Car insurance is a necessary expense that will be around as long as you drive your car. However, unlike a mortgage payment or car payment, your auto insurance rate can vary depending upon several factors. Auto insurance companies set premium rates based on several factors such as your driving record, age, gender, credit score, location, and type of vehicle. The company will then determine your premium based on your risk classification.
The average driver in the U.S. pays around $1,600 a year for car insurance, or $133 per month. That rate is based on a middle-aged driver with good credit and a good driving record. Many drivers pay much more or less than the average for auto insurance coverage, depending on the discussed variables. The driver might also pay higher rates for additional coverages or more expensive cars.
Most states require that all drivers purchase minimum liability insurance to operate a vehicle on the road legally. In many states, you can’t get a driver’s license or register a car without proof of liability coverage. However, a minimum liability policy only covers other drivers if you are at fault for an accident. It would not provide financial assistance for you or your car if you caused the accident. This is why a majority of drivers elect to pay higher rates for collision and comprehensive coverage. Also known as full coverage, this protects you and your car no matter who is at fault.
With varying insurance requirements and numerous policy options, many drivers consider auto insurance rates as the number one factor when selecting a plan. To get the best rates and good coverage, you might need to shop around and do some research to locate discounts, incentives, and other rate deductions.
One of the factors that help determine car insurance rates is the type of car that you drive. Insuring a top-of-the-line sports car or sport utility vehicle can be more expensive than getting coverage for a small family sedan. Toyota 4Runner insurance, for example, typically is higher than that for a Kia Forte. The insurance company believes a larger, more expensive SUV will cost more to replace than a smaller compact car.
Newer model cars will also be more expensive to insure because of the cost to replace them, in general. Additionally, car insurers consider the risk of the vehicle. Jeep Wranglers, for example, might be see viewed as riskier considering their off-road capabilities. One way to ensure that you get lowers rates on your car insurance is to consider the type of car you drive and the risks that insurance companies perceive.
Perhaps one of the best ways to save money on your car insurance is maintaining a clean driving record. Many states have a points system that keeps track of each driver’s traffic violations and offenses. Insurance companies see driver’s license points as an indicator that you are a high-risk driver. If your insurance company feels you are a higher risk based on your driving record, you will have to pay larger premiums for coverage. One of the best ways to get low insurance rates is to maintain your status as a safe driver.
Many insurance companies offer discounts for things like a clean driving record, having certain safety features, and multi-car policies. You might even be able to bundle your home and auto policies with the same company to save on both rates. Additionally, some insurers are now offering rate discounts for policyholders willing to install a tracker device in their cars to monitor driving habits. With some research, you can locate discounts to help reduce your insurance rates.
Having the appropriate amount of car insurance will add to the expense of driving. Insurance rates and premiums will be a bill you have to pay as long as you drive. The good news, though, is that rates vary, and by shopping around for discounts and premium deductions, you can find a policy that fits your needs and your budget.