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How to estimate your car insurance

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If you are at the beginning of your search for car insurance, you may be trying to get a general sense of what you might have to pay. That can be tricky to gauge, as insurance costs are not standardized. In fact, there are quite a few individual factors that impact your insurance premium, in addition to factors based on where you live. You can control some things, like whether you practice safe driving and avoid tickets. And some, like your age or local crime rates, are out of your control.

However, it is still possible to estimate your rate by looking at how car insurance policies are rated. With a little research, a review of the average insurance rates in your region, and by taking into account ways to lower your premium, you may be able to get a fairly good estimate of how much you will pay for car insurance.

Keep in mind every insurance company weighs your rating factors slightly differently. You can ask for quotes on identical coverage from two different insurers, and you will receive two different rates. That’s why most experts recommend you get quotes from several companies before making your final choice.

What determines your car insurance rate?

Due to economic and societal influences, auto insurance rates are predicted to increase in 2022. Inflation plays a role in this, as well as supply chain disruptions, labor shortages and changing driving habits. You may also see state-wide rate increases playing a role, reflecting increased risks that drivers face in these states. Since insurers see increases in costs, that cost will be passed on to the policyholders. In general, these are some of the factors that play a key role in determining your rate:

  • Your driving record: The more accidents and traffic violations you have on your record, the higher your premium is likely to be. For example, a DUI can nearly double your premiums, and even a simple speeding ticket can mean more than a 20% rate increase. Similarly, if you are a newer driver without an established driving record, you will likely pay more than a more experienced driver with a clean driving record.
  • How much you use your car: The amount of time you spend on the road can impact your insurance premiums. If you spend a lot of time behind the wheel or drive long distances, you can expect to pay more than someone who drives more infrequently. If you are an infrequent driver, pay per mile or usage-based car insurance might help you save money.
  • Your location: Car insurance rates vary by state and may even factor in your ZIP code, depending on your state’s insurance laws. Drivers in urban areas may pay more due to a higher risk of getting into an accident since more cars are on the road. The incidence of accidents, vehicle theft, vandalism and the severity of these claims in any given area could cause your insurance to be higher or lower. For example, the area where you park your car — on the street or in a protected garage — can also make a difference in what you pay.
  • Your age: Because younger drivers tend to have less experience behind the wheel, they are more likely to get into accidents than mature drivers. If you are under the age of 25, you will likely pay more for car insurance than someone older. Additionally, rates can begin to creep up again after 70. However, Hawaii and Massachusetts prohibit the use of age as a rating factor.
  • Your gender: Women are statistically less likely to get into serious traffic accidents than males. As a result, females tend to pay lower car insurance premiums. However, the following states prohibit gender as a rating factor: California, Hawaii, Massachusetts, Michigan, Montana, North Carolina and Pennsylvania.
  • Your credit score: Your credit may impact your car insurance premium, depending on your state. Drivers with a low credit-based insurance score may be more likely to file claims than drivers with higher scores. Insurance companies often charge more if you have a low credit score to compensate for the increased risk. However, the following states ban the practice of using credit as a rating factor: California, Hawaii, Michigan and Massachusetts.
  • The type and amount of coverage you have selected: While you have to purchase at least your state’s minimum levels of coverage to drive legally, you may choose to purchase higher limits or optional coverage types. Generally, increased limits and adding endorsements will increase your premium, although the coverage provided could make up for the increased cost. Purchasing full coverage, which adds both collision and comprehensive coverage, provides more financial protection than minimum coverage in the event of an incident.
  • The discounts you qualify for: Most car insurance companies offer discounts that might help you save money, like savings when you bundle your home and auto insurance together with the same company or a discount for signing up for paperless statements. Some discounts have more of an effect on your premium than others. Talking to your agent or company about possible discounts might help you maximize savings opportunities.

It is important to remember that while each factor may play a role in determining how much you will pay for your policy, each insurer weighs each factor differently. Getting quotes from several companies might help you find the coverage you need at a competitive price.

How do coverage types affect your car insurance rate?

Car insurance policies are bundles of several coverage types, and most of those coverage types can be purchased in varying limits. Generally, the more coverage you choose and the higher the limits, the more expensive your car insurance policy will be.

Minimum coverage

Several different coverage types can be included in a policy. Most states require you to carry at least the minimum levels of coverage, but each state has different insurance laws that dictate what coverage types and levels you must purchase. State minimum coverage is often the cheapest car insurance option, but provides less financial protection if you cause an accident.

State minimum coverage is often “liability only,” depending on where you live. However, you could choose to purchase liability limits above your state’s minimum limits. For example, your state could require minimum limits of $25,000 bodily injury liability per person, $50,000 bodily injury liability per accident and $25,000 property damage, often represented as 25/50/25. You could choose to purchase 100/300/50 limits, which would typically cost more.

Full coverage

You may also choose to purchase full coverage, which adds comprehensive and collision coverage. These auto insurance coverage types add protection for damage to your vehicle from a myriad of situations, including theft, vandalism, hail and hitting a stationary object or vehicle — whereas minimum coverage insurance does not pay out for damages to your vehicle. If you have a loan or lease, you will likely have to purchase full coverage to protect the lender’s asset. Because you are adding additional coverage, your premium will generally be higher than if you purchased the minimum amount available.

