your car insurance premium may not be the most accurate way to figure out what you’ll pay. But it’s a start. Insurers use multiple factors to determine rates, and you may pay more or less than the average driver for coverage based on your risk profile.

For example, younger drivers are generally more likely to get into an accident, so their premiums are typically higher than average. You’ll also pay more if you have an at-fault accident, multiple speeding tickets, or a DUI on your driving record. On the flip side, if you have 20 years of driving experience under your belt, a clean driving record, and pristine credit, you may qualify for lower than average rates.

Average Car Insurance Cost: Minimum to Full Coverage

Maintaining the minimum amount of insurance your state requires will allow you to drive legally, and it’ll cost less than full coverage. But it may not provide adequate protection if you’re in an accident or your vehicle is damaged by another covered incident.

Curious about how the average price for minimum coverage stacks up against the cost of full coverage? According to Insurify.com, the average cost for maintaining state minimum liability coverage is $164 per month, and the average cost of maintaining full coverage is $323 per month.

But the only way to know exactly how much you’ll pay is to shop around and get quotes from insurers.

Top 5 Most and Least Expensive States for Full Coverage Auto Insurance

One of the factors insurers use to determine rates is location. People who live in areas with higher theft rates, accidents, and natural disasters typically pay more for insurance. And since insurance laws and minimum coverage requirements vary from state to state, states with higher minimum requirements typically have higher average insurance costs. So, someone with the same risk profile as you may pay more or less than you for the same coverage if they live in a different state.

Here are the states with the highest and lowest average car insurance rates, according to Insurify.com.

States with Highest Average Monthly Cost for Car Insurance

• Michigan: $515
• Rhode Island: $371
• New York: $351
• Louisiana: $332
• Delaware: $331

States with Lowest Average Monthly Cost for Car Insurance

• Hawaii: $117
• North Carolina: $138
• Wyoming: $143
• Maine: $145
• Idaho: $148

Which Factors Impact the Price of Your Car Insurance?

Insurers review many factors when determining car insurance rates. Here are some of the most common, and some may surprise you. It is still best to compare insurance prices to see how these factors affect your rates for different companies.

• Credit score. Most — but not all states — allow insurance companies to use credit scores when setting rates. In general, applicants with lower scores are more likely to file a claim, so they typically pay more for insurance than drivers with higher credit scores.
• Driving record. If your driving record includes accidents, speeding tickets, DUIs, or other violations, expect to pay a higher premium.
• Make and model. Some cars cost more to repair or replace than others. Cars with higher price tags usually cost more to insure.
• Age and gender. Drivers under the age of 25 pay higher rates due to their lack of experience and increased accident risk. Men under the age of 25 are typically quoted higher rates than women of the same age. But the gap shrinks as they age, and women may pay slightly more as they get older.
• ZIP code. Some locations have higher theft rates, accidents, and natural disasters than others. Because insurance companies tend to pay more claims in high-risk areas, rates are usually higher.
• Marital status. Tying the knot typically results in lower insurance premiums.

Car Insurance Discounts

Getting adequate coverage may not be cheap, but there are ways to get a discount on your car insurance. Here are five common discounts you may qualify for.

1. Multi-policy. Purchasing multiple policies, such as home and auto, from the same insurer usually results in a price cut.
2. Multi-vehicle. If you have multiple vehicles to insure, getting coverage from the same insurance company can help you save.
3. Good grades. Getting good grades won’t just make your parents happy. It can also get you a discount on your car insurance. Some insurers offer discounts for students who maintain a set minimum GPA.
4. Safe driver. If you have a clean driving record with no accidents, moving violations, or other large claims, you may qualify for a safe driver discount.
5. Homeowner. If you own your home instead of renting it, some insurers will give you a discount on your auto insurance premium, even if your home is insured through another company.

Is Insurance Required in Every State?

Other than New Hampshire and Virginia, every state in the country requires drivers to maintain a minimum amount of liability coverage to drive legally. Depending on where you live, you may also need to maintain other types of coverage, such as uninsured and underinsured motorist or personal injury protection and medical payments.

It may be tempting to stick with the minimum limits your state requires to save on your premium, but you could be putting yourself at risk. State minimums are notoriously low and could leave you without adequate protection if you’re in a serious accident. Most experts recommend maintaining enough coverage to protect your assets.

Related Auto Insurance Stories:

• 10 Easy Ways to Lower Your Car Insurance Costs
• How Much Car Insurance Do I Need?
• 5 Common Types of Car Insurance Coverage

Editor’s Note: This article has been updated for accuracy since it was originally published.

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