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Car insurance average monthly payment

Automobile Affordability

Fuel Costs

Whether a buyer is considering new or used options, one important factor in the decision must be fuel costs. As gas prices rise in the U.S., fuel costs have become a salient consideration. Inefficient vehicles, such as large SUVs and trucks, not only cost more for fuel to operate, but in many areas, these large gas-guzzlers are considered environmentally irresponsible. No matter the buyer’s views on the environment, driving a fuel efficient car will save money. Vehicles generally become more efficient over time as new models meet stricter fuel efficiency requirements. If you are a long distance commuter for work, it might be worth paying more for a new vehicle to save on the cost of fuel.

Energy efficient cars are generally smaller than full-sized or luxury vehicles. Very efficient options include those that operate with electricity, such as hybrid models. Though most hybrids, such as the Prius, are small and lack power when compared to standard efficiency vehicles, more hybrid models are currently being developed. GM will soon produce a hybrid Cadillac for those who would like energy efficiency in a luxury model. The main drawback when considering the purchase of a high efficiency model is the cost. Hybrid and other high energy efficient models generally cost significantly more than standard efficiency models.

Shoppers do not necessarily need to purchase high efficiency models to save money on fuel. Four cylinder engines are more fuel efficient than six cylinder engines. The smaller the automobile, the more fuel efficient it will be. Cars are more energy efficient than trucks and SUVs. If the buyer travels a great deal each week, they must consider the costs of fuel to operate the vehiclel. Sticking to smaller cars and foregoing the SUVs and larger trucks is one way to ensure fuel savings for long commutes.

Each vehicle in the U.S. is evaluated for its energy efficiency, though not all vehicles use these evaluation in their marketing materials. Purchasers must research the make and model they are considering to find the two fuel efficiency ratings. Highway MPG is an estimate of the miles per gallon the vehicle will get while traveling on the open road, such as a highway. City MPG is an estimate of the fuel efficiency of the vehicle when driving under stop-and-go conditions.

Fuel costs will likely rise over time. In addition, social pressure to reduce each individual’s carbon footprint will become even more pronounced. Purchasers must consider what they buy today will likely be the one they are fueling two years from now. Selecting the most fuel efficient model available will keep operating costs in control. Guard against out-of-control fuel prices of the future by purchasing a smaller, four cylinder vehicle or a hybrid.

Ways to Lower Insurance Costs

No matter if the buyer purchases new or used, the car will need to be insured. Unless the purchaser pays cash for the vehicle, they will be required to carry a full coverage policy in order to protect the lender’s interests in the case of a collision, weather damage or if the vehicle is stolen or vandalized. If the buyer purchases with cash and no portion of the purchase price is financed, the new owner may carry liability only insurance. In most states, at least a liability policy is required. However, depending on the vehicle age, buyers who pay in full upfront may still want to consider full coverage. In “at fault" states, liability covers only the other driver and vehicle in case of an accident. In “no fault” states, liability will cover only the minimum required for the policy for property damage and bodily injury. If the car is five years old or newer, the driver probably needs to carry full coverage insurance to make sure they are able to cover the cost of repairs in case of an accident or damage.

Whether the driver opts for full coverage or liability insurance, shopping around and comparing rates for similar policies with various carriers is essential for lowering insurance costs. Premiums greatly vary between companies for similar policies. With the Internet, comparing similar policies for several companies is quick and easy. Before the Internet, the task of comparing rates would entail calling each company for a quote for a specific policy. Now, with the Internet, comparisons between companies may be made within minutes. Those who seek to insure a newly purchased vehicle can quickly shop and compare the rates for several companies and choose the company that offers great rates for their products.

