According to the most recent data available in a report from the National Association of Insurance Commissioners, the average yearly cost of vehicle insurance in the United States was $1,057 in 2018.
However, knowing that statistic will not necessarily assist you in determining the cost of your personal plan. Rates vary greatly and are determined by a variety of factors.
To gain a better understanding of what you should pay for auto insurance, it’s a good idea to understand yourself on how businesses set their rates. Continue reading to learn about the most common determinants and how you might gain some more savings.
Calculating Average Annual Car Insurance Cost
Numerous factors contribute to the calculation of your car insurance rate. Some of these factors are easily modifiable, while others require effort and are beyond your control. The following are some key factors that affect the average cost of car insurance in the United States of America.
Location: If you drive about Manhattan on a regular basis, you are much more likely to be involved in an accident than if you often stick to backcountry roads in rural Kentucky. Regional premium pricing are reflected by more than only traffic premium; they are also influenced by local rates of vandalism, theft, and natural disasters.
Gender: Men are often regarded to be more reckless drivers than women. Women have fewer DUI incidents and crashes than men, according to statistics. When women are involved in an accident, the likelihood of it becoming a serious accident is statistically lower.
Age: Due to their age, those under the age of 25 are considered unsafe drivers. Teenagers and newly licensed drivers are particularly new. If you are under the age of 25, you can anticipate paying a higher premium.
Marital status: Marriage requires two individuals to think—and it communicates to insurers that you are less risky than you were when you were single. The statistics support this, with married persons being less likely to be involved in accidents. As a result, married couples save money on their insurance rates.
Occupation: If you are using your car as an actual taxi or driving for a rideshare service, you will have to pay more for insurance, and you might need to pay for a different type of insurance altogether. Talk to your company and your insurance agent about how your job can affect your rate.
Driving habits: The length of your commute, how often you use your car, why you use your car, and where you park all impact your premiums. If you have a long commute, you are exposed to the risks of the road for longer. If you drive more often, you’re exposed to the risks of the road more frequently. Carpooling, telecommuting, and taking public transportation could all save you money in premiums.
Driving history: This one should be pretty self-explanatory. If you have a history of receiving fines, you are a higher-risk driver to insure, and your premiums will pay this. When you have a less-than-perfect driving history, installing tracking software on your vehicle may help you save money on your insurance premiums.
Type of vehicle: What about that ultra-sleek sports car you’ve always desired? It won’t simply cost you the sticker price: driving a pricey car gives you a higher risk for insurance companies. That is because driving a fancy car makes you an easy target for thieves. Additionally, insurance premiums take into account the car’s general safety and the average cost of repairs. If you want to save money on insurance, consider purchasing a minivan, a sensible sedan, or an SUV. Additionally, you should consider purchasing a secondhand car and adding anti-theft systems.
Credit score: Your terms for pretty much any financial transaction will be greatly improved if you improve your credit score. A higher credit score means you’re less of a financial risk, and it also signals that you’re generally more responsible.
While there’s no instantaneous cure for a poor score, there are a lot of steps you can take to improve your credit score. Potential steps include building up a history of paying bills on time, avoiding too many checks on your credit, and using less than your available credit.