At CarEdge, we understand that car insurance can be a complicated and confusing topic. With so many variables and factors at play, it’s hard to know exactly how much you should be paying for car insurance. That’s why we’re here to help break down the average cost of car insurance in 2023 and what factors may impact your rates. We’ll also look at why car insurance rates are rising so fast.
The Average Cost of Car Insurance Is Rising
According to NerdWallet’s 2023 rate analysis, the national average cost of car insurance has risen to $2,148 per year, or roughly $179 per month for full coverage insurance. However, it’s important to note that these are just averages, and your personal car insurance rate may vary based on several factors.
Factors that may impact your car insurance rates include your driving history, location, the type of coverage you select, and the make and model of your car. For example, if you have a poor driving record or a recent DUI, you can expect to pay more for car insurance than someone with a clean driving record and good credit.
To get an accurate quote for your specific situation, we encourage you to compare car insurance rates for free with CarEdge. In fact, 76% of drivers who shop around find a lower rate for the same coverage. So why not take a few minutes to see if you could be saving money on car insurance?
Why Are Auto Insurance Rates Rising?
Despite a slight cooling in inflation, auto insurance prices are surging. How much have car insurance rates risen? Rates are up nearly 15% over the past year. A new report by Bankrate found that nationwide, premiums have risen more than $240 on average, topping $2,000 a year. Florida drivers saw the biggest jump, up nearly twice that amount to almost $3,200 a year. The higher cost of car insurance comes as supply chain issues are starting to ease, but the spike in repair costs is still driving insurance rates up across the board.
Insurance companies are fighting tooth and nail to spend less on claims. Claims tied up in court are one of the major driving forces for rising car premiums. “Most claims that are going through to the carriers are coming in with an attorney,” said Anakarina Callejas, an insurance agent at GreatFlorida who spoke to CBS News. “So, maybe a claim that could have been closed off rather quickly is now tied up in court, with higher and higher and higher expenses.” Those expenses are ultimately passed down to consumers.
Let’s take a closer look at how different factors may impact your car insurance rates.
Factors That Determine Auto Insurance Rates
Your driving history is one of the biggest factors that can impact your car insurance rates. If you have a clean driving record with no accidents or violations, you can expect to pay less for car insurance than someone with a history of accidents or tickets.
For example, a good driver with good credit can expect to pay an average of $2,148 per year for full coverage insurance. However, if you have an at-fault accident on your record, that price could jump to $3,164 per year. And if you have a recent DUI on your record, you can expect to pay even more, with an average cost of $3,933 per year for full coverage insurance, according to NerdWallet.
Your location can also impact your car insurance rates. If you live in a densely populated area with a high rate of accidents or thefts, you can expect to pay more for car insurance than someone who lives in a rural area.
For example, if you live in a city with a high rate of car thefts, your comprehensive insurance may be higher than someone who lives in a low-theft area. It’s important to consider these factors when you decide to shop around for better rates.
Type of Coverage
The type of coverage you select can also impact your car insurance rates. Full coverage insurance, which includes liability, comprehensive, collision, and additional insurance required by your state, is generally more expensive than minimum coverage insurance.
For example, a good driver with good credit can expect to pay an average of $685 per year for minimum coverage insurance, compared to $2,148 per year for full coverage insurance. However, it’s important to note that minimum coverage insurance may not provide enough protection in the event of an accident, so it’s important to consider your individual needs when selecting the right coverage.
Make and Model of Your Car
Finally, the make and model of your car can also impact your car insurance rates. We covered this in detail in a recent blog. Cars that are more expensive to repair or that have a high rate of theft may be more expensive to insure than cars that are less expensive to repair or have a lower theft rate.
For example, if you have a luxury car or a sports car, you can expect to pay more for car insurance than someone with a more modest vehicle. It’s important to consider these factors when selecting a car to purchase.
What Affects Your Car Insurance Rates?
Several personal factors can impact your car insurance rates. Let’s break down some of the most common factors:
Driving Record: Your driving history is a key factor in determining your car insurance rate. If you have a clean driving record, meaning no accidents, DUIs, or other traffic violations, you can expect to pay less for car insurance than someone with a history of accidents or violations.
Credit Score: Your credit score can also impact your car insurance rate. Insurers use a credit-based insurance score to calculate rates in most states, which is similar to your regular credit score. If you have good credit, you can generally expect to pay less for car insurance than someone with poor credit.
Location: Where you live can also impact your car insurance rate. Insurance companies consider factors such as crime rates, population density, and weather patterns when setting rates for different regions. If you live in an area with a high crime rate or a lot of accidents, you can expect to pay more for car insurance than someone in a safer area.
Coverage Selection: The amount of coverage you select also affects your car insurance rate. If you opt for minimum coverage, you’ll pay less per month, but you’ll have less protection in the event of an accident. On the other hand, if you choose full coverage insurance, you’ll pay more per month, but you’ll have more protection in case of an accident.
Car Make and Model: The type of car you drive can also impact your car insurance rate. Cars that are more expensive to repair or replace can cost more to insure. For example, a sports car will generally cost more to insure than a sedan. These are the most and least expensive cars to insure today.
What You Can Do to Lower Your Car Insurance Rates
While some factors that affect your car insurance rates are out of your control, there are several things you can do to lower your rates:
Shop Around: Comparison shopping is one of the best ways to find a lower car insurance rate. CarEdge can help you compare quotes from multiple insurance providers for free, so you can find the best rate for the coverage you need. In fact, 76% of drivers who shop around find a lower rate for the same coverage.
Increase Your Deductible: Raising your deductible, or the amount you pay out of pocket in the event of an accident, can lower your monthly premium. However, make sure you can afford to pay the higher deductible if you need to file a claim.
Bundle Your Insurance: Many insurance companies offer discounts if you bundle your car insurance. You may want to bundle with homeowners or renters insurance.
Maintain a Good Credit Score: As mentioned earlier, your credit score can impact your car insurance rate. Maintaining a good credit score can help you qualify for lower rates.
Choose a Car That’s Cheaper to Insure: Before you buy a car, check with your insurance provider to see how much it will cost to insure. Choosing a car that’s cheaper to insure can help you save money on your car insurance rates. Check out the huge gap in insurance costs for new cars.
The national average cost of car insurance is $2,148 per year, according to NerdWallet’s 2023 rate analysis. However, your personal car insurance rate will vary based on several factors, including your driving history, location, coverage selection, and car make and model. By understanding these factors and taking steps to lower your rates, you can save money on car insurance without sacrificing the coverage you need.
Remember, comparing car insurance quotes is one of the best ways to find a lower rate. CarEdge can help you compare quotes from multiple providers for free, so you can find the best rate. Don’t overpay for car insurance – start comparing quotes today.