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Compare Car Insurance Rates Online – Guide to Factors Determining Your Premium

The area of the country or even the city can play an important part in your car insurance rates.

Many know your age and driving record play a factor in your final premium.

However, your state and zip code is a big factor when car insurance companies decide your car insurance rate.

The average cost of auto insurance for 2020 is over $1,100 per year. Your final premium depends on factors about you, your vehicle, and the state or zip code you reside in. 

How to Compare Car Insurance Rates Online

If you compare car insurance rates online you know there are a ton of companies offering you a premium.

All you have to do is enter your information and the emails, texts, and phone calls come flooding in.

Car insurance companies use rating factors to determine your final policy.

Factors used to determine the cost of an auto policy by insurers.Note: Illustrated above are the biggest factors used by insurers to determine the cost of your auto policy. However, insurers are going to put more weight on one factor then the other. Each insurer has a different method of doing so. Therefore, you will get a different rate from different insurers.

Since “factors” are scored differently by different companies, they are going to price your auto insurance policy differently.

Ultimately, you could end up paying more by choosing the wrong company and failing to compare.

In 2020 there are a diverse collection of companies to choose from.

Over 650 companies in the United States.

If you include all types of insurance there are over 5,900 according to the III.org.

This guide is going to help you understand the factors which go into your final premium.

Plus, there shall be a few tips along the way to help you find the best insurance rates. 

Determining Your Rate

Your vehicle insurance rate is determined by your track record as a driver.

As well as your vehicle, credit, gender, and your location.

Insurance companies employ their own method to determine your risk as a driver.

This will be reflected in your premium. 

For example, having a poor credit score and driving history can drastically affect what you pay for car insurance.

Below are the demographic, car-related, and driving-habit factors illustrated how insurers determine your premium. 

Demographic Factors  
Gender and AgeYoung men usually incur higher rates than young women as statistically.
Marital StatusMarried people tend to have fewer accidents than single people.
Where You LiveA densely populated city with high crime rate will have higher premiums.
Credit ScoreLower score equals higher premiums.
ProfessionWork requiring a lot of driving.
Car-Related Factors
Vehicle SizeLarger cars are generally safer than smaller cars in an accident.
Age of the CarOlder vehicle are more likely to be not worth the repairs or "totaled".
Safety RatingPassengers less like to be injured in an accident means lower rates.
Likelihood of TheftCar which is likely to be stolen means higher premiums.
Driving Habits
Driving HistoryPast driving offenses and accidents equal higher premiums.
Driving ActivityThe more you drive the higher chance of an accident equals higher premiums.

(Table – Source)

Compare Car Insurance Rates by State

There are state-mandated rate increases on what factors can be used to determine your premium.

However, it not just laws driving state-by-state difference in car insurance rates. 

In fact, auto insurance companies are able to charge more in places where people are filing more claims.

If you live in a densely populated city with a high crime rate and poor road conditions there is a really good chance drivers are filing claims regularly.

What are you going to pay for an auto insurance policy?

Below is a state-by-state breakdown of an average premium with full coverage.

StateAnnual PremiumStateAnnual Premium
Alabama$1,877Montana$2,206
Alaska$1,598
Nebraska$1,732
Arizona$2,643Nevada$2,648
Arkansas$2,052New Hampshire$1,922
California$1,953New Jersey$2,318
Colorado$2,498New Mexico$2,100
Connecticut$2,512New York$2,532
Delaware$2,059North Carolina$2,498
Florida$2,712North Dakota$1,655
Georgia$2,500Ohio$1,640
Hawaii$1,455Oklahoma$2,262
Idaho$1,501Oregon$2,200
Illinois$2,185Pennsylvania$2,100
Indiana$1,488Rhode Island$2,821
Iowa$1,472South Carolina$2,015
Kansas$2,022South Dakota$2,282
Kentucky$2,665Tennessee$1,861
Louisiana$2,721Texas$2,423
Maine$1,268Utah$2,411
Maryland$1,983Vermont$1,700
Massachusetts$1,860Virginia$1,409
Michigan$3,982Washington$1,622
Minnesota$2,134West Virginia$2,095
Mississippi$1,994Wisconsin$1,550
Missouri$2,417Wyoming$1,832

State with Highest Rates

Below is a list of states with the highest average premium.

