How Much Is Car Insurance?
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Car insurance is required in almost every state. It’s important to have insurance because while no one wants or expects to get into an auto accident, they happen all the time. Car insurance helps protect your financial assets and your vehicle.
The cost to insure your car will vary depending on several factors, like your age, where you live, and the type of car you drive. But knowing how car insurance works can help you find the best policy and premium.
Here’s what you need to know about the cost of car insurance:
What is car insurance?
Car insurance is a contract between you and an insurance carrier where you agree to pay a premium in exchange for coverage. If you cause an accident, your policy will cover repairs to your vehicle, the other driver’s car, or both. Your insurance will also cover your car if it’s vandalized, stolen, or you hit an object like a tree or fence, depending on the coverages you have.
Since car insurance is mandated in every state except New Hampshire, it’s a good idea to have enough coverage for all eventualities. That way you have peace of mind. If your car is stolen or not driveable due to an accident or vandalism, it can disrupt your life in major ways.
How does car insurance work?
If you cause an accident or your car is damaged due to a covered incident, you’ll need to file a claim with your insurance carrier. Then, after you pay your deductible, your insurance provider will cover damages and medical costs — up to your policy limits. Depending on the type of coverages included in your policy, your insurer may even pay for a rental car while your vehicle’s being repaired or replaced.
The coverage amount on your policy determines the maximum amount an insurer will pay when you file a claim. For example, many states have liability limits of $25,000/$50,000/$25,000.
This means insurance will cover:
- Bodily injury per person: $25,000
- Total bodily injury per accident: $50,000
- Property damage per accident: $25,000
You can purchase higher limits (for a higher premium), which will cover you financially if you have substantial assets to protect. But you must carry at least the minimum amount of coverage that your state requires.
What is the average cost of car insurance?
The average annual premium per insured vehicle in 2019 was $1,204, according to the National Association of Insurance Commissioners (NAIC). This means most drivers pay around $100 a month. It pays to shop online and compare costs to make sure you’re getting the best deal.
The map below shows the average cost of car insurance in different states:
States with the highest car insurance costs include Connecticut, Delaware, and Florida. Meanwhile, states with lower premiums include Idaho, North Carolina, and New Mexico.
What factors affect the cost of car insurance?
Aside from your location, several other factors impact your car insurance premium, including:
- Accidents: If you’ve filed a claim for an accident, this could increase your auto insurance costs, since insurers may view you as more of a risk.
- Tickets: Tickets for speeding or other driving offenses can also increase your insurance premiums while they’re on your record.
- Coverage type and amount: While most states have minimum auto insurance requirements, you can always increase your coverage, which will also increase your premium.
- Deductible: If you want to lower your premium, you can increase your deductible. This means you’ll pay more if you ever need to file a claim, but you’ll save on the monthly cost. Just be sure you can afford your deductible in the event you file a claim.
- Age and gender: Generally, young drivers (under age 25) will pay more for car insurance since their driving experience is limited. What’s more, young men usually pay higher rates than young women because statistically, young males get into more accidents.
- Insurance score: Many states use your credit-based insurance score as an indicator of how likely you are to file a claim.
- SR-22 insurance: If you have a history of traffic violations, your state may require SR-22 insurance, which could increase your insurance premium.
Car insurance FAQs
Here are the answers to some of the most commonly asked questions about car insurance.
How often do I have to pay insurance premiums?
You can choose to pay your car insurance premium monthly, every six months, or annually. As an incentive to pay your premium all at once, some insurance carriers offer a discount if you pay your car insurance up front when you buy the policy.
How long does it take to file an insurance claim?
Filing an insurance claim doesn’t take long, but the claims process depends on the type of accident or situation as well as state laws. It’s best to contact your insurance carrier as soon as possible to find out how to submit a claim and which supporting documents you’ll need to gather.
Typically, insurers have 30 days to review your auto insurance claim and provide a response, but the timeline can vary depending on your state.
If a tree falls on my car, would my insurance pay for repairs?
Yes, as long as you have comprehensive insurance coverage. This coverage is optional and not required by law but it protects your vehicle if it gets damaged by another object.
What happens if my car is totaled in an accident?
If your car is considered a total loss (damaged beyond repair), you’ll still need to file an insurance claim. If you carry the appropriate coverage (either comprehensive insurance or collision insurance, depending on the circumstances of the accident) and your insurance carrier agrees that the vehicle is totaled, they’ll issue a payment for the actual cash value of the car, minus your deductible.
Can an insurance provider raise my premium if I’m not at fault for the accident?
Yes, insurers can increase your premium if you file a claim for an accident, even if you’re not at fault.
However, some insurers offer accident forgiveness, which means your premiums won’t increase if the accident wasn’t your fault or if it was your first accident. Contact your insurance provider to find out if it offers accident forgiveness and if you qualify.
Disclaimer: All insurance-related services are offered through Young Alfred.
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