Auto Insurance: Is $750 Monthly Premium Worth It?

Car insurance rates vary depending on several factors, including age, location, vehicle type, driving history, and credit score. In general, younger drivers tend to pay more for car insurance than older, more experienced drivers. Additionally, drivers with accidents or violations on their record may face higher rates. The type of vehicle being insured can also impact the cost of insurance, with newer and more expensive cars typically costing more to insure. Location can also play a role, with insurance rates tending to be higher in areas with higher population densities and accident rates. When considering the cost of car insurance, it is important to compare rates from multiple providers and review the coverage options and discounts offered. Bundling insurance policies, such as renters and auto insurance, can also help lower the overall cost. While $750 for a six-month policy may seem high, it is not uncommon for drivers in certain age groups or with accidents on their record.

Location, age, and gender can affect insurance rates

Several factors determine the cost of car insurance, and location is one of the most significant. The average cost of car insurance varies between states, and even between cities, for many reasons, including accident and claim frequency, the cost of labour and vehicle parts, vehicle theft frequency, and road conditions.

For example, in the United States, Louisiana and Florida are two of the most expensive states for car insurance, while Hawaii, North Carolina, and Ohio have the cheapest average rates. In Texas, the average annual cost of car insurance is $2,426 for full coverage and $693 for minimum coverage. However, the cost varies depending on where you live within the state. For instance, in Texas, city dwellers often pay more for car insurance than those in rural areas due to higher traffic density and a higher likelihood of accidents. Crime rates and local weather patterns can also influence insurance rates by ZIP code.

Age is another factor that can affect insurance rates. Younger drivers, especially teens, tend to pay more for car insurance because they are considered riskier to insure due to their lack of driving experience. Insurance rates typically decrease as drivers get older and gain more experience, but they may increase again for senior drivers due to factors such as decreased reaction time and poorer eyesight.

Gender also influences insurance rates in most states. Men generally pay higher premiums than women because they are more likely to engage in risky driving behaviours and have a higher rate of accident severity. However, the difference between male and female drivers tends to decrease with age and becomes negligible after 25. It's worth noting that some states, such as California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania, prohibit the use of gender as a factor in determining insurance rates.

Insurance rates can be lowered by bundling policies, reducing mileage, and raising deductibles

The average cost of car insurance varies across the United States. In Texas, the average annual cost stands at $2,426 for full coverage car insurance, while minimum coverage averages at $693. The national average for full coverage is $2,329, and $633 for minimum coverage.

Car insurance rates can be lowered in several ways. Firstly, bundling policies can help reduce costs. Many insurance companies offer discounts for customers who take out multiple policies, such as home and auto insurance.

Another way to lower insurance rates is to reduce mileage. Some companies offer discounts for motorists who drive below the average number of miles per year. This can also apply to those who carpool to work.

Finally, raising deductibles can lower insurance rates. Deductibles are the amount paid before an insurance policy kicks in. By increasing deductibles, you can lower costs. For example, increasing your deductible from $200 to $500 could reduce your coverage costs by 15-30%. Going to a $1,000 deductible can save you 40% or more.

Insurance rates can be higher for newer cars

However, it is important to note that insurance rates for newer cars can be influenced by various factors beyond the vehicle's age. The make and model of the car, as well as its safety features and repair costs, can also impact the insurance rate. Additionally, personal factors such as the driver's age, gender, credit score, driving record, and location can significantly affect insurance rates, regardless of whether the car is new or used.

Accidents and DUIs can cause insurance rates to increase

The impact of accidents and DUIs on insurance rates also depends on the insurance company. Different companies have different policies on rate adjustments, and some may increase rates more drastically than others. For instance, State Farm's rates rise by $243 on average after a DUI, while Progressive's rates only increase by $43.

The state in which the incident occurred also plays a role in determining the increase in insurance rates. Some states have higher average rate increases than others. For example, Michigan has the most expensive rates after a DUI, with full coverage costing nearly double the rate for drivers with a clean record. On the other hand, North Carolina has the largest increase in insurance rates after a DUI, with rates nearly quadrupling.

The driver's age is another factor that influences rate increases. Younger and less experienced drivers often face higher rate increases after accidents or DUIs. For instance, insurance for an 18-year-old with a DUI can be up to 47% more expensive than for an older driver.

Finally, the time since the incident can affect insurance rates. Insurance companies typically consider the last three to five years of a driver's record when setting rates. So, an accident or DUI that occurred longer ago may have less impact on your current insurance rates.

Insurance rates can be lowered by shopping around and comparing quotes

When comparing quotes, make sure you are getting like-for-like by checking that the level of coverage is the same across all quotes. You should also consider the reputation of the insurance company, including their customer service and claims handling processes.

It is also worth researching what discounts each company offers, as you may be eligible for savings such as a good student discount, a no-claims discount, or a discount for paying your premium annually rather than monthly.

Frequently asked questions