When purchasing a car, make sure to factor into your budget the other costs that come with it, like car insurance. Keep in mind that many factors determine your car insurance cost. Understanding how to calculate car insurance means knowing that your age, driving history, credit score, and location are all considered by insurance companies when setting your premium rates.
The national average annual rate for car insurance is currently $1,311. But if you work with an independent insurance agent in your area, they may be able to find you more affordable coverage and even several discounts to lower your premiums further. Until then, check out our simple car insurance calculator and a breakdown of car insurance overall.
Car Insurance Cost Calculator
How will this quote help me?
Your quote is based on several common factors to give you a clear picture of the cost you can expect, though an independent agent can shop around and maybe even improve your rate!
NOTE: This auto insurance calculator quote is not final, though we did work with professional actuaries to help get you a ballpark figure to get started.
Factors that May Affect Your Car Insurance Estimate
While car insurance rates vary by state, your location isn't the only factor that determines your premium costs. Other factors that influence your auto insurance estimate are:
- Liability-only vs. full coverage: How much coverage you select will influence your overall premium costs. Opting for a liability-only policy will cost considerably less than a policy that offers "full coverage," meaning protection for not just liability, but also damage from collisions, medical treatment for your personal injuries, etc.
- Personal characteristics: Your personal details (e.g., age, gender, marital status) are all factored into your car insurance costs. Drivers under the age of 25 have much higher car insurance rates than those who are a bit older.
- Your car insurance history: If you've had car insurance with the same carrier for a few years, you may start to be rewarded with a loyalty discount. These discounts can save you a percentage on your annual premiums, but this amount varies by insurance company.
- Your driving record: If you've got accidents or other traffic violations on file, you're going to pay quite a bit more for your coverage. Insurance companies review your driving records when determining your car insurance rates, and offer cheaper premiums and even coverage discounts to historically safe drivers.
- Location: The state you live in affects your car insurance rates, similar to how it does with any other type of coverage. Resident drivers in Michigan pay an average of $2,476 for coverage annually, the highest rates in the nation, while resident drivers in Idaho pay only $877 per year.
- Credit score: Insurance companies have found a correlation between credit management and driving behavior, and link safer driving to better credit scores. If you have good or excellent credit, you'll be offered cheaper car insurance premiums.
- Deductible: Similar to other types of insurance, your deductible amount influences your premium costs. Higher deductibles translate to you paying more out of pocket per claim before receiving reimbursement, but also tend to come with lower premium rates, and vice-versa.
- Car make and model: The type of vehicle you drive, as well as how valuable it is, will also impact your car insurance costs, because the more expensive your car would be to repair or replace, the higher the cost of your coverage will be. Newer cars tend to be more expensive to insure than older vehicles because they carry a higher value.
- State-required coverages: Depending on your state, you'll have various types of car insurance required by law, and the more coverage you need, the more you'll pay for it. While some states only require you to purchase liability coverage before hitting the road, others require uninsured motorist coverage, personal injury protection, etc.
To get several quotes for car insurance in your town, work together with a local independent insurance agent. They can provide you with an accurate car insurance estimate for your area. But our calculator for car insurance is also a great place to start.
Calculating How Much Car Insurance You May Need
Every state comes with its own legal minimum requirements for car insurance coverage, but drivers can choose to purchase additional coverages to better protect themselves. Say that your state only requires you to purchase bodily injury liability and property damage liability car insurance, which can reimburse you for legal costs if you cause an incident that results in a third party getting injured or having their property getting damaged by your vehicle. You may decide that you'd feel safer if you also had coverage for the treatment of your own injuries if necessary, and want to add personal injury protection to your car insurance. You might also want to receive reimbursement for physical damage to your own vehicle after an accident, and opt to purchase collision coverage.
Your car insurance calculation will depend on how many of the following types of coverage you choose:
- Collision coverage: This covers the cost to repair or replace your vehicle if it gets damaged or totaled in a collision, regardless of fault.
- Liability coverage: Including bodily injury liability and property damage liability, this coverage protects you against lawsuits if you end up causing injury or property damage to a third party with your vehicle.
- Comprehensive coverage: This covers the cost to repair or replace your vehicle if it gets damaged or totaled by a non-collision event such as a hailstorm or theft.
- Uninsured motorist bodily injury coverage: This covers medical bills, lost wages, and pain and suffering for you and your passengers if you get into an accident with an uninsured or underinsured driver who was at fault.
- Personal injury protection: This coverage reimburses for injuries to yourself and your passengers if you're at fault for an accident.
For more information on how to calculate car insurance, ask your independent insurance agent for details on how your personal policy's rates are determined.
