What Is a zk Car Insurance Premium?
A car insurance premium is the amount you pay your auto insurer to protect you and your car. An insurance company determines this amount based on its best guess about your potential to make a claim for reimbursement or to have someone else make a claim due to you causing an accident.
The premium depends on numerous factors, including your selected coverages, driving record, location, and age. You might pay your car insurance premium monthly, every six months, or once a year, depending on your chosen payment plan and how much time your policy covers.
:max_bytes(150000):strip_icc():format(webp)/GettyImages-1328171458-5b2c06f6aaf241388c8718208fb65540.jpg)
KEY TAKEAWAYS
- A car insurance premium is the money you pay for your auto insurance policy.
- The national average car insurance premium for full coverage is about $147 monthly.
- Shopping around for insurance, having a clean driving record, and taking advantage of discounts can help keep your premiums low.
How Are Car Insurance Premiums Calculated?
The higher the risk you are to insure, the higher your premium.1 If you fall into the category of a driver who might make any claim—based on your age, driving record, type of car, claims history, car theft in your city, or other factors—the insurance company could charge you a higher premium or decline to cover you.
Drivers paying the highest premiums are single males under age 25 because statistics about millions of drivers demonstrate they have the highest accident rates.2 In contrast, a middle-aged person without a history of claims, accidents, or tickets will likely pay a lower premium. Statistics indicate that this person is less likely to make a claim.
But premiums are also calculated based on a broader increase in claims payment costs. These include rising, inflation-based costs of covering auto repair, theft, fraud, lawsuits, administrative expenses, and finally, medical treatment for those in auto accidents note..
Every insurer in each state has its method of rating risks and may charge you differently for similar coverage. That’s why it pays to shop around for car insurance.
Car Insurance Premium Factors
Each state requires insurers to disclose factors used to calculate premiums. Here’s a closer look at some of the most prevalent factors for determining premiums.
- Driving record: Insurers look at the last three to five years, including accidents and moving traffic violations.
- Household status: Singles may pay more for insurance because insurers note that married couples have fewer accidents overall. However, any driver with a poor driving record in your household could affect your rates.
- Claims history: This is based on your CLUE report, which details seven years of personal property and auto claims.
- Type of vehicle: Owners of newer cars, electric vehicles, sports cars, and high-performance cars may pay more due to risk or costs for repair.
- Location or ZIP code: People living in areas with higher rates of accidents, theft, or vandalism may pay more.
- Prior insurance coverage: If your coverage lapsed, you could pay more.
- Discount eligibility: You could pay less by bundling your home and auto insurance, taking defensive driving courses, or having auto safety devices like airbags.
In most states, the following are considered. But some or all of these factors can't affect your premium in states that include California, Georgia, Hawaii, Massachusetts, Montana, North Carolina, New York, and Pennsylvania, according to researchers at insurance website The Zebra.3
- Your credit history: While some states forbid your credit score from influencing your insurance premium, it’s allowed in other states.
- Gender: Males typically pay higher premiums than females, but gender isn’t considered in some states.
- Age: People under 25 typically pay the most for auto insurance, but some states don’t consider age-related factors.
- Education, occupation, and employment status: You might pay less for insurance if you’re employed and college-educated, but several states don’t allow this factor to be considered.
Your state sets a minimum amount for liability insurance that covers damage to other people and vehicles you’re responsible for causing. Some premium cost factors depend on the coverage you buy.
- Additional coverages: You can add coverage to protect your vehicle or passengers or if an uninsured motorist damages your car.
- Liability coverage limits: You will choose these limits, which could lead to higher premiums.
- You can decide how high your deductible is for
How Much Is a Car Insurance Premium in 2024?
The national yearly average for car insurance premiums in 2024 was about $1,759, or $147 per month. Here are some other national 2024 averages based on coverages and age groups; these come from The Zebra.
*Full coverage here is defined as higher liability limits of 50/100/50 and comprehensive and collision coverage with a $500 deductible
Avoid Accidents and Claims
To improve your driving and claims records, take active steps to avoid accidents, auto theft, and tickets.5 Any claim you make could raise your premium rate.
In addition, think twice before filing a claim if no other people or property were involved, such as a fender-bender involving only your fender and a garage wall. Also, weigh the wisdom of filing an auto insurance claim if your deductible (the amount you pay first) is slightly lower than any claim reimbursement you might get back.
Avoid Fees
Read your policy or speak with an agent to understand any fees that could be charged in the premium payment process. Find out how to avoid those fees. For example, autopay can ensure you avoid late fees, while paying a year upfront can help avoid installment fees for monthly payments.
Update Your Insurer Regarding Changes
Some changes in your situation could lower your rates, such as if you move to a different neighborhood, drive less, have fewer drivers in the household, marry, or turn 21, 25, or 29.
Frequently Asked Questions (FAQs)
How Often Do I Have to Pay My Car Insurance Premium?
Depending on your payment plan, you might have to pay your premiums every month, every six months, or annually. You can usually only make yearly payments on 12-month policies, but many insurers only offer six-month policies. You can often save money by paying the entire bill in advance.
Is It Better to Pay My Car Insurance Premium Monthly or Annually?
Paying annually usually gets you a discount for paying a lump sum, but monthly payments could be easier on your budget. If your premium is too high, a monthly payment can allow you to shop around without worrying about getting a refund or paying an insurance cancellation fee.
What Is the Difference Between a Car Insurance Premium and a Car Insurance Quote?
A car insurance premium is the specific amount you agreed to pay to have your policy in force, while a car insurance quote estimates what your policy will cost before you buy it. These numbers may be the same, or your insurance quote may change once you provide more details about your circumstances.
What Is the Difference Between a Car Insurance Premium and a Car Insurance Deductible?
A car insurance premium is what you agree to pay for your policy. A car insurance deductible is what you selected to pay out of pocket for specific types of claims, usually those filed for comprehensive or collision coverage.6
Why Did My Car Insurance Premium Increase?
Many drivers nationwide saw their car insurance premiums increase more than 25% in recent years because of inflation, natural disasters, more car accidents, and climbing repair costs. Your car insurance policy can increase at renewal even if there aren’t any changes to your coverages, driving record, or other metrics.
The Bottom Line
Car insurance premiums are the price you agreed to pay for auto insurance when you purchased your policy. Simply shopping around for coverage annually to get the best price can help keep premiums low. You can do many other things to decrease your premiums, including making timely payments, increasing your deductibles, and ensuring your insurer has the latest information.
