Average Cost of Car Insurance

Average Car Insurance Cost

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Keeping Track of the Average Cost of Insurance Each Month

Insurance cost can seem extreme, especially when viewed as a yearly or biannual cost. It might seem like a good idea to pay your insurance on a monthly basis, however there are some drawbacks to doing that as well. If you cannot afford a lump sum for your insurance, there are ways to reduce the cost of insurance each month and to make it work better for your budget.

What Is the Average Cost of Insurance Each Month?

There is no universal insurance cost. Coverage types vary from state to state. Policies vary from company to company. And there are a number of variables that have to be figured into the equation to give each person their insurance cost. The national average for insurance in 2009 was $1,736, which works out to $145 per month.

The Nine Most Expensive States for Insurance in the US

These are the nine most expensive states in the US for insurance premiums. They are:

  1. New Jersey
  2. The District of Colombia (Although not a state, this area has the second most expensive insurance costs in the nation.)
  3. New York
  4. Louisiana
  5. Maryland
  6. Delaware
  7. Rhode Island
  8. Michigan
  9. Alaska

In some cases, it is the insurance industry itself that drives the cost higher. In others, it is the potential for serious weather risks that may increase cost dramatically. In Louisiana, for instance, the risk for hurricanes and flooding can increase the cost of insurance each month.

The Lowest Cost Insurance in the US – Insurance in these states are the lowest in the nation.

  1. Illinois
  2. South Dakota
  3. Iowa
  4. Arkansas
  5. Vermont
  6. Hawaii
  7. North Dakota
  8. Nebraska
  9. Ohio

Ways to Make the Monthly Insurance Cost More Affordable

While it might be daunting to come up with the money to pay for your insurance six or twelve months at a time, monthly insurance payments can be less appealing than you might think. For most companies, monthly insurance bills mean more administrative costs, which result in fees for the customer. Instead, you can consider:

Paying either six or twelve months but making it more doable. Divide the total amount by your choice of monthly payment amounts and then put that amount into a savings account or onto a re-loadable, no fee credit card. With the savings account option, you earn interest on the amount, while the fee free credit card prevents you from being overdrawn as well as from other problems. It is a good idea for online transactions as well.

Other ways to reduce your insurance cost each month:

  • Reduce insurance on older vehicles. It makes no sense to pay more in premiums than a car is worth in terms of value.
  • Make sure that you are always taking advantage of every available discount that you are eligible to get.
  • Eliminate additional services that you do not need. For instance, do not pay for roadside service through your insurance if you are already part of a motorist club.

Before You Change Insurance Providers

Choosing insurance should be based on service and rates, not about how much you like the insurance agent. However, if you are really thrilled with the service but not the premiums, discuss that fact with the insurance agent.

  • Be upfront with your current provider; tell them that you are going to start shopping for quotes. Let them give you a quote -hopefully they can beat the current price.
  • If not, look for the right coverage for your needs. That does not necessarily mean the same level of coverage, especially if the car is older or has been paid in full.
  • Insurance rates change for a number of reason, so always look for quotes rather than just renewing a policy at the end of each term.

The Perfect Insurance

There is no such thing as the “perfect” insurance for every person, but there are ways to make sure that you are getting the coverage that comes pretty close to it. Here are some things to look for to get your right fit:

  • The right coverage – Not too much coverage for the vehicle but enough to protect your family in the event of an accident. Remember, the state minimum is enough to keep you legal, but may not be enough to protect you.
  • The right premium – Insurance can be wonderful- but it will not matter how great a policy it is if you cannot afford it.
  • The right service level – If you want to deal with a person, then choose a local insurance agent. If you prefer online convenience, you can choose that option. Most insurance companies have both- you can deal with an agent face to face if you would like but go online when you need to do so.
  • The right terms – If you want to pay monthly, you can do so. Not all insurance companies or policies are available for monthly payments. Not all policies are available as a yearly term either. Discuss this with the agent when you are buying your policy.

Make changes to your policy whenever there are changes to your situation including marital status, age, occupation, age of the vehicle and additional drivers in the household.

 Ask for Discounts

Finally, before you start looking for quotes, make sure that you are aware of all of the potential discounts you might be eligible to receive. Make a list and ask your agent as you go. These might include:

  • Certain occupations
  • Membership in certain types of organizations and clubs
  • Veteran status
  • Good student
  • Good driver
  • The type of car
  • The safety equipment in your car
  • Good credit history
  • Paperless discounts
  • Paid in full discounts
  • Having more than one time of insurance policy with the same company
  • Low mileage per year
  • Safe driver courses
  • Living in safer areas
  • Agreeing to pay a higher deductible amount on your insurance

These discounts are not available in all situations. In addition, there might be other types of discounts not listed here.