  • Car Insurance Discounts: In addition to comparison shopping, there are a few additional ways that individuals may save money on their auto insurance costs. Various discounts are offered by most insurance companies. Such discounts include multi-policy discounts. A multi-policy discount is when a policy holder insures more than one vehicle, or their vehicle and home, with the same company. Other possibilities would include carrying a motorcycle and a car policy, a vehicle and boat policy, and so on. Having more than one policy with an insurance carrier may provide as much as a 20 percent discount on the designated policies. Exploring discounts is a sure way to save money on insurance costs. Various insurance companies offer discounts for different consumers. Good Student discounts may be offered to high school and college students who maintain at least a B average in school. However, each insurance company requires that the student prove their GPA in different ways. Check with the insurance provider and ask about Good Student discounts, as well as other discounts that may apply.
  • Lower Deductibles: Each insurance policy is assigned a deductible. A deductible is the amount the policy is responsible for should they file a claim. Most insurance companies automatically assign a $500 deductible to their policies. This means that if $2000 in damage has been done by a fallen tree, the owner is responsible for paying the first $500. The insurance company provides the owner with the remaining $1500. Many insurance policy holders are unaware that they may raise the deductible on their policy. Raising the deductible to $1000 will considerably lower premium payments. However, the concern is if and when the owner files an insurance claim, they will be responsible for the first $1000 for the damages.
  • Add Young Drivers to the Family Policy: Another way to save on insurance costs is to add younger drivers onto their parents’ policy instead of obtaining a policy just for the young person. Younger drivers, due to their lack of experience with driving, have higher insurance rates. However, when they are added to their parents’ policy, the costs are adjusted for a better rate.
  • Carry Liability Instead of Full Coverage for Older Cars: If a vehicle is older than five years, the owner may consider carrying only liability insurance. Not only are liability insurance premiums less costly than full coverage premiums, full coverage makes less sense the older the car gets. The insurance company will base the amount they pay for claims on the current vehicle book value. The older the vehicle, the less the insurance company will pay on claims. Owners should always have the minimum coverage of liability insurance mandated by their state. Though for older automobiles, having full coverage insurance is often not cost effective.

Many people may think that the longer a consumer stays with an insurance company, the better rates they will get as a “loyalty” benefit. Unfortunately, this is not true. In fact, the longer a consumer stays with an insurance company, the less likely they will be to receive discounts and the more likely they are to having extra charges tacked onto their policies. Review insurance policies each year prior to renewal. Make sure that extra coverage has not been added without your knowledge. Renewal time is a great time to shop around for insurance. The owner will likely find that switching to another company will save them money on their insurance costs, especially if they have been with their insurance companies for years.

Ways to Negotiate Sales Prices and Online Alternatives to Haggling

Progressive nj car insurance Many Americans do not like to haggle for a better deal. However, haggling is commonplace in some cultures. If a buyer will haggle over the price of a new or used vehicle, they stand a chance of obtaining a better purchase price for the vehicle. Haggling simply means that the purchaser makes a counter-offer to the dealer or seller once they have presented the purchaser with a selling price. Haggling is simple negotiation. Dealers in particular have some bargaining leeway when it comes to the purchase price of their new and used vehicles. When shopping, the purchaser has nothing to lose. They should attempt to negotiate a lower selling price. Even a $500 break is often equivalent to a monthly payment. Buyers should always attempt to gert a better price than the asking price of the seller.

For those who are uncomfortable with the prospect of haggling for a better price, some websites offer services that allow users to comparison shop for the same make and model of vehicle. Sites such as CarsDirect and TrueCar allow users to search for a specific make and model in their geographical area. The search results provide the asking prices of various sellers and dealers. The site user may then contact the seller or dealer and even offer a lower price, if the so choose.

In addition, sites such as CarsDirect are a one-stop-shop. The buyer may locate a desired make and model, purchase insurance and apply for loans right from the site. Sites like TrueCar show the user the amount others have paid for the make and model they are searching for. Many people may prefer haggling over email or simply comparison shopping for a good selling price instead of haggling in person with a salesperson or a seller over their asking price. No matter the preference of the buyer, they should try to obtain the lowest selling price for the vehicle they choose. Online alternatives make the process less personal and more efficient. Use such sites to see what others are paying for the same make and model regardless of comfort level of face-to-face haggling. Some people may simply be intimidated with the prospect of being on the seller’s own turf when attempting to negotiate. Sites like CarsDirect and Truecar level the playing field and ensure that the dealer or seller is not able to influence the buyer as with a face-to-face interaction.

