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It's one of the most common questions we get from car buyers: How much does car insurance cost per year, and per month, on average? In truth, these costs can vary widely based on a number of factors. But it's helpful to know the average cost in your area, when shopping for a policy. This kind of knowledge will help you spot a "good deal," if and when it comes along. So let's take a look at the average cost of car insurance in 2014.
At a Glance: In a hurry? Here's the gist of this article in 100 words or less. On average, drivers pay around $797 per year on their car insurance policies. This is according to a study published at the end of 2013. This number reflects current trends in 2014 as well. But there are a number of variables that can affect the total price. So the true cost varies from one driver to the next. These variables include the driver's age, driving record, type of vehicle, and the amount of coverage you get. You can learn more about each of these factors below.
That's the short answer. Now let's take a more detailed look at the average cost of car insurance premiums in 2014:
How Much Does Car Insurance Cost Per Year in 2014?
In December 2013, the National Association of Insurance Commissioners (NAIC) issued a report that showed how much people are paying on their auto premiums, per month and per year. It is the most current research available on this subject. According to the NAIC's data, the average cost of car insurance actually declined slightly over the last few years. In 2007, drivers paid an average of $799 per year on their auto insurance premiums. In 2011, that number fell to $797 annually. That comes out to about $66 per month.
So, over the last few years, the typical cost for car insurance policy has held steady, and actually decreased slightly.
It's important to note, however, that the averages mentioned above reflect the premiums paid each year. But they do not account for the deductibles that are typically paid whenever an insurance claim is filed. Drivers who make claims against their policies tend to pay significantly more per year, as a result of those deductibles. When you factor in the deductibles, the cost of insurance is much greater -- and it also becomes harder to track.
The NAIC report also listed the average price in each state across the country. Drivers in New Jersey paid the most for their insurance premiums, with an average cost of $1,184 per year (or roughly $98 per month). On the more affordable end of the spectrum, drivers in Idaho spent the least on their policies, which averaged $535 per year (or approximately $44 per month). Auto insurance prices tend to be higher in more crowded / congested areas, where the risk of collision is greater. Conversely, the price tends to go down in less populated areas.
For a complete list of average costs per month and per year, in every state of the country, visit:
So that answers the first question: How much do car insurance premiums cost, per month and per year, in 2014? Now let's talk about some of the different factors that can influence the amount you pay for your policy.
8 Factors that Determine the Cost of Premiums
First of all, it's important to realize that every insurance company is different. As a result, they all have their own internal methods for determining the cost of an individual car insurance policy. With that being said, there are certain factors that are common across all companies, and those are the ones I've listed below.
- Types of coverage -- There are different parts of an auto insurance policy (collision, liability, uninsured motorist, etc.). As a consumer, you can choose how much of each type of coverage you want, though your state probably has a minimum requirement of some kind. The types and amounts of coverage you choose will affect the total cost of your annual auto insurance premium. For example, a policy that
includes uninsured motorist coverage will cost more than another policy that doesn't include that component.
- Type of vehicle -- This is another one of the major factors that will influence the amount of your car insurance premium. A convertible sports car with a lot of horsepower, for example, is going to cost you a lot more in monthly and annual premiums than a four-door family sedan with only moderate horsepower. The type of car says a lot about the person who drives it, and insurance companies have known this for a long time. So they typically adjust the cost of the policy based on the type of vehicle you drive. This makes high-performance vehicles cost-prohibitive for many drivers.
- Driving habits -- How often will you be driving your vehicle, and where will you drive it on a regular basis? These are questions your insurance company will want to know. The answers to these questions will partly determine how much you pay on your premium, per month and per year. For example, if you drive on a daily basis through congested areas with a statistically high rate of accidents, your coverage will cost more than somebody who works at home and only drives to the store and back.
- Your age -- It's probably no surprise to you that drivers under the age of 20 have a higher rate of accidents than most other age groups. They are less experienced, after all. Because of this, the cost of car insurance is higher for teenagers than it is for adults, on average. Statistically speaking, we start off as bad drivers, then we get better, and then we get worse again in our elder years. Drivers between the age of 50 and 65 have a lower accident rate than most other age groups. But after 65, the accident rates start to go up again. The cost of insurance premiums rise and fall in relation to these accident rates. (Side note: 16-year-old drivers tend to pay the most per year.)
- Marital status -- Accident statistics show that married drivers have fewer accidents than singles do. As a result, most insurance companies will discount the cost of coverage for married people. You should always ask about discounts when shopping for a policy.
- Your gender -- Guess what guys? On average, we tend to pay higher insurance premiums than women do. That's because statistics show that women are safer drivers than men. This gender difference will likely influence the cost of your policy.
- Credit scores -- In the past, this did not influence the overall cost of an insurance policy very much. But with each passing year, more and more insurance companies are using consumer credit scores to help determine the amount they charge in premiums. Personally, I don't think the two things are related. But insurers don't see it this way. Some states restrict this practice, preventing insurance companies from using credit scores as a pricing consideration. But these states are few and far between. Most states allow the practice, and an increasing number of insurers are using credit scores.
- Driving record -- This is probably the one factor you're most familiar with. Obviously, the way you drive your car will determine the cost of your insurance coverage. If you have a long and safe driving record behind you, you'll get breaks on your annual premium. On the other hand, if you have a history of accidents, speeding, and other negligent behavior, the insurance company is going to charge you more -- that is, if they will cover you at all.
So let's recap: How much does car insurance cost per month and year, on average, in 2014? According to the most recent studies available, the average driver pays around $797 per year in policy premiums. That comes out to about $66 per month.
But remember, this is only the premium cost -- it doesn't include the deductibles that drivers typically pay in the event of an accident.
At the end of the day, the only way to find out how much your policy is going to cost you is to shop around and obtain quotes from different auto insurance companies. You can start here.
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