How to estimate your car insurance

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For most drivers in the U.S., car insurance is required by law. Because it is a mandated purchase, you may be wondering how much you can expect to pay for a policy. While there is no way for you to accurately estimate how much you will pay for car insurance from any given company, you can learn about the factors that impact your car insurance rates to know which of your individual rating factors could increase or decrease how much you pay. The best way to know how much you will pay for car insurance is to request quotes from several different companies.

Learning about how car insurance policies are rated might help you understand the quote that you receive and ways you can lower your premium. Bankrate’s insurance experts break down the personal rating factors that impact your car insurance, how different coverages affect what you pay and ways that you might be able to save money.

What determines your car insurance rate?

When you get a car insurance quote, the insurance company gathers information about you, then plugs that data into its proprietary algorithm to determine your rate. Each company views your rating factors differently; one company might more heavily penalize speeding tickets while another company might be more forgiving, for example. Your rate could be radically different from a friend or family member’s rate or even from the national average rate. Some of the key factors that go into calculating your auto insurance premium include:

  • Your driving record: The more accidents and traffic violations you have on your record, the higher your premium is likely to be. A DUI can nearly double your premiums, for example, 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 also pay more than a more experienced driver.
  • 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: Your state and even your ZIP code can affect your car insurance rate. 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. The area where you park your car — on the street or in a protected garage, for example — can also make a difference in what you will be charged.
  • 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 the age of 70.
  • 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.
  • Your credit: Your credit may have an impact on your car insurance premium. Drivers with low credit may be more likely to file claims than drivers with higher credit scores. Insurance companies often charge more if you have a low credit score to compensate for the increased risk. However, some states ban the practice of using credit as a rating factor.
  • 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 coverages. Generally, increased limits and adding endorsements will increase your premium, although the coverage provided could make up for the increased cost.
  • 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 coverages, and most of those coverages can be purchased in varying limits. Generally, the more coverages 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 minimum levels of coverage, but each state has different insurance laws that dictate what coverages and levels you must purchase. State minimum coverages are often the cheapest car insurance option but provide 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 coverages add protection for damage to your vehicle from a myriad of situations, including theft, vandalism, hail and hitting a stationary object or 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 more coverage, your premium will be higher than if you purchased the minimum amount available.

Optional coverages

Finally, some coverages are generally optional. Uninsured and underinsured motorist coverage may be required by your state but is usually optional and adds 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 coverages include roadside assistance, car rental coverage, new car replacement, ridesharing coverage and gap insurance. Every company will offer a different range of optional coverages.

Car insurance is highly customizable. You could choose state minimum limits, you could add full coverage but maintain state minimum liability levels, you might buy liability-only coverage with higher liability limits, and you could add one or more optional coverages. Because each company charges a different amount for these coverages, it can be challenging to estimate how much you could pay. But a general rule of thumb is that the more coverages 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 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 coverages 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.

Because each company has its own rating system, there is no way to know how much your insurance will actually cost. But understanding the average cost of insurance in your state and your rating factors might help you estimate if your insurance will be higher or lower than the state average and help you evaluate quotes from insurance companies.

Factors to consider when comparing quotes

When comparing car insurance estimates, make sure that you are comparing apples-to-apples quotes. 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.

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, age, gender, driving history, vehicle type, the coverages 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 coverages 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 coverages, 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 coverages and levels.

What does car insurance cost in the U.S.?

The average minimum coverage car insurance premium in the U.S. is $565 per year, and the average full coverage premium is $1,674 per year. Keep in mind that your premium will likely be different based on your rating factors.

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