Optional coverage

Finally, some coverage types are generally optional. Optional coverage can help address your individual circumstances. Do you have an unreliable vehicle? You may want to consider roadside assistance. Do you lease or finance your vehicle? You may want to purchase gap insurance, which pays the difference between what you owe on your new vehicle and its current value should it be stolen or totaled in a covered accident.

Uninsured and underinsured motorist coverage may be required by your state, but are usually optional and add coverage for your injuries and possibly the damage to your vehicle if you are hit by someone who does not have any insurance or does not have enough coverage to pay for your damages. Other optional coverage types include car rental coverage, new car replacement or ridesharing coverage. Every company will offer a different range of optional coverage options.

Car insurance can often be personalized to fit your unique needs. You could choose state minimum limits, add full coverage while maintaining state minimum liability levels, buy liability-only coverage with higher liability limits, or choose more add-ons. Because each company charges a different amount for these coverage types, it can be challenging to estimate how much you could pay. But a general rule of thumb is that the more coverage options you add and the higher limits you purchase, the more your car insurance will cost.

How to figure out your car insurance estimate

The best way to know how much your car insurance should cost is to review the average cost of car insurance in your state. That will give you a general idea of how much a policy costs in your area. Then, getting auto insurance quotes from several companies will help you understand how your rating factors impact your rates.

However, you may be able to get an idea of your car insurance cost by thinking about your rating factors and what kind of coverage you need:

  • Decide how much insurance you need. Before shopping for coverage, it might be helpful to know how much coverage you need and what optional coverage types you are considering. If you are unsure how to figure this out, talking to an agent might be helpful.
  • Think about your individual circumstances. If you have a teen driver to insure, have one or more accidents or tickets on your record, have a DUI conviction or live in an area where car crashes are common, you should probably expect to pay more for insurance than drivers without these factors. Understanding your rating factors might help you search for companies geared toward drivers like you.
  • Know what discounts you can take advantage of. If you have a home and auto policy, getting quotes from companies with multi-policy discounts could be a good move. If you have a teen driver, looking for a company with numerous teen driver discounts might help you save.

After taking each of these factors into account, you can begin requesting quotes and comparing insurers. One of the best ways to get an accurate estimate of your car insurance premium is to request a quote. Quotes are not exact, but they can give you an idea of how much you’ll pay. A licensed insurance professional can help you finalize rates after you get your quote, which may be a beneficial step in the insurance buying process.

Factors to consider when comparing quotes

When comparing car insurance quotes, make sure that you are making apples-to-apples comparisons. Comparing quotes for different levels of coverage will not give you an accurate idea of which company can offer you a lower premium. Because each company is different, you may not be able to get a quote for exactly the same coverage, but the closer the quotes, the more accurate your comparison will be. An example of an apples-to-apples comparison would be getting quotes from Progressive and State Farm for the same coverage levels, plus roadside assistance and gap coverage.

You might also want to compare any policy features that appeal to you, like a mobile app or company-specific discounts that might help you save money. Additional features to consider are a company’s financial strength scores from companies like AM Best and customer satisfaction scores from companies like J.D. Power.

Frequently asked questions

Why is it so hard to estimate my insurance costs?

Numerous factors make up your auto insurance premium, including your location, driving history, vehicle type, the coverage types and levels you choose and the discounts you are eligible for. On top of that, each insurance company has its own rating system and weighs each rating factor differently. You may be able to get a ballpark idea of how much you should pay based on your state’s average premiums and your understanding of your rating factors, but the only accurate way to know how much your insurance will cost is to get quotes from various companies.

How do I know how much coverage to buy?

You will have to purchase at least your state’s minimum mandated coverage types and levels. Do not let this worry you — even if you get quotes online, a company’s software should not allow you to purchase less than state minimum limits. If you have a loan or lease on your vehicle, you will likely need to buy full coverage to fully protect your lender’s asset, which includes comprehensive and collision. If you are unsure of what coverage types, levels, policy features or discounts to take advantage of, talking with a licensed agent could be helpful. An insurance professional can assess your situation and make recommendations for coverage and levels.

How does my vehicle affect car insurance rates?

The type of vehicle you drive can have a major impact on your rates. A luxury car that requires imported parts, for example, may cost considerably more for a repair than a similar car that is an American-made, economy model that is easily repaired with parts manufactured locally. The size and complexity of your car play a part as well, with larger vehicles or those with special electronic modifications likely to reflect higher premiums than smaller cars or those with standard technology.

On the flip side, having advanced safety features may allow you to see lower premiums or qualify for special discounts, as these features may reduce the chances of a severe accident or injury. Insurers will take all these factors into account when determining your policy. They use model data to evaluate vehicles and determine the risk they will incur by insuring them, and they pass those costs on to you.

How much does it cost to add a teen driver to my policy?

The cost of adding your teen to your car insurance policy will vary based on several factors such as your teen’s age, driving record and discounts they qualify for. On average, 16-year-old drivers add around $2,500 to their parents’ car insurance policy each year. While adding a teen to your car insurance policy is usually expensive, they may qualify for student discounts which could bring costs down.

Written by
Cate Deventer
Insurance Writer & Editor
Cate Deventer is a writer, editor and insurance professional with over a decade of experience in the insurance industry as a licensed insurance agent.
Edited by
Managing Editor