There are Many Factors that Can Impact What You Pay for Car Insurance
According to data reported by The Simple Dollar, Nerdwallet, and The Zebra, the average cost of car insurance in the United States is about $1,577 per year, which works out to roughly $131 per month.
However, what you pay for automobile coverage can vary widely depending on several crucial factors. First, we’ll begin by discussing average costs, and then we’ll dive into many of these critical elements.
Average Monthly Auto Insurance Costs by State
Perhaps the most significant factor determining your auto rates—and one that you can’t change—is the state in which you live.
For example, The Zebra tells us that the average Maine resident pays $467 biannually, or $77 per month, which is the lowest in the nation. At the other end of the spectrum, Michigan drivers pay more than any other state (a whopping three times Maine residents), at $258 monthly.
Here are some additional numbers related to many of the states where IHS Insurance Group is licensed:
|State||6-Month Cost||Monthly Cost|
|New Mexico (NM)||$666||$111|
Related: Why is Texas Auto Insurance So Expensive?
Outside of where you live, what other factors can increase or decrease what you pay per month for auto coverage?
Additional Variables That Can Affect Your Monthly Auto Insurance Costs
Most automobile insurance companies use something called ‘multivariate rating’ when determining your rates, which is just a fancy way of saying that the price is unique to your specific combination of variables. As such, what you pay for auto coverage will almost certainly be very different than your neighbor.
In addition to the company, coverage limits, and deductibles you select, some of these rate-impacting factors include:
- Other drivers who live with you, including their age, years of driving experience, and primary vehicle
- Accidents and violations within the past five years
- Your driving habits, such as whether you primarily drive for work or pleasure, as well as annual mileage
- The number of vehicles in your household, including their cost new and performance ratings
- The neighborhood in which you live, including related crime rates (vehicle thefts, break-ins, etc.)
Regarding this last point, The Zebra reports that all things being equal, trucks average the lowest 6-month rates at $865, whereas ‘green’ vehicles cost the most to insure, on average, at $1,055 every six months.
Last, but certainly not least, your credit score can have a significant impact on what you pay for auto insurance. Let’s quickly address this aspect in the next section.
The Importance of Insurance Score When Determining Auto Insurance Rates
As we outline in How Can You Learn More About Your Insurance Score, your insurance score is closely related to your credit score, which ranges between 250 and 997, depending on the reporting company (Fair Isaac Corporation (FICO), TransUnion, or LexisNexis).
And like with your credit score, your specific rating will fall within categories:
- Very Poor (250-579)
- Fair (580-699)
- Good (670-739)
- Very Good (740-799)
- Exceptional (800-900)
On a broad scale, these numbers statistically relate to your likelihood of being involved in an auto insurance claim. Therefore, the lower your insurance score, the more you’ll pay for auto coverage, and vice-versa.
Related: How Can You Learn More About Your Insurance Score?
To emphasize this point, Nerdwallet reports that, on average, a person with a poor insurance score will pay $472 more per year for minimum auto coverage than an individual with a good score. When raising to full coverage, the annual difference increases to $1,079.
The good news is that your insurance score isn’t static and can be improved by avoiding filing claims, paying your bills on time, and keeping your outstanding balances low like your credit score.
How Can You Learn More About Monthly Auto Insurance Costs?
As you can see, there are dozens of factors to consider when purchasing car insurance that fits within your monthly budget, including coverage amounts, cars, driving habits, and drivers and their activity.
Related: How to Choose the Right Auto Coverage & Still Save Money
The good news is that you don’t have to go through this often-confusing process by yourself. The professional staff at IHS Insurance Group is here to help you determine how much auto coverage you need, and then shop our suite of top-rated auto carriers for the best rates in town. After all, we understand that just a few dollars per month can make a big difference, so we’re here to help you obtain the most value for your hard-earned money.
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