Even if the purchaser is a talented negotiator, sites such as CarsDirect and TrueCar provide a baseline of data that they should arm themselves with before confronting the dealer or seller. No matter how it is accomplished, buyers are advised to utilize all resources and become educate with regards to an acceptable purchase price before dealing with the seller or salesperson. Just remember that the asking price is often set with room built in for negotiation.

In some cases the vehicle you want most might not be available with all the features you want. For that reason it can make sense to be willing to consider used vehicles as well, or to pick out 2 or 3 different options, such that you can compare the best deals for them and chose the one which fits your needs while being the most affordable after you factor in the full operating costs and your typical usage patterns.

Should You Accept Dealer Financing? Learn How to Save on a Loan

Generally, most buyers should not accept dealer financing, unless there are compelling rebates that more than offset the typically higher interest rates. Even if the buyer has an excellent credit rating, the dealer’s finance company will likely charge them a higher interest rate than if the buyer were to obtain a loan from a bank or credit union. If the purchaser has less than perfect credit, the dealer finance company will likely charge a very high interest rate for the loan. Dealer financing with 18 percent interest are not uncommon for those with poor or no credit.

Just like with insurance, shopping around for good loan rates will save buyers a great deal of money on their loan. The lower the interest rate, the lower the overall cost of purchasing. Better still, if the purchaser is able to pay cash, they will not need a loan. This, however, requires that the purchaser save aggressively before embarking upon the purchase. Buyers who pay in full will have the option to carry liability or full coverage insurance and the buyer will only pay the price for the vehicle. They will pay no interest charges or fees associated with a loan. Clearly, saving in advance and paying cash is the best way to buy.

However, most people are not prepared to pay the full purchase price in cash when they buy, financing at least some portion of the vehicle. Still, a large downpayment will minimize the loan and keep monthly payments down. For those who must finance their vehicles, taking a few months to clean up any credit problems before applying for the loan is advisable. Obtain credit reports from all three credit reporting agencies, which you can do for free at AnnualCreditReport.com. Challenge any information that is not recognized or verifiable. The company that has placed the entry on the credit report has 30 days to respond to a challenge with proof that the creditor owes them what the entry claims. If the company does not respond within 30 days, the entry is removed from the credit report.

Once credit reports are cleaned up, the buyer should shop the loan around to various banks and finance companies. With good credit, the purchaser will be more likely to obtain a low interest rate for the loan. Factor in a healthy downpayment so that an amount less than the full purchase price must be financed, and the purchaser will obtain a better interest rate and lower monthly payments, too. Generally speaking, the lower the amount borrowed & the shorter the loan term, the less interest you have to pay on a loan.

  • Here are some additional tips on dealing with poor credit.
  • If your credit has improved since you first obtained financing, you may also want to consider refinancing into a lower rate.
  • You can use this comparison chart to calculate the interest costs & loan payments for up to 5 loans at the same time.
  • Some people who have significant home equity might find the rates on a home equity loan lower than a car loan.
  • Paying bi-weekly can further lower interest costs.

What Time of Year to Buy to Get the Best Deals

Many people believe that the best time of year to buy is in September. For example, the best time to purchase a 2012 model is in September of 2012. This is because the next year’s models are released in September of the preceding year so in September of 2012, the 2013 models are showing up at the dealerships. The dealers will make better deals knowing that they need to clear out the inventory to make room for the 2013 models. Dealers will often offer “year end” sales on the previous years’ models.

Edmunds recommends that the best time of year to purchase new is during the holiday season. The reasoning for this is that dealerships are not selling as many new vehicles during this time of year and the odds of getting a good deal are in the buyer’s favor. Edmunds also recommends that buyers will get a better deal if they purchase at the end of the month, when dealerships are trying to meet sales quotas to get bonuses from manufacturers.

