How much should you pay for insurance? It's an age-old question. We'll teach you how to estimate your car insurance cost so you don't pay too much.
How much does car insurance cost? How do you estimate your rates, especially with so many different coverage options? It's not exactly straightforward, but we can simplify it for you.
A car insurance policy comes with a lot of moving parts. Coverage options include liability, collision, comprehensive, personal injury protection, and more. And don't forget about deductibles!
The price of car insurance depends heavily on your personal factors. Where do you live? What car do you drive? Do you have a clean driving record?
These factors will determine your policy's exact cost. But you can make an educated guess on your rates based on your preferred coverage levels. We'll walk you through the steps.
Our research shows that minimum coverage costs between $45 to $50 per month on average.
What's minimum coverage? It is the smallest legally required amount of car insurance. It only covers liability. In other words, it covers the damage you cause to other drivers. Liability does not cover damages to you or your car.
How did we establish the price of minimum coverage? We used two sources:
What's our hypothetical driver profile? It's the driver information that we used to get quotes from insurance companies:
Our driver lives in Seattle, Washington, where our office is located. We chose Washington because (aside from the fact that it's where we live and work!) the state has middle-of-the-road rates and liability requirements. That makes it a good sample state.
Washington requires that all drivers carry minimum coverage of 25/50/10. What does that mean?
Exact coverage requirements vary from state to state. To estimate the cost of your insurance policy, find the average cost of liability insurance in your state here. Using our sample driver, we'll explore the price differences between minimum coverage and other levels of car insurance. Using your state's average cost of a liability policy, you can calculate the percentage changes between our different sample plans.
Another way to estimate the cost of car insurance is by comparing car insurance quotes. We can help you quickly find prices for various coverage levels, plans, and insurance companies. That will give you a good idea of how much you should expect to pay for car insurance.
A basic coverage plan costs $53.98 per month on average. That's an 11.5 percent increase from minimum coverage. What's basic coverage? Like minimum coverage, it only has liability protection. But we doubled the liability limits from 25/50/10 to 50/100/25.
Doubling your liability for an extra $5.58 a month is, in our opinion, worth it. If you cause an accident, your minimum liability coverage will quickly runout – especially if someone gets injured.
An enhanced coverage plan costs $80.87 per month on average. What's enhanced coverage?
Here's where things start getting expensive. At $80.87 per month, enhanced coverage costs quite a bit more than basic or minimum coverage:
Personal injury protection pays for your medical bills after an accident. Since medical bills can balloon to enormous amounts, it's a good idea to include it.
Uninsured/underinsured coverage pays your bills if the other driver doesn't have adequate coverage. According to the III, about 13 percent of drivers are uninsured across the country. In Florida, that number jumps to 26.7 percent compared to just 4.5 percent in Maine. While it's always a good idea to have this coverage, whether you really need it depends on where you live.
An advanced coverage plan costs $97.30 per month on average. This policy builds comes with the following coverage:
While advanced coverage doesn't come with new coverage types, it does boost limits across the board. The cost difference between advanced and enhanced coverage isn't staggering. But it is notable:
A full coverage plan costs $143.92 per month on average. It's noticeably more expensive than advanced coverage, but for good reason. Full coverage comes with comprehensive and collision.
Comprehensive coverage pays for damages to your car that don’t involve another car. That includes natural disasters, theft, hitting an animal, vandalism, and more.
Collision coverage pays for damages to your car after a car accident. That includes hitting another car or a stationary object. It also covers your damages if someone hits your car while it's parked.
Our full coverage plan has the same coverage as an advanced plan. The only difference is the inclusion of comprehensive and collision coverage, each with a $1,000 deductible.
Full coverage is quite a bit more expensive than our other plan types:
Your deductible is the amount you must pay out-of-pocket before your car insurance kicks in. Imagine that you have a $1,000 deductible, like our sample full coverage plan. If you're in an accident and your car suffers $5,000 in damages, you would get a $4,000 claim payout, after you've paid $1,000.
That's why some shoppers prefer a lower deductible. It minimizes your own costs when you file a claim. Unsurprisingly, it also costs more. A full coverage policy with a $500 collision and comprehensive deductible rather than $1,000 costs $154.71 a month.
That's a 7.5 percent increase from full coverage plan $1,000 deductible. An extra $10.79 per month comes out to about $130 per year. If you splurge on the smaller deductible, you'll get your money's worth if you need to file a claim within four years. After four years, you'll have spent more on higher rates than you would save with a lower deductible.
Ultimately, the exact cost of your car insurance policy depends on you.
First, where you live is a big factor. If your city has high rates of car accidents, theft, or vandalism, that impacts your rates.
Second, your driving and insurance history is very important. Simply put, if you have recent tickets or accidents (within the last three to five years), you'll pay higher rates. And if you've filed claims in the past couple of years, expect to pay more. Same goes for drivers with lapses in their car insurance coverage.
Third, your credit score is, unfortunately, very relevant. If you have bad credit, you'll pay more for insurance. It's that simple.
Finally, your insurance rates depend heavily on your car's make and model. New or expensive cars usually cost more to insure. Collector's cars come with higher rates. Sports cars increase your chance of an accident, so insurers charge more to cover them. And any commonly-stolen cars usually cost more to insure, also.
Beyond personal factors, the nuts and bolts of your policy are equally relevant. Here's how different coverage choices will change your rates:
Now that you know how to estimate your rates, let's talk about what you can do to lower them:
Improve your credit. Drivers with bad credit pay more for insurance, so you can save money earning a good credit score.
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