Most expensive states to get a policy by price from D.C., Kentucky, Florida, Louisiana, and Michigan.Note: Illustrated above are the most expensive states to have an auto policy. They are Michigan, Louisiana, Florida, Kentucky, and Washington D.C. (Source)

This changes from time to time.

Michigan has been the most expensive state for years now.

The primary driver is Michigan is a no-fault state which allows drivers to recoup financial loses from their insurance company no matter who is at fault.

StateTotalLiabilityCollisionComprehensive
Michigan$3,982$1,911$1,185$886
Louisiana$2,721$1,333$843$545
Florida$2,712$1,247$867$598
Kentucky$2,665$1,305$874$486
District of Columbia (D.C.)$2,601$1,248$891$462

As you can see, there are many different variables influencing auto insurance rates. 

States with Lowest Rates

Generally speaking, the states with the lowest car insurance rates are less densely populated and have lower claims.

Least expensive states by premium.Note: Illustrated above are the least expensive states to get a policy. The cheapest is Maine at $1,268 per year. Followed by Virginia, Iowa, Indiana, and Idaho. All clustering around $1,400 per year for full coverage.

States, such as Virginia, mandate a $500 fee to forgo coverage.

Idaho doesn’t mandate personal injury protection (PIP) and uninsured motorist coverage.

Maine’s population base is much older and the majority of drivers are 40 and up.

Cheapest StatesTotal PremiumLiabilityCollisionComprehensive
Maine$1,268$608$474$189
Virginia$1,409$648$543$218
Iowa$1,472$691$561$220
Indiana$1,488$759$495$234
Idaho$1,501$956$660$260

You might not live in one of the cheapest states to insure your vehicle.

If you don’t, there are a few things you can do to lower your premium.

The most important is to keep a clean driving record.

Also, keep a good credit score and don’t let your car insurance lapse. 

Average Cost by Coverage

There are specific types of coverage which make up your auto insurance policy.

This will determine the price of your monthly premium.

The main coverage types are:

  • Liability
  • Comprehensive
  • Collision

You are certainly going to have liability coverage.

This is required in most states.

Liability coverage is going to protect you from costs incurred if you injure someone or damage their property with your vehicle.

Comprehensive and collision is coverage which protects your vehicle. They are optional unless you have financed your vehicle.

When you have liability, comprehensive, and collision this is commonly referred to as “full coverage”. 

Cost of a policy by Liability, Collision, and Comprehensive coverage compared.Note: Illustrated above is the cost for liability, collision, and comprehensive to get a full coverage price of $1,650 per year. Many drivers get “minimum” coverage or liability only which is illustrated in blue at $792. This is a way to save a lot on your premium, but it does come with risk.

Comprehensive and collision coverage will protect you if your vehicle is damaged from an automobile accident or damaged from a fallen tree branch, as an example. 

Many drivers opt to forgo comprehensive and collision coverage since you can lower your monthly car insurance rates significantly by doing so.

However, skipping out on comprehensive and collision can lead to bigger expenses down the road if you are stuck with vehicle repairs. 

Below I have a breakdown of each coverage for a driver with a $1,650 full coverage policy.

Type CoverageCostMinimum Coverage
Liability$792$792
Collision$5760
Comprehensive$2820
Total$1,650$792

If you forgo comprehensive and collision the price of the policy is only $792.

Significant savings, but it does come with risk.

For example, if someone “keys” your car you would be on the hook for repairs. 