One responder to a survey about when the best time of year to buy suggests that during the Superbowl is the best time of year to buy. This person apparently went into a dealership when the salespeople were gathered around a TV watching the game. The salesman gave the purchaser a great deal in record time, and did not try to sell the customer any extras, simply to get back to watching the game. Though this study is anecdotal, it does give shoppers something to think about.

Other experts believe that any time of year is the best time for purchasing so long as you are flexible with your options. The fact is, buyers may negotiate good deals any time of the year. Dealerships will often offer special sales on particular makes and models, or they may have sales over a period of time. As long as the buyer does their homework and shops around for the best deals, and they are able to negotiate a good purchase price, any time of the year can work.


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  • Car insurance premiums are based on a variety of factors
  • Installment fees are usually nominal and do not add much to the monthly payment
  • You can usually lower your rates by implementing security devices and attending defensive driving courses
  • The most common and preferred payment method is to pay in monthly installments
  • Depending on the state you live in, your average car insurance rates could drastically change

Car insurance premiums are based on a variety of factors, including the amount of coverage, the state in which you reside, your geographical location, the make and model of your car, your age, your driving record, and a host of discounts that can help reduce your premium.

We can help you find average car insurance rates instantly! Simply enter your ZIP code above!

How do payment plans work?

Most car insurance policies are issued for six months to a year, but you can usually arrange for a monthly payment schedule. If you set up a monthly schedule, you will be able to estimate your average monthly price of car insurance.

Installment fees are usually nominal and do not add much to the monthly payment.

Depending on your insurance policy premium, your average monthly car insurance payment can range from $100 to $200 a month.

Average auto insurance rates by state are a great thing to research. There are many state averages that can help you out greatly. Different studies use different methodologies, which is why you will see some disparities in the numbers — most likely dealing with the inclusion of high-risk drivers, teenage drivers, etc.

The average monthly car insurance payments by state — according to this study done in 2012 — are as follows:

  • Alabama: $56.50
  • Alaska: $80.17
  • Arizona: $77.17
  • Arkansas: $57.75
  • California: $70.42
  • Colorado: $68.92
  • Connecticut: $82.58
  • Delaware: $85.67
  • Washington D.C.: $98.50
  • Florida: $88.58
  • Georgia: $65.33
  • Hawaii: $70.25
  • Idaho: $48.58
  • Illinois: $61.92
  • Indiana: $54.75
  • Iowa: $46.25
  • Kansas: $49.17
  • Kentucky: $62.50
  • Louisiana: $89.67
  • Maine: $53.67
  • Maryland: $78.75
  • Massachusetts: $92.75
  • Michigan: $77.58
  • Minnesota: $65.92
  • Mississippi: $62.08
  • Missouri: $57.08
  • Montana: $57.08
  • Nebraska: $51.75
  • Nevada: $81.92
  • New Hampshire: $66.00
  • New Jersey: $98.67
  • New Mexico: $60.58
  • New York: $93.50
  • North Carolina: $50.17
  • North Dakota: $46.17
  • Ohio: $55.75
  • Oklahoma: $56.50
  • Oregon: $61.42
  • Pennsylvania: $70.75
  • Rhode Island: $88.25
  • South Carolina: $62.75
  • South Dakota: $47.08
  • Tennessee: $54.92
  • Texas: $70.42
  • Utah: $58.83
  • Vermont: $58.25
  • Virginia: $58.17
  • Washington: $70.00
  • West Virginia: $71.42
  • Wisconsin: $51.25
  • Wyoming: $53.25

Now you know how much car insurance costs per month on average . . . sort of. The above numbers are for the year 2012, and there are some conflicting studies that quote the real average at closer to $150/month.

So if someone asks you, “What is the average cost of auto insurance per month?” then you can just say, in typical lawyer fashion, “Well, it depends.”

