How Much Should I Be Paying for Car Insurance?

how much should car insurance cost

The Insurance Information Institute states that the average annual car insurance rate is approximately $800, but what you’ll pay could vary significantly. That’s because insurers take a wide set of variables into consideration when calculating your rates.

Factors that Could Make Your Rates Higher than the Norm

Your rates may come in higher than the national average, or even those of friends and family, based on the following factors:


If you live in a highly populated area, crashes and insurance claims are generally more commonplace. Your rates are likely to reflect the greater risk with higher premiums.

Driving Record

Your cost for auto insurance will probably be higher if you’ve been in several accidents than it would be if your driving record were clean. Furthermore, if you’re a new driver that has never been insured,  you’ll likely pay more for auto insurance.


Another factor that can impact your premium is your age, particularly if you’re in your twilight years or are young. According to the Insurance Institute for Highway Safety (IIHS), the rate of fatal crashes for teenage drivers is 3 times the rate for drivers over 20 years old. Likewise, the CDC also cites a high accident rate for  older drivers. Because of this demographic risk, you can expect your rates to be higher, even if you’ve never had an accident.

Factors that Could Lower Your Premiums

Your insurer may cite you lower premiums for the following factors:

Deductibles and Policy Limits

The specifics of your deductible and the limits of your policy play a big role in what you’ll pay for car insurance. Normally, going with a higher deductible lowers your auto insurance rate.

Lower policy limits in areas such as uninsured motorist coverage could result in a lower rate as well but could leave you exposed to uninsured losses. In cases like these, lowering your limits to save money on your premiums may not be worth the risk.


Insurers often offer discounts for bundling your auto policy with other types of coverage, such as homeowners. If you’re insuring more than one type of property, consider purchasing from a single carrier to save some money on your combined rates.

Insurers also hand out discounts to policyholders who have had no moving violations or accidents for several years. Being a student who’s away at college without a vehicle, getting good grades, or enrolling in an education or defensive driving course are also ways to score discounts and qualify for lower monthly premiums.

While comparison shopping for auto insurance, be sure to ask if you qualify for these and other discounts such as:

  • Taking out higher deductibles
  • Having a good credit score
  • Being a long-time customer
  • Having low annual mileage
  • Owning more than one car
  • Having no accident or moving violations in a few years

Not every insurance company will offer all of these discounts and some might not be available in your state. You’ll have to sit down with an independent insurance agent and ask for details.

Credit Score and History

Most auto insurers will factor in your credit score and history when calculating your monthly rate. Although there’s no specific point where your credit will start affecting your premiums, typically a high credit score usually equates to a lower rate.

Understanding the Purchasing Process

When discussing your situation with your independent insurance agent, you’ll decide on the coverages, limits, and deductibles that fit your needs as well as what discounts you qualify for to get the lowest rate possible.


Looking for affordable car insurance fast? Be sure to complete our online quote form for multiple auto insurance quotes from top carriers.