The cost of auto insurance depends on many factors that are unique to every driver. Getting car insurance quotes from insurance providers is the only way to find out exactly what you will pay for car insurance. And since companies will price you differently, you should compare quotes to find the best rate.
We have several resources, linked below, that can give you a general price of car insurance and an understanding of how the price is determined.
Car insurance rates hinge on risk -- the risk that you will be involved in an incident that the insurance provider will have to pay for. These incidents include car collisions, thefts, vandalism and inclement weather, which result in property damage and personal injuries. The riskier your car insurance company thinks you are to insure, the more you'll pay for insurance. All the factors mentioned below help insurance companies assess the risk you pose to them.
Where you live
Car insurance companies consider your ZIP code and how many claims have occurred there. If you live somewhere with a lot of traffic, there is a higher risk of accidents. If you live in a neighborhood where crime is prevalent, there is a higher risk of theft and vandalism to your vehicle. Congested urban areas typically have much higher car insurance rates than open rural areas.
- Average Car Insurance Rates by ZIP code: See the average price of car insurance in your ZIP code, and compare to nearby neighborhoods.
Age, marital status and driving experience
Teens are involved in accidents more than their elders, and they therefore pay much higher rates. All other factors being equal, new drivers pay less with each passing year until they turn 25, the age at which drivers are typically as safe as all other adults. For teens, gender plays a role because young males have been found to be more dangerous drivers than young females. Married people pay lower rates because they’re shown to be safer drivers. If you happen to start driving later in life than most people, you’ll initially pay more for car insurance since you’re an inexperienced driver.
- Average Car Insurance Rates by Age: See how much insurance rates drop as you get older.
The more expensive your vehicle, the more it would cost an insurance company to replace if it’s in an accident, and the higher rate you’ll pay. Some cars are more expensive to insure based on statistics showing that their drivers are more prone to accidents, although contrary to a popular myth, the color of your car doesn’t matter. Insuring multiple cars obviously raises your rates, but will get you a discount on your overall premium if you put both vehicles on the same policy.
- Liability insurance: The only coverage that is required by law*, liability covers medical bills (up to your limits) for others you injure in an accident that is your fault, and it covers others’ vehicles or property you damage.
- Collision coverage: If you’re in an accident, collision coverage will pay for damage to your car due to a collision or upset of your vehicle, regardless of fault.
- Comprehensive coverage: Sometimes called "other than collision," comprehensive coverage pays for damages to your car from incidents such as theft, vandalism, weather, fire and animals.
- Uninsured motorist: If you’re hit and injured by an uninsured driver, uninsured motorist bodily injury coverage will pay for your medical bills, up to your limits.
- Personal injury protection (PIP): PIP covers medical bills for you and your passengers in the event of an accident. It also covers disability, loss of income, funeral expenses and survivor’s loss when the accident results in injury or death. Twelve states require PIP by law, and other PIP laws vary greatly by state.
- Gap insurance: An option if you finance or lease your car and owe more than the car is worth, gap insurance will pay you the difference between its actual cash value (what is paid out if your car is totaled in an accident) and how much you owe on the car.
*Liability is not required by law in New Hampshire. Personal injury protection is required by law in twelve states.
A vehicle with airbags, anti-lock brakes, an anti-theft device and other features can be slightly cheaper to insure than a comparable vehicle without them. These features make accidents or theft less likely or less severe, making you a lower risk to the insurance company.
The more miles you drive, the higher your rates will be, because you have a better chance of being in an accident.
If you’ve been in an accident before, insurance companies figure you’re more likely to be in one again, so your rates will be higher. If you’ve been at fault in accidents, they’ll be even higher. Traffic violations, especially DUIs, reckless driving and severe speeding tickets, will raise your rates. Even if your violation didn’t cause an accident, insurers treat it as an indication that you’re more likely to be in an accident in the future.
Insurance companies have found that drivers with low credit are more likely to file claims following accidents, so they usually give slightly lower rates to drivers with good credit. State laws in California, Massachusetts and Hawaii prohibit pricing based on credit score, but your credit is fair game in all other states.
There are various car insurance discounts offered besides what’s mentioned above; your occupation, switching companies and bundling auto insurance with home insurance are a few other ways you can lower your rates.
As controversial as it is, your education level can affect your insurance rates (in most states). A driver with a high school diploma will likely pay a bit more for insurance than a college graduate.
If you are a licensed driver but you don’t own a car, it's wise to have non-owner car insurance. It is secondary coverage when you drive other people’s cars and will allow you to keep continuous car insurance coverage in place if in between cars (having a gap in coverage can lead to higher rates in the future). Non-owner policies are typically much cheaper than normal policies.