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How Auto Insurance Premiums are Calculated

Auto insurance companies use different methods to calculate car insurance premiums, but the majority of them start with a base rate that is first approved by their state’s Department of Insurance.

Once the insurance company has an approved base rate, they consider the age of the driver and his driving record, which is one way that you will be able to estimate a typical car insurance payment.

Young and inexperienced drivers cost more to insure, while an experienced driver can get a better rate —provided that his driving record is relatively clean.

New and sporty cars always cost more to insure, and if you live in an at-risk neighborhood for theft or vandalism, you will most likely pay more for your rates as well. Depending on these factors, your average auto insurance payment could fluctuate.

You can usually lower your rates by implementing security devices and attending defensive driving courses. If you have more than one vehicle with the same policy, it is common to receive a multi-car discount.

Furthermore, if you own a home and place your homeowners insurance with the same insurance company as your vehicle, you can qualify for a multi-policy discount.

Your insurance company may also offer other discounts, such as good student or accident-free incentives, which will help reduce your insurance premium and your monthly car insurance payment.

Paying Your Car Insurance Premiums

Depending on the term of your insurance policy, you may be able to pay in installments instead of paying the entire insurance premium up front.

For example, if you have a six-month policy, your payment options would typically be to pay the entire premium at the time of accepting the policy, to make two installment payments with the first half being due immediately and the second half being due in three months, or to make monthly payments.

Therefore, it doesn’t always make sense to wonder what the average person pays for car insurance per year because really, people don’t usually pay per year for car insurance.

Check with your insurance company to see if they will give you the monthly car insurance cost. Then you will be able to better plan financially!

The fees to arrange a payment schedule are usually small, such as $2 for each installment payment, which would ultimately add $12 to your six-month premium if you chose to make monthly payments.

The most common and preferred method for most people is to add a small extra fee each time and make those smaller monthly payments, rather than to come up with the larger sum that is initially due for the entire insurance premium.

Since the payment fees do not usually add up to much each month, it is fairly easy to calculate your monthly car insurance payment. Simply take your total premium and divide it by how many months are covered by the term.

For example, if your premium is $600 for a six-month term, then your monthly car insurance payment will be $100 plus the payment arrangement fee — approximately $102.

It is important to note that even though you have a term policy, if you do not make your payment on time, your insurance can be canceled and the state will be notified.

If you choose to cancel your insurance ahead of time, say because you are switching car insurance companies, you are entitled to a prorated refund for any premiums that you paid for your policy in advance.

The Most and Least Expensive Car Insurance States

When it comes to car insurance, there are some states that are historically more expensive than others, with the District of Columbia, Louisiana, Maryland, New Jersey, and New York being some of the most expensive.

Some of the least expensive states for car insurance are Arkansas, Illinois, Iowa, South Dakota, and Vermont. Depending on the state you live in, your average car insurance rates could drastically change.

Always remember that not everyone will get the same price on car insurance. The state average car insurance rates can change according to the person’s place of residence.

Population, congestion, and cost of living are some factors that influence the average monthly car insurance rates by state.

New Jersey tops the list with an annual average car insurance premium of $2,500, while Illinois averages an annual average low of $1,200, making the national average annual premium an approximate $1,800.

Your monthly car insurance payment may not reflect the average car insurance payment for the state because of all of the factors that apply to your personal policy. Your premium could be higher or lower depending on the type and amount of coverage you select, the deductible you choose, and the discounts you earn.

A typical car insurance monthly payment can look drastically different among different people due to the varying policies, driving records, and many other factors. Make sure you have all the basics covered and look for the best deal on insurance.

Wondering how much car insurance usually costs is only of so much use. What you need is to know how much you will pay, which will help you plan your budget better.

The best way to find your average monthly rate is to compare the prices that car insurance companies offer. It’s FREE and easy to compare; all you have to do is enter your ZIP code in the box below!

