Introduction
Car insurance is a critical purchase for all drivers. It provides financial protection against accidents, theft, and other types of damage that can occur while driving. Understanding the cost of car insurance is important in order to make sure you are getting the best coverage at the most affordable rate. This article will explore the average cost of car insurance per month, how to calculate your own car insurance premium, and tips for reducing your monthly car insurance costs.
Review of Average Car Insurance Cost Per Month
According to the National Association of Insurance Commissioners (NAIC), the average annual cost of car insurance across the United States was $1,427 in 2020. This works out to an average of about $119 per month. However, this figure varies widely by state. For example, in Michigan the average annual cost was $2,738, which works out to around $228 per month, while in Maine the average annual cost was just $836, or about $70 per month.
When it comes to car insurance, there are different types of coverage with varying associated costs. For instance, liability coverage, which covers damage to another person’s property, typically costs between $25 and $50 per month. Collision coverage, which pays for damage to your vehicle in an accident, usually costs between $100 and $200 per month. Comprehensive coverage, which covers damage from events such as theft, fire, or natural disasters, is typically between $50 and $125 per month.
How to Calculate the Cost of Your Monthly Car Insurance Premium
The cost of your monthly car insurance premium is calculated based on a variety of factors. These include your age, gender, location, driving record, credit score, and the type and amount of coverage you choose. Insurers use these factors to determine how likely you are to file a claim, and adjust your premium accordingly.
You can estimate your own car insurance premium using an online calculator. Simply enter your information and the type and amount of coverage you want, and the calculator will provide you with an estimated premium. It’s important to note, however, that this is just an estimate, and the actual cost could be higher or lower depending on the insurer’s assessment of your risk profile.
The Impact of Credit Rating on Car Insurance Monthly Costs
Your credit score is one of the key factors insurers consider when calculating your car insurance premium. Studies have shown that individuals with lower credit scores are more likely to file claims, so they are charged higher premiums as a result. According to a 2019 study by the Consumer Federation of America, a driver with a “poor” credit score (below 620) can pay up to twice as much for their car insurance as someone with an “excellent” credit score (above 780).
If your credit score is lower than you’d like, there are steps you can take to improve it. Paying bills on time, reducing credit card balances, and avoiding late payments can all help to boost your score over time.
Factors That Influence the Cost of Car Insurance Per Month
Insurers consider a variety of factors when setting rates, including your age, driving experience, and the type of vehicle you drive. Younger drivers tend to be charged higher premiums due to their lack of experience and greater likelihood of being involved in an accident. Similarly, certain makes and models of vehicles are considered higher risk and therefore come with higher premiums.
You can use these factors to your advantage. By taking a defensive driving course or opting for a less sporty vehicle, for example, you may be able to reduce your monthly car insurance costs.
Comparing Prices to Find the Most Affordable Car Insurance Per Month
Comparing prices is one of the best ways to find the most affordable car insurance. You can do this manually by contacting several insurers and asking for quotes, or you can use an online comparison website. These websites allow you to enter your information once and get quotes from multiple insurers, making it faster and easier to compare prices.
Using a comparison website also allows you to compare different types of coverage and various levels of deductible. This can be helpful in finding the most comprehensive coverage at the lowest price.
Tips for Reducing Your Car Insurance Cost Per Month
There are several strategies you can use to reduce your car insurance costs. One of the most important things you can do is reduce your risk profile. This means maintaining a clean driving record, avoiding distracted driving, and limiting the number of miles you drive each year.
Shopping around for better rates is also a good strategy. Comparing prices between different insurers can help you find the most affordable policy. You should also consider raising your deductible. While this will increase your out-of-pocket costs if you need to file a claim, it can also significantly reduce your monthly premium.
Conclusion
Car insurance is an essential purchase for all drivers. It’s important to understand the cost of car insurance so you can make sure you are getting the best coverage at the most affordable rate. The average cost of car insurance per month is around $119, but this can vary significantly depending on where you live and the type of coverage you choose. To calculate your own car insurance premium, use an online calculator. Your credit score can also have a major impact on your premium, so it’s important to work on improving it if necessary. Finally, shopping around and comparing prices can help you find the most affordable car insurance per month.
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