Compare Minimum Coverage or Liability Only

Minimum coverage means to carry only liability.

There may be other “add-ons” required in some states.

For ease, I will refer to minimum coverage as liability only or vice versa. 

There are times when full coverage is not worth it.

If you have a vehicle worth $4,000 or less and can do your own repair work, carrying full coverage is probably not cost-effective. 

For example, your vehicle is only worth $4,000 or you fix the repairs yourself.

You probably should drop comprehensive and collision coverage.

If you can’t afford full coverage at the moment you may have to carry minimum coverage.

It is better to have coverage than none at all or let your policy lapse.

It would spike your auto insurance rates next time you get a policy. 

Age & Your Auto Policy

Age is a factor which affects your car insurance premium.

Generally, the older you are the lower your premium until about the age of 65 or so.

If you are teen driver you could pay into the thousands.

Parents of teen drivers have seen their premium more than double.

Comparing online vehicle insurance rates by price for teens drivers.Note: Illustrated above is the cost of a premium for a 17-year-old driver. The prices are typically double or more of the average price. Insurers will classify teen drivers are one of the riskiest drivers on the road. Therefore, they will have the highest premiums.

Below are illustrations comparing the price of different insurers by price for teen drivers.

For drivers 25 years of age the price of a policy is much better than a teenager.

Cost of an auto premium for a 25-year-old driver from Allstate, Farmers, Liberty Mutual, Progressive, and Nationwide.Note: The cost of premium drops significantly for a 25-year-old driver. This is the age or “sweet spot” where drivers get a drop in a premium assuming their driving history is clean. Though the rates drop it is a good idea to compare car insurance rates of other companies since the variance in price is over 20% from insurer to the next.

The age of 25 is the turning point for most drivers since the price drops significantly, as you can see in the illustrations.

After you hit the age of 40, your premiums are nearing the cheapest they will be with a good driving history.

This is the age where premiums don’t fluctuate much based only on age or gender.

Cost of a premium for 40-year-old driver.Note: At the age of 40 drivers will see the cheapest rates assuming they have a clean driving record.

Assuming all metrics are constant, this is where many men begin to see a slight decline in rates against women.

While men will pay significantly more at a young age.

Driving History

It is going to be difficult to find an affordable policy if you have poor driving history.

Insurance companies are going to use your past driving history as an indicator of your future risk.

Cost of premium after an at-fault accident.

Note: Illustrated above is the cost of a premium before and after an at-fault accident. As you can see your premiums can nearly double after an at-fault violation. All things being equal, most insurers had a 40% spike in auto insurance rates.

It will be nearly impossible for you to find another company that won’t hike your rates after a violation.

One thing to consider, the amount of the rate increase varies from company to company.

The more serious the violation the higher the rate hike.

Illustrated are rates before and after a violation.

Getting a DUI is a costly offense you can have on your record.

In the majority of cases, the average driver will see their car insurance rates double for a period of three years or more.

In California a DUI can stay on your record for 10 years.

If you are in this unfortunate situation be sure to compare rates to find a more affordable premium.

Below is a comparison of rates before and after a DUI. 

Cost of a premium before and after a DUI conviction from Allstate, Farmers, Liberty Mutual, Progressive, and Nationwide.Note: Getting a DUI is going to double your auto insurance rates from most insurers. There are some insurers which will drop you from coverage. If you are in this scenario, finding insurers which specialize in high risk coverage are the best. Progressive is one such company.

Compare Credit Scores

Another big contributor to the cost of your premium is your credit score.

While many drivers don’t like it, insurance companies use it to determine your level of risk as a client.

If you see an increase in rates unexpectedly, you may want to find out if your credit score went down.

There are situations where a person financed home improvement work on their house.

In turn their credit score went down and their rates went up.

Depending on how low your credit score is, depends on how much you will pay for a policy.