  1. http://www.prweb.com/releases/auto/insurance/prweb9730144.htm
  2. http://disb.dc.gov/
  3. http://auto.howstuffworks.com/under-the-hood/aftermarket-accessories-customization/10-car-security-systems1.htm
  4. http://www.aarpdriversafety.org/
  5. https://www.nationwide.com/multiple-policy-discount.jsp


For ballpark estimates on your car insurance rates, or to find out how, why or how much your car insurance will go up or down after a ticket or a change of address, we have several helpful articles and car insurance calculators.

CarInsurance.com’s average car insurance rates tool provides average auto insurance rates for nearly every ZIP code in the U.S. It allows motorists to explore comparative rates within their own city or across the nation.

The "How much car insurance do I need?" tool can suggest what level of coverage is best for you, based on your age, the state you live in, your car's model year, whether you own or finance your car, and whether you own or rent your home.

By their nature, averages and estimates don't apply specifically to you. For that, you can use our online quote comparison tool and get matched with multiple car insurance providers, who will give you a quote, or you can call one of our licensed insurance agents at 855-430-7753.

But you may simply be looking ahead to a new car, a marriage or a move across town and wonder about the consequences. We advise that you check car insurance rate quotes before making life changes, so you'll be aware of how your premium may change and can budget for it appropriately, or switch to a provider that offers a better price given your new situation.

Below are answers to some of the most common questions about the factors affecting your car insurance rate.

How much does my age affect my car insurance rates?

Auto insurers penalize inexperience rather than age. Of course, the vast majority of inexperienced drivers are teenagers. Rates for 16-year-olds can double or even triple their parents’ car insurance annual premiums.

The less experienced the driver, the higher the rates. Among drivers with clean records and no accidents, no other factor changes rates more.

Statistically, inexperienced drivers crash – a lot – and so they are the riskiest category of drivers to insure. Car insurance rates reflect this high risk.

The inexperience penalty drops slowly until about year 10. As an example, this is what the inexperience surcharge for basic bodily injury liability coverage looks like at one California car insurer during the first decade of driving:

ExperienceBodily injury base rateInexperience surchargePremium
0-1 year $189.56 2.172 $411.72
2 years $189.56 1.945 $368.69
3 years $189.56 1.789 $339.12
4 years $189.56 1.669 $316.38
5 years $189.56 1.324 $250.98
6 years $189.56 1.299 $246.24
7 years $189.56 1.1 $208.52
8 years $189.56 1.059 $200.74
9 years $189.56 1.059 $200.74
10 years $189.56 0.946 $179.32

If you keep a clean record after age 25, rates typically stay relatively stable until you become a senior driver, when crash rates go up and premiums begin to rise again.

Does my address affect what I pay for insurance?

If you live in a highly populated urban area, congestion, accidents and insurance claims are more prevalent. Living and driving in a metro area will make your rates higher than if you live in a rural area, where having an auto accident is less likely.

Car insurance companies look at factors such as the rate of stolen cars in your area, and the number of cases of vandalism, claims and fraudulent claims. All of this helps insurers discern the risk associated with insuring you and your car in that ZIP code, whether you ever have made a claim or not.

All other factors equal, your ZIP code can change your rate by hundreds of dollars.

Are some cars cheaper to insure than others? Why?

Auto insurers track which cars have the most wrecks and the worst injury records. Those factors impact the cost you pay for liability insurance -- which covers the damage you cause to others.

Insurers also know which cars are expensive to buy, expensive to repair or more easily stolen. Those factors drive up the cost of collision and comprehensive coverage, which repairs or replaces your own car.

The calculations about the risk of a certain car are made independently. For example, if you are an inexperienced driver in a car with a poor claims record, you are penalized twice. A more mature driver in the same car would pay a surcharge for the car, but not one for inexperience.

Insurers can also choose not to cover certain types or brands of cars. For example, some won’t insure a lifted pickup truck, a kit car or certain exotic cars.

How does my marital status affect my car insurance rate?

Married couples have been found to have fewer accidents and claims than single drivers do.

