Auto insurance is one of those necessary expenses that comes with owning a vehicle. But how much should you expect to pay each month? The answer varies depending on many factors, such as where you live, your driving history, and the type of coverage you choose. Understanding the average cost of auto insurance can help you budget more effectively and even find ways to save money. In this article, we’ll dive deep into the factors that determine auto insurance costs, and help you get a better idea of what you might be paying each month.
What is the Average Cost of Auto Insurance Per Month?
On average, auto insurance in the United States costs around $133 per month, but this figure can vary widely depending on several variables. For example, drivers with clean records in low-risk areas might pay as little as $50 a month, while others could be facing premiums of $200 or more. Understanding how these costs break down can give you better control over your insurance policy and help you find the most affordable option.
Factors That Influence Auto Insurance Costs
Several factors can significantly affect your monthly premium:
- Location Where you live has a huge impact on how much you pay for auto insurance. Cities with higher rates of accidents, theft, or natural disasters will have higher premiums. For example, drivers in states like Michigan and Florida tend to face higher insurance costs due to no-fault laws and higher accident rates. Rural areas generally have lower premiums because there’s less traffic and lower accident risk.
- Age and Gender Younger drivers, especially those under 25, tend to pay higher rates because they are statistically more likely to be involved in accidents. Teen drivers, in particular, can face astronomical premiums. Additionally, men often pay more than women, especially young men, due to a higher likelihood of risky driving behavior.
- Driving Record Your driving history is one of the most significant factors that insurance companies consider. If you have a clean driving record with no accidents or traffic violations, you’ll generally pay less for insurance. On the other hand, drivers with a history of accidents, DUIs, or speeding tickets will likely see much higher premiums.
- Type of Vehicle The make and model of your car also play a big role in determining your insurance costs. High-performance sports cars are more expensive to insure because they are associated with higher speeds and more accidents. Vehicles with high repair costs or those that are often targeted by thieves can also lead to higher premiums. On the flip side, cars with strong safety ratings, lower repair costs, or features like anti-theft devices tend to come with lower insurance rates.
- Credit Score In most states, insurers use your credit score as a factor in calculating your premiums. People with higher credit scores are seen as more responsible and are less likely to file claims. As a result, they often pay less for insurance. In contrast, those with lower credit scores may face higher rates, although some states have banned this practice.
- Coverage Level The type of coverage you choose will obviously affect how much you pay each month. Basic liability coverage is the cheapest, but it only covers damages you cause to other drivers. If you opt for full coverage, including comprehensive and collision insurance, your monthly premium will be higher. However, this type of coverage protects you against a broader range of incidents, including theft, vandalism, and damage to your own vehicle in an accident.
Average Costs for Different Types of Coverage
Auto insurance policies come with a variety of coverage options, each affecting your monthly premium differently.
- Liability Insurance: The minimum required coverage in most states, liability insurance is the least expensive option, averaging around $50-$70 per month. This insurance covers damages to other people and their property if you’re at fault in an accident but does not cover your own vehicle.
- Collision Insurance: If you add collision insurance to your policy, you can expect to pay about $30-$60 more per month. Collision insurance covers the cost of repairing or replacing your vehicle if it’s damaged in an accident, regardless of fault.
- Comprehensive Insurance: Comprehensive insurance covers non-collision-related incidents like theft, vandalism, or natural disasters. The cost for comprehensive coverage varies but typically adds another $20-$40 to your monthly premium.
- Full Coverage: A full coverage policy, which includes liability, collision, and comprehensive insurance, generally costs between $120 and $200 per month. This higher cost provides greater peace of mind, as it covers a wider range of potential risks.
How to Lower Your Auto Insurance Premium
If your monthly premium seems too high, there are several ways to lower your costs:
- Shop Around for Quotes Insurance rates can vary significantly between providers, so it’s worth getting quotes from multiple companies. Online comparison tools make it easy to see which company offers the best rates for your situation.
- Ask About Discounts Many insurance companies offer discounts for things like bundling your auto and home insurance, being a good student, or having a car with certain safety features. You might also get a discount for being a member of certain organizations or having a clean driving record.
- Increase Your Deductible If you’re willing to pay more out of pocket in the event of an accident, increasing your deductible can significantly lower your monthly premium. For example, raising your deductible from $500 to $1,000 could save you 10-20% on your premium.
- Maintain a Good Credit Score As mentioned earlier, a good credit score can help you qualify for lower insurance rates. Pay bills on time and keep your credit utilization low to improve your score.
- Take a Defensive Driving Course Many insurance companies offer discounts for drivers who complete a defensive driving course. These courses teach safe driving techniques and can help reduce the likelihood of accidents, making you a lower-risk driver in the eyes of your insurer.
- Drive Less If you can reduce your annual mileage, you may qualify for a low-mileage discount. Some insurance companies also offer usage-based insurance policies, which track your driving habits and offer discounts for safe driving and lower mileage.
State-by-State Differences
Auto insurance premiums vary significantly by state. For example, drivers in states like Michigan and Louisiana pay much more than the national average due to factors like no-fault insurance laws, higher accident rates, and higher repair costs. In contrast, states like Maine and Vermont have some of the lowest average insurance premiums. The state you live in can have a big impact on what you pay for auto insurance each month, so it’s important to understand the specific factors at play in your area.
Conclusion
The average cost of auto insurance per month is around $133, but your actual premium could be higher or lower depending on a wide range of factors. By understanding what influences your premium, shopping around for the best rates, and taking advantage of discounts, you can lower your monthly costs without sacrificing coverage. Whether you’re a new driver or just looking to save on your existing policy, staying informed is the best way to ensure you get the best deal on auto insurance.