Average yearly premium from poor to excellent credit. Note: Illustrated above is the cost of policy for drivers with poor to excellent credit. Your credit score a major factor when determining your premium. If you have very good credit and it is lowered you could get hit with a rate hike. The difference in price from excellent to poor credit is over $1,000.

Type of Vehicle

The type of vehicle you drive is going to determine the amount you pay for a premium.

Typically, the more expensive the vehicle the more you will pay, but not always.

Another good reason to compare auto insurance rates.

Cost of coverage for SUV's, Minivan, Hybrid, and Pickup.Note: The type of vehicle you drive is going to influence the cost of your premium. Illustrated above is the price of premium for a small SUV to a pickup. All things being equal, the premium for a pickup is 20% more than the cost of a small SUV.

The more expensive it costs to replace parts on a vehicle the more it costs to insure it.

More expensive vehicles have more expensive parts.

Another contributing factor is the safety rating.

If the vehicle has a poor safety rating you could pay more for a premium.

The risk is more drivers get injured with a poor safety rating in an auto accident.

Most vehicles today have excellent safety, however.

Marital Status

You are going to have to blame statistics on your marital status.

Statistics show single people get in more automobile accidents than their married counterparts.

Why?

Married people take less risks.

Below is illustrated the cost of car insurance rates for married and single drivers. 

Company*Married Single
Allstate$1,410$1,521
Auto-Owners$1,523$1,673
Erie$1,470$1,610
Farmers$1,325$1,490
Good2Go$1,820$2,010
Liberty Mutual$1,487$1,614
Mercury$1,524$1,743
Travelers$1,422$1,582
USAA$1,232$1,421
Wawanesa$1,520$1,723

*Some companies do not charge a difference between married and single drivers.

How Far You Drive

The distance you drive per year is going to determine your premium too.

Why?

The more you drive the higher chance you will be in automobile accident.

Does Filing a Claim Increase Your Premiums

In the majority of cases filing a claim is going to increase your auto insurance rates especially if you were at fault.

As mentioned previously, an at-fault accident can increase your rates from 30% to 50% and stay on your record for three years or more depending on the state and insurer.

Insurers raise your rates to mitigate risk.

By doing so, you are more prudent and less likely to have an automobile accident. 

On the other hand, if you have a minor fender bender and can get the damage fixed you will probably be better off not filing a claim.

If you do the file, the increase in premiums can cost more than the damage itself.

Car Insurance Discounts

You can reduce the amount you pay for a premium by the use of discounts.

Every state and carrier is different, so be sure to check with your insurer to get the benefits of discounts.

Some of the most common type of discounts are:

  • Bundling discounts
  • Safe driver discounts
  • Safety & security discounts
  • Good student discounts

And itemized below are common discounts and the percent reduction you could get. 

By PopularityDiscount AvailableTypical Percentage
1Multi-car10 Percent
2Multi-policy10 Percent
3Anti-theft or security system5 Percent
4Good student5 Percent
5Driver eduction10 - 15 Percent
6Safety course10 - 20 Percent
7VIN “etching” discounts*5 Percent

Frequently Asked Questions

What is a No-Fault State?

Your insurer is required to pay for your medical costs in the event of accident no matter who is at-fault in the accident.

Claims are made through personal injury protection or (PIP).

What is a Tort State?

Contrary to no-fault, in a tort state one driver must be found at fault during the automobile accident.

Then that driver’s insurer is responsible for paying the medical costs. 

How Can I Lower my Premium?

If you have unnecessary coverage you could drop it.

For example, if you carry comprehensive and collision, you could drop both and get minimum coverage.

Drive less miles per year.

You could get cheaper auto insurance rates by getting discounts. 

What Determines the Cost of my Policy?

The factors which determine your policy are your driving record, location, coverage type and amount, age, gender, how far you drive and the type of vehicle you are insuring. 

Is Auto Insurance Required in your State?

Only two states do not require auto insurance – Virginia and New Hampshire.