Rates can be from 5 percent to 15 percent lower for married couples just because of their marital status. But there are also other discounts married couples can look forward to when they combine their policies, such as a multicar discount, or a multipolicy discount if they have a renters or homeowners policy with the same insurer.

An insurer considers you single if you have never been married, or are widowed or divorced.

How much does my driving record impact my car insurance rate?

Your driving record is paramount to your car insurance company. Safe drivers get a discount from standard rates for keeping a clean driving record. On the flip side, individuals who have a moving violation (speeding or a DUI, for example) or an accident on their motor vehicle record are more of a risk and can face a surcharge on top of standard rates.

If you have enough violations or accidents, you can become uninsurable according to some car insurance companies’ underwriting rules. For example, some insurers reject anyone with four or more chargeable accidents in three years, or more than three DUIs in seven years, or more than 15 points on the driver’s motor vehicle record.

In general, a minor violation such as a speeding ticket can boost your rates 20 percent to 40 percent. You may not be surcharged for the actual ticket, but will lose your good-driver discount. If you have a major violation like a DUI, your rates can go up 100 percent or more. The more risk you appear to be to your auto insurer, the more you will pay.

How much does my commute matter?

You car’s annual mileage is a rating factor for many car insurance companies. The less you drive, the less risk you have of being in an accident. Also, how far you drive for your commute lets the insurer know what kind of risk you are during the congested, high-risk hours.

Your insurer can also use the length of your commute to determine if you head into a metro area from your rural or suburban home. If you live outside of Los Angeles, but your commute is 30 miles, your insurer can predict that although your local area is low-risk, your commute into the heart of a very populated metropolitan area pushes your risk factor much higher.

Why should my credit history count?

Insurance companies routinely check your credit rating as part of your application process, except in California, Massachusetts and Hawaii, where state law prohibits credit from being a pricing factor.

Credit scores help the insurance companies assess the risk level of a potential customer. Research has shown that those with lower credit scores (typically under 600) are more likely to file claims, file exaggerated claims, or even commit insurance fraud.

Those with low scores may face a surcharge. Rates for those with higher scores are typically unaffected.

Your credit score can also affect how an insurance company allows you to pay for your policy, since statistics show that people with lower credit scores are more likely to miss a payment. Customers with very poor credit scores may be required to pay the entire premium for a six-month policy up front. Customers with low credit scores sometimes won’t qualify for monthly billing, or they may need to pay a large percentage of the policy up front and the remainder monthly.

Are some types of coverage more expensive?

There are several types of car insurance. The more coverage you get, the more you will pay. If you get a bare-bones liability policy that covers only what the state requires, your car insurance costs are going to be less than if you bought coverage that would repair your own car, too.

Liability coverage tends to cost more because the amount the insurance company risks is higher. Coverage for collision and comprehensive insurance is limited by the replacement cost of the car itself. But medical bills and multiple-car accidents could push a liability claim into the hundreds of thousands of dollars.

If you don’t have enough liability coverage, you could be sued for the difference by anyone you injure.

Comprehensive and collision damage is affected by the deductible you choose. The higher the deductible, the less the insurance company will have to pay -- and the lower your rates.

Medical coverage, such as uninsured motorist bodily injury, medical payments or personal injury protection (PIP), will cause your rates to go up. Without some kind of medical coverage, if you don’t have health insurance elsewhere, you might not be able to pay for treatment if you are injured in an accident you caused.

Is there any difference between insurance companies?

Insurance companies must follow state laws, but within those laws they price coverage based on their own underwriting rules and guidelines. One insurance company may look at your driving record for five years, another only for three. The surcharge for a speeding ticket may raise your insurance by 10 percent with one carrier but only 5 percent with another.

You should shop around and get quotes from several carriers. Make sure you are comparing apples to apples -- the same coverages with each insurer -- and check the reliability and financial stability of the insurance carrier.

Finally, make an informed decision about who you want to be insured with for the best price and protection. Don’t let a small savings drive you away from an insurance company you know and trust.


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