Car insurance is more than just a luxury. In today’s highly regulated world, it is a necessity. There are steep penalties associated with driving without car insurance, and most states impose mandatory minimum coverage amounts to ensure that if you happen to get into an accident, you will have a policy to cover it. With this in mind, if you are planning out your financial future, it’s important to know the average cost of car insurance. Your amount may come out higher or lower depending on your particular factors, but having a good sense of the average cost will allow you to properly budget.
Average car insurance costs rising each year
Like many other expenses, to figure out the average cost of car insurance coverage, one must apply some annual inflationary adjustments. Prices continue to rise for the most part, with the average cost going up a few dollars every year. The number in 2012 put the average yearly cost at around %850. In 2014, that number had jumped to just over $900. That comes out to around $75 per month on average. This number can vary from state to state and consumer to consumer, so understanding what impacts average car insurance rates is critical.
One must also take into account the potential late fees and other expenses associated with car insurance. Depending on your provided, you may be charged as much as $40 per month if you are late with a payment. The good news is that many insurance providers will provide a discount if you enroll in an automatic payment program with your bank or debit card. This can allow you to avoid expensive fees while also taking full advantage of whatever discounts may come.
Factors that can increase average monthly car insurance rates
There are many things that will make your car insurance rates go up or down. If you happen to get a few tickets, then your rates will likely increase. Insurance companies use complex formulas to assess the level of risk that you present to their bottom line. If you’re the sort of person who gets pulled over once every year for speeding, then you can expect your average monthly insurance cost to increase.
Getting into accidents will also drive up your rates. Some insurance companies, including Allstate, have accident forgiveness, where a single accident will not impact your rates. With most, however, filing a claim against your insurance after an accident will produce a rate spike. If you have significant changes to your credit report, you may also see your rates go up. The insurance company needs to know that you can be counted on to pay your bill. Bad credit raises risk levels.
Likewise, the state where you live can influence your average costs. If you happen to live and drive in Los Angeles, for instance, where traffic is horrible and accidents are common, your rates will be higher. Those who drive in the relatively benign rural areas of South Carolina may experience lower rates. This is why average monthly cost must be considered in conjunction with other critical factors.