Ways to Help You Lower Your Car Insurance Costs
If you're unhappy with your current car insurance rates, fortunately there are several methods available to help you lower them. Your quotes and overall premium costs can drop significantly if you apply even one or two of these methods. Consider the following ways for how to calculate car insurance savings:
Comparing quotes from multiple companies
An independent insurance agent can help you compare quotes from multiple car insurance companies so you can find the best available rate. If you're currently paying too much for coverage at your current carrier, they can help you switch after comparing several different quotes from others.
Ask about discounts
Your independent insurance agent will automatically find any discounts you may qualify for on your coverage, but you can also feel free to ask your insurance company directly. Many different discounts exist, including bundling discounts, safe driver discounts, good student discounts, etc.
Improve your driving record
The better your driving record, with as few accidents and traffic violations as possible, the better your car insurance rates can be. If your driving history is less than perfect, now might be the time to clean it up, both for your personal safety and to save some serious money on your car insurance.
Improve your credit score
As with your driving record, the better your credit score, the better your car insurance rates can be. Making wise financial decisions can reward you with lower car insurance premiums, so work on improving your credit score starting today.
If you buy more than one type of coverage through the same carrier, such as home insurance and auto insurance, you can often save quite a bit on your premiums, sometimes up to 25%. Ask your carrier about bundling discounts if you need more than one type of coverage.
Consider telematics programs
Many modern car insurance companies have started offering telematics programs to track your driving patterns if you consent. Discounts are awarded according to your driving behavior, so the safer and more consistent you are on the road, the lower your premiums may be.
FAQ about Calculating Car Insurance
Personal information such as your Social Security number, date of birth, age, location, marital status, and vehicle details are all required before you can get an accurate car insurance cost estimate. The names of other drivers you want listed on your policy, such as immediate family, will also need to be provided. Some personal information about these additional drivers must be provided as well.
Other information you'll need when getting a car insurance cost estimate includes:
- Your driving record
- Your credit score
- Your insurance claim history
Instead of worrying about all the information required before pursuing a car insurance quote, you can work with an independent insurance agent, who knows exactly what's needed. They'll make sure to ask all the necessary questions so they can find you the best available rates and discounts in your area. To get an insurance estimate for a car, you can also start by using our calculator on this page.
We've found that the current national average rate for car insurance is $1,311 per year. However, these costs vary depending on several factors.
Costs may be higher for:
- Drivers with bad credit
- Drivers with prior traffic violations or accidents
- Drivers with prior claims
- Drivers who live in states with above-average car insurance rates
- Drivers who are under the age of 25
However, car insurance costs can be cheaper for:
- Drivers with good to excellent credit
- Drivers with no prior accidents or traffic violations
- Drivers with no car insurance claims history
- Drivers who live in states with below-average car insurance rates
- Drivers who are age 26 or older, but not senior citizens
For exact car insurance quotes in your area, work together with an independent insurance agent. You can also use our auto insurance estimate calculator on this page to get started.
When studying car insurance quotes over several years, it's been shown that February and August are historically the cheapest months to insure your car. In recent years, buying car insurance coverage in February saved drivers an average of 10% compared to what they'd have paid in November. Your independent insurance agent can further advise you on the best time of year to buy car insurance.
Many different factors are used to calculate car insurance rates, including:
Your location: The state you live in has a huge impact on the cost of car insurance due to minimum coverage requirements, etc.
Your age: New, younger drivers pay quite a bit more for car insurance due to their risk level, as do senior drivers, when compared to middle-aged drivers.
Your driving record: Cleaner driving records, with no history of accidents or traffic violations, result in lower car insurance rates.
Your vehicle's type and value: The make and model of the vehicle, as well as its current replacement value, impacts your coverage rates, as older, cheaper cars are less expensive to repair, replace, and insure.
Your claims history: The number of claims you've filed on your car insurance within the past few years impacts your premiums, and car insurance costs tend to skyrocket after filing even one claim.
It might seem difficult to determine how much your car insurance will cost just thinking about how these factors apply to you. However, you can still get an idea of the average car insurance rates you can expect to pay.
Car insurance estimates can be accurate depending on how you get them. If you're just calling up one specific insurance company, you're not hearing all of your options. Similarly, online quote tools aren't really equipped to show you all your numerous options, either.
The best way to get accurate car insurance estimates is by working together with a local independent insurance agent. They can browse multiple car insurance companies for you and gather multiple quotes and estimates for the exact type of policy you need. Independent insurance agents aren't bound to any specific carrier, so they're free to get you several different, accurate estimates.
Why Choose an Independent Insurance Agent?
It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print so you know exactly what you’re getting.
Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best car insurance coverage, accessibility, and competitive pricing while working for you.
TrustedChoice.com Article | Reviewed by Lloyd Foster
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