How Much Should Car Insurance Cost?

how much should car insurance cost

How much should your auto insurance cost? It’s not a simple question to answer. There are several factors that determine your premium, but if you’re looking to save some cash on your insurance, we’ve got the scoop on what goes into deciding the cost of your policy.

Basic Demographics

Your sex, age, location, and marital status all play a part in determining what you  pay for auto insurance. Each factor is an indication of risk, telling your insurer how likely you are to suffer an incident and file a claim.

Age, for instance, plays a big role in calculating your premium, as younger, less experienced drivers are more prone to accidents than most older adults. The location where you live or park the car also has an impact on your rate.  You’ll end up paying more if you live in a densely populated area since there’s a higher risk of getting into an accident.

Your demographics aren’t easily changed, so it’s wise to shop multiple carriers to make sure you’re getting the best rate.


The more your car costs, the more the insurance company will have to pay to replace it if it’s totaled. Because of this, insurance rates are higher for more costly vehicles and lower for less-expensive base models.

Some vehicles, regardless of cost, have a historically high accident rate, meaning drivers of these automobiles file more claims than other drivers. If cost is a concern, it’s a wise idea to consult an insurance agency before purchasing a new vehicle to make sure that your premiums will be affordable.

Credit Score

You may not realize it, but your credit score impacts more than your ability to get that new car loan. It also determines how much you’ll pay to insure it.

Consumer Reports found that it isn’t enough to have an acceptable credit rating if you’re looking for rock-bottom premiums. Applicants whose credit scores were merely “good” paid $68 to $526 more per year than individuals who met similar demographic criteria but boasted an excellent score.[i]

A poor credit score can add as much as $1,301 a year depending upon the age of the driver and where they live. The bottom line? Boosting your credit score could save you quite a bit when it comes to insuring your vehicles.[ii]

Driving Habits and History

Drivers with clean records usually get better rates, while those who have moving violations or at-fault accidents receive higher premiums. Another factor that determines how much you pay is your annual mileage and daily commute length.

To keep your rates as low as possible for your demographic and location, consider doing one or more of the following:

  • Drive less and be safe: The fewer miles you drive, the lower your risk for accidents; Rates remain lowest for drivers who don’t make claims.
  • Ask about discounts: There are many discounts that could lower your premiums, such as rate reductions for certain safety features. Memberships in certain organizations can also net you dollars off your yearly premium, so ask what’s available with your carrier.
  • Compare annual rates: It pays to shop around if you’re looking for the best in premiums, but don’t forget to compare amenities as well, such as how fast and easy the claims process is.
  • Select a higher deductible: Raising your deductible will lower your rates, but be conscience of the fact that you’ll be on the hook for a higher amount of the out-of-pocket costs if you suffer a claim.
  • : Drivers under the age of 20 are three times more likely to be involved in a crash,[iii] so they naturally command a higher premium, but there are ways to beat the teen-rate blues.
  • Use an independent insurance agency: They’ll compare quotes from top carriers and provide you with the lowest quote for the best coverage.

By understanding the various factors that can impact what you pay for car insurance, you can shop around more confidently for better premiums.

To ensure that you are getting the best rate on your auto insurance coverage,  compare quotes from top carriers online. Click here to get multiple auto insurance quotes from a single simple application.

[i] “The Secret Score Behind your Rates.” Consumer Reports, July 30, 2015. Web.

[iii] Karen J. Bannan. “How to Cut Teen Insurance Rates.” Edmunds, June 4, 2014. Web.