3 years ago

It is time to drive your machine for the first time, right? But the question is, do you have a car insurance policy? If not, what are you waiting for?

Acquiring an auto insurance policy has been an easy journey ever, especially for new car buyers. This is because the process involves comparing different insurance rates and coverage types to get what will work for each driver. It also needs to work with reputable car insurance companies like USAA, State Farm, and Geico to get the best quotation. However, with the correct information, the entire procedure can be simplified within minutes.

Therefore, the average cost of car insurance is around $1,200 per year or $100 per month. The rate can increase or reduce based on various factors like coverage types, demographics like age, gender, marital status, car features, driving habits, the insurers, and your minimum deductible.

Average cost of car insurance?

Auto insurance is available in various options and requirements depending on the insurers and your financial situation. You may also choose to secure your vehicle for different reasons, including your comfort and future anticipations. However, whatever the reason could be, you will face questions like the average cost of cheapest car insurance?

Various auto insurance companies will give different car insurance quotes. However, according to the National Association of Insurance Commissioners, the national average cost of auto insurance is around $1,200 or $100 per month. Of course, this is a ballpark figure that can vary based on several factors such as location, driving record, different insurers, credit score, and your car model.

Factors affecting car insurance rates

As stated above, the cost of cheap car insurance can be influenced by internal factors such as car size, age, the insurer you choose, and the coverage limits types. It can also be determined by external factors like your location, gender, age, and marital status. Therefore, here are the main factors determining the auto insurance rates:

The coverage types

A good insurance policy should include liability insurance with a limit of up to $100,000 for bodily injury and $50,000 for property damage. It can also have collision coverage and comprehensive insurance with $500 deductibles. Besides, those leasing or financing their cars should take a gap insurance policy. However, depending on your budget and the type of car you drive, you may consider taking your insurance policy in these two main categories:

Full coverage car insurance

A full coverage car insurance policy covers you and your multiple drivers, especially teenagers, your assets, high-performance cars, and when you are leasing or financing your vehicle. It is categorized into two levels; the best full coverage policy with liability limits of 100/300/100 and $500 deductibles for both collision and comprehensive coverage, and an excellent full coverage policy with liability limits of 50/100/50 and $1,000 deductibles for both comprehensive and collision coverage. You can, however, increase the deductibles to reduce your annual premium.

Minimum liability coverage policy

Minimum liability coverage policy rates are set by each state, meaning every driver must have at least the specified minimum level of liability insurance to drive in that state. They are the cheapest auto insurance quotes that do not have comprehensive and collision coverages. However, they have certain limitations, including:

● Insurers view drivers with a minimum coverage policy only as riskier clients hence impose higher rates on them.

● A driver with insufficient liability limits may be underinsured or sued during a fault accident to pay for other driver’s property damage or injuries.

● If your car is damaged by an uninsured driver or by a comprehensive claim incident like theft, weather, and animal-related, you are likely to miss the coverage.

Driver’s age

Some road incidents are closely related to the driver’s age- that is, according to data from Traffic Safety experts. As such, young drivers, especially teenagers between 16- and 19-years, are assumed to cause more accidents; hence face higher rates of about $381 per month than older drivers. However, these risks reduce as the age increases. For instance, drivers above 20 years will pay around $224 as car insurance premiums, while older people above 60 years pay about $150 for their monthly premiums.

Driving activity

When getting your auto insurance policy, the insurers will also look at your driving history and how often you drive. Spending more time behind the wheel increases the chances of causing or being involved in accidents, leading to higher annual premiums. On the other hand, cars that spend the most time in the garage will pay lower rates for the insurance.

Most auto insurance companies will also check your driving history to see if you have any speeding ticket before settling for any rate. For example, last year’s average cost of car insurance increased by $335 for a six-month policy or $670 for an annual policy for drivers with at-fault accidents history. This means you should maintain a clean driving record if you want to enjoy lower rates.

Credit score

Credit history could also be a significant factor that alters the cost of car insurance. According to the Federal Trade Commission (FTC), drivers with poor credit scores are found to file more claims than excellent credit score ratings. This leads to their insurance rates being around $237 per month than those with good credit, which pays about $107 per month.

Average car insurance rates by companies

The cost of auto insurance also varies from company to company. While some insurers may provide lower rates, they may have fewer options than those with higher insurance rates. Besides, these service providers are tailored to fit different groups; hence you should analyze each company and see if it is suitable. Here are the best car insurance companies to consider:


USAA is the most affordable car insurer in the motor industry, with an annual rate of $1225 or $102 monthly. Its success is attributed to its excellent customer service ratings and insurance discounts on both cars and homes, making it ideal for young homeowners getting into the auto industry. However, the company only serves the military and their families.

USAA offers different coverage types, including personal injury protection and medical bills, collision coverage, comprehensive insurance policy, and property damage liability. It also discounts up to 60% to soldiers living in the camps and those deployed overseas.

State farm

State Farm auto insurance company has an annual rate of around $1,457 or $121 monthly. It is the best option for people looking for a local agent or online services and has the highest customer rating with more than 1,800 local agents in most states. The company also has a convenient Pocket Agent application where customers can use smartphones to pay insurance premiums, file claims, and request roadside assistance.

State Farm has different insurance policies such as GAP and rideshare, with numerous insurance discounts, including Drive Safe and Save incentive, Safe Driver, and a 5% discount for new enrollments.

The Verdict

When setting the minimum cost of car insurance, the insurers look at various aspects, such as how safe the vehicle is on the road and how it protects the driver. They also look at the potential damage it can cause to the other car.

With these determinants, the cost of auto insurance can vary from one individual to another, depending on both the direct and indirect influencers. Therefore, before moving on to secure your car, learn simple hacks to reduce the insurance rates, including maintaining a clean driving record, a good credit score, and working with a reputable company. Try CarInsurance.net, a car insurance quote comparison platform that is free and does all the work for you.

Author Bio

Rose Rosie is a writer for the personal finance website, Joy Wallet, which provides readers with useful information, resources, and tools to help maximize their financial fitness.

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