Jeffrey Wade
Auto insurance rates have been on a steady rise, with the average annual premium of a full-coverage auto policy now over $2,000. The amount of car insurance necessary depends on several factors, including where you live, what type of vehicle you drive, and how often you use it. The most commonly required liability limits are $25,000 (bodily injury per person) / $50,000 (total bodily injury per accident) / $25,000 (property damage per accident). However, these rates vary from state to state, with Louisiana, New York, Florida, Nevada, and Colorado being the most expensive states for full-coverage car insurance.
| Characteristics | Values |
|---|---|
| Average cost of car insurance in the U.S. | $72 per month for minimum coverage and $223 per month for full coverage |
| Average cost of car insurance by state | Louisiana, New York and Michigan are the most expensive states, while Maine, Vermont and Hawaii are the cheapest. |
| Average cost of car insurance by provider | USAA, Erie Insurance and Geico offer the lowest full-coverage insurance rates. |
| Average cost of car insurance by age | Younger and older drivers pay the most, while drivers between 25 and 55 years old pay the least. |
| Average cost of car insurance for high-risk drivers | Drivers with a speeding ticket, DUI/DWI, accident or bad credit pay between $299 to $446 on average per month for full coverage. |
| Average cost of car insurance by vehicle type | Electric vehicles are the most expensive to insure, while standard sedans are the cheapest. |
| Average cost of car insurance by model | Kia and Tesla electric vehicles are the most expensive to insure. |
What You'll Learn
Liability insurance
While liability insurance is essential, it is also important to ensure you have sufficient coverage. The minimum requirements may not be adequate, especially if you are found liable for an accident that results in significant property damage or injuries. In such cases, you could be sued for any amount exceeding your coverage limits. Therefore, it is recommended to purchase liability insurance that fits your budget and net worth and is above your state's minimum requirements.
When determining how much liability insurance you need, consider factors such as the value of your personal assets, your ability to cover financial responsibilities after a collision, and your state's minimum requirements. Additionally, consider the potential costs of an at-fault accident and whether your current assets and future income could be at risk.
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Collision insurance
The cost of collision insurance depends on various factors, such as the value of your vehicle, your ability to pay out of pocket, and whether your vehicle is in storage. It is important to note that collision insurance will not cover damage to personal belongings inside your car or normal wear and tear. Additionally, if your car is totaled, collision insurance will only pay the actual cash value of your vehicle, minus your deductible.
To determine if collision insurance is worth it for your specific situation, you can use a collision insurance calculator, which can help you decide if the cost of the coverage and the collision deductible are higher than the current market value of your car. It is recommended to revisit this calculation as your car ages and whenever you get car insurance quotes.
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Comprehensive insurance
Comprehensive coverage does not have a limit. The most it will pay out is based on the actual cash value of your vehicle. You will be responsible for paying your selected deductible.
The average cost of car insurance in the U.S. is $2,278 per year for full coverage. However, this can vary depending on factors such as age, gender, driving record, credit score, and vehicle type.
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Personal injury protection
In addition to medical care, PIP often covers lost income, childcare, and funeral expenses related to the accident. It is important to note that PIP does not cover property damage.
When deciding on the amount of PIP coverage, consider your health insurance, health insurance deductible, and whether you have life insurance. If your job requires physical labour, you may also want to factor in lost wages.
PIP is mandatory in the following states: Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Utah, and Puerto Rico.
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Medical payments coverage
MedPay limits typically range from $1,000 to $10,000, depending on the state and insurer. If you have health insurance, MedPay can help cover your out-of-pocket costs. If you don't have health insurance, MedPay can help cover your medical bills and give you peace of mind. It is generally recommended to carry coverage equal to your health insurance deductible so that you can use MedPay to cover any out-of-pocket medical expenses.
It is important to note that MedPay does not cover all medical costs. For example, it does not cover childcare expenses while you recover, wage reimbursement if you're unable to work due to your injuries, or medical costs for injuries to other drivers involved in the accident. Additionally, MedPay is not the same as health insurance; it only provides coverage in the event of an automobile accident. If you have both MedPay and health insurance, your MedPay will pay for covered expenses related to the accident first, and then your health insurance will cover any remaining costs.
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Frequently asked questions
The amount of auto insurance that is too much depends on several factors, including where you live, what type of vehicle you drive, and how often you use it. If you live in a state that requires liability insurance, then that should be your minimum coverage requirement. The most commonly required liability limits are $25,000 in bodily injury per person, $50,000 in total bodily injury per accident, and $25,000 for property damage per accident. In some states, additional insurance such as medical payments or uninsured motorist coverage may also be required. Beyond these requirements, additional coverages like collision and comprehensive are optional but may be necessary depending on your circumstances.
To know if you're overpaying for auto insurance, you can review your current coverage, look at policy amounts, premiums, and covered risks to decide if your coverage is adequate or if you have more than you need. For example, if the value of your vehicle has decreased since you purchased coverage, it may no longer make sense to pay for higher levels of collision or comprehensive coverage. You should also consider any changes in your lifestyle or personal circumstances, such as getting married or having children, and whether you qualify for any discounts offered by insurers, such as safe driver or student discounts.
Several factors affect your auto insurance rates, including your age, gender, driving record, credit score, vehicle type, location, and marital status. Insurance companies weigh these factors differently, so it's important to shop around and compare quotes from multiple insurers to find the best rate for your needs.
To lower your auto insurance costs, you can consider the following strategies:
- Shop around and compare rates from multiple insurers.
- Bundle your home and auto insurance policies to get a discount.
- Pay your premium in full annually or biannually to save on processing costs.
- Take a defensive driving or driver's education course to qualify for a discount.
- Choose a higher deductible to lower your monthly premium.
- Look for discounts offered by insurers, such as good driver, paperless billing, or multi-vehicle discounts.
