Based on the Consumer Price Index, which was issued on March 12, 2024, car insurance rates increased by more than 20% in the year that ended in February 2024.
A combination of harsh weather and car theft, as well as persistent inflation and growing maintenance costs, are to blame for the jump.
- Naturally, there are differences in the cost of motor insurance among individuals. You do not influence all of the criteria that carriers consider when calculating your rates.
- What affects the cost of your auto insurance
- Whereabouts
- driving history
- Credit history
- Age, gender, marital status, and past claims
- Make and model of the car
- Four strategies to cut your auto insurance costs
- In summary
Whereabouts
Your home area has a significant impact on the cost of your vehicle insurance. Drivers in more populated metropolitan areas generally pay far more than those living in remote or rural regions due to the increased danger of theft, accidents, and vandalism.
States also have minimum standards for liability insurance, which is the coverage you must have to compensate for injuries or damages to another person’s vehicle, driver, or passenger. Your payment amount is determined by how much your state requires.
As a result, rates for auto insurance can differ greatly across the United States. According to statistics from Bankrate, drivers in Florida pay an average of $3,945 annually, which is the highest in the nation, whilst those in Vermont pay $1,353, which is the lowest.
Businesses do provide various discounts to help with cost-cutting. Geico, one of the least expensive auto insurance providers on the market, gives drivers 16 various kinds of discounts, including a 25% multi-vehicle policy discount.
Driving History
The III states that having even one accident or speeding ticket might result in higher premiums. Insurance companies usually review your driving history for the previous three to five years, although they may take longer to review cases involving more serious infractions, such as DUIs or repeated speeding citations.
Credit History
In the majority of states, the cost of auto insurance is partly based on your credit history. There is a strong correlation between your credit score and your three-digit insurance score.
An investigation by insurance comparison website The Zebra based on information gathered from 2011 to 2021 found that drivers with bad credit (below 580) paid almost 69% more for auto insurance than those with great credit scores (800 or above).
Also Read: Farmers auto insurance assessment for 2024
Age, Gender, Marital status, and Past claims
By the III, women often pay less for vehicle insurance than males do because they are more inclined to wear seatbelts, and are more unlikely to be in significant accidents or infractions.
Gender is not a factor in vehicle insurance approvals or pricing in seven states: Pennsylvania, Massachusetts, California, Hawaii, Michigan, Montana, North Carolina, and Texas.
Make and model of the car
The manufacturer, model, trim level, and body style of your car all influence your monthly rates. Generally speaking, the cost of a showy sports vehicle with a premium finish and extra options will be more than that of an SUV.
Your car’s age is also important: Newer automobiles often cost more to insure since they are typically worth more.
Because repairs for electric cars are often more expensive, insurance for them may also be more expensive. But Lemonade gives discounts for electric vehicles (EVs), bundles, careful driving, low mileage, and early payment in full.
Four strategies to cut your auto insurance costs
Once you understand how auto insurance companies determine your rates, there are a few easy things you can do to lower your costs.
Compare the quotations for prices.
You may save a lot of money on vehicle insurance by comparison shopping. Make sure you’re obtaining a policy similar to your present one and get estimates from at least three respectable businesses operating in your state.
Find out whether any reductions might reduce that quotation, as well as the monthly premiums and deductibles.
Continue to have Good credit.
Reducing your credit usage ratio and enhancing your payment history are two benefits of paying off credit card debt. For further assistance, consider using Experian Boost, a free tool that may improve your FICO-based insurance ratings by adding timely payments for your phone bill and other utilities to your Experian credit report.
Combine your Vehicle and House Insurance
Purchasing both house and auto insurance from the same provider is one of the simplest ways to save money on both. (It also facilitates access to all of your accounts.) Customers of Allstate who combine their vehicle insurance with their renters’ or homeowners’ insurance can save up to 20%.