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Every driver on the road is required to carry car insurance, but not every driver will pay the same amount. Many factors affect how much people will pay, some of which are under their control.
The average cost of a monthly car insurance premium in the United States is $45 for liability coverage — the minimum legally allowed — and $148 for full coverage, according to Bankrate. But these averages don’t tell the whole story. Here is what goes into determining how much drivers pay.
Age
Younger drivers pay a steeper price for their premiums because of their higher risk of car accidents, said Pam Hansen Alfred, a 37-year veteran State Farm Insurance agent.
In fact, the risk of crashes is higher for 16- to 19-year-olds than any other age group, with their fatal crash rate three times higher than older drivers, according to the Centers for Disease Control and Prevention.
Premiums tend to start going down around age 20 and, by age 25, most people with clean driving records will pay the same amount as other adults, Alfred said.
Driving history
The caveat for that decline in prices rests on drivers maintaining a clean driving history.
“We look at the last three years of a person’s driving record,” Alfred said.
Speeding tickets, reckless driving, car accidents, and driving under the influence infractions will all raise the cost of insurance.
Credit score
It may be surprising to learn that people with no traffic tickets but poor credit scores are a higher risk for insurers than people with one or two driving infractions but good credit, Alfred said.
“I have an example here in front of me,” she said. “For this client to be insured for their particular vehicle with a great credit score, their rate would be $527 for six months. For the same client on the same car with a very poor credit score, the rate would be $1,435.”
Driving experience
The number of years people have driven also can impact insurance premiums. The longer they’ve been on the road, the lower their rate will be.
“I’ve had many discussions with parents because they’re afraid to put kids behind the wheel,” Alfred said. “You can put a child behind the wheel at 16 or at 19, licensed, and there’s no difference in the driving risk. The difference is how much experience they get.”
Location
Where a person lives matters when it comes to car insurance premiums. Rates go up or down because of crime rates, weather, wildfire, floods, number of miles driven by state residents, number of drunk drivers on the roads, and litigation costs.
“In Montana, we have the third highest rate in the nation for all insurance companies,” Alfred said. “We have a lot of uninsured drivers, and that forces the costs up.”
The length of people’s commutes also matters, with longer commutes leading to higher rates.
Discounts
State Farm’s discount programs can save drivers hundreds of dollars a year on their premiums, Alfred said. Possible discounts include the following:
● Multi-line discounts.
● Good driver discounts that are available if no one in the household has had an accident or a ticket in the last three years.
● Multi-car discounts.
● Drive Safe and Save, an app-driven program that can save safe drivers an average of 10 to 15% on their annual premium.
For more information on car insurance premiums or to get a quote, visit pamhansenalfred.com.
