What Is The Average Car Insurance Cost Per Month?

Matthew Lloyd
February 19, 2021
Matthew Lloyd

average car insurance cost per month

Average Car Insurance Cost Per Month

Buying a car is a huge step in the game of life and is definitely a reason to celebrate. After all, it isn’t every day that you finally save up enough money to invest in the vehicle that will travel with you for years.

However, there’s more to buying a car than just making the down payment. As a proud car owner, you’re going to have to accept the new set of responsibilities that accompany your vehicle’s ownership.

One of the first things you’re going to want to do right after buying your car is to find to a practical and efficient car insurance policy for your situation. These policies are mandatory by law in most states and bring a wide-ranging set of benefits along with them, too.

Each state has a different insurance rate average. Places with a higher population density and a greater rate of vehicle ownership are likely to have higher premium costs. You’ll also be expected to pay for your car insurance policy’s premium every month, or else you’ll lose your package and all the benefits that accompany it.

As a result, you should always be extra careful when picking out a policy for your car. Car insurance providers offer a wide array of coverage policies, so be sure to consider your coverage needs, your lifestyle, and your ability to pay on time before committing to an insurance plan.

This article will go over everything you need to know about car insurance premiums and how much you can expect to pay for your plan per month.

So, are you ready to learn more?

Let’s dive in! 

Average Car Insurance Cost by American State 

One of the prime factors that help determine your cost of car insurance rate is location. Insurance costs vary heavily by state. The amount charged is calculated based on local state statistics. Things like crime rate, average income, and traffic laws all play a role in determining the cost. 

A state with a higher likelihood of car damage due to robbery (or other criminal acts) may charge more for car insurance because there is a higher chance for your car to experience trauma. 

If vehicle repair rates are generally higher in your state, then it’s likely that your car insurance provider will charge you a higher fee to help cover these repairs if the case ever arises. 

These are just some examples of how and why the car insurance cost varies depending on which American state you’re based in. 

If you want a clearer picture of just how high these rates can go, have a look at this table:

10 States with Highest Average Car Insurance Costs

Ranking

State

Full Coverage Premium

Minimum Coverage Premium

1

Louisiana

$2,711

$757

2

Florida

$2,544

$895

3

Michigan

$2,375

$995

4

New York

$2,205

$974

5

Nevada

$2,058

$709

6

California

$2,012

$580

7

Colorado

$2,004

$466

8

Georgia

$2,000

$654

9

Arkansas

$1,912

$452

10

Rhode Island

$1,846

$605

It’s no secret that these prices are high. But remember, living in these states also means that your income may be higher than what you would be earning in another state. 

People in Maine, for example, earn significantly less money than those based in New York or California. So, the auto insurance rates in Maine are much lower: the full coverage premium is $782, while the medium coverage premium is only $227. These are the lowest insurance averages in the country.

Car Insurance Companies 

Another important element that plays a role in how much you’ll be paying for insurance is the company you choose to go with. Some providers are known for providing insurance at more affordable rates, but their insurance policies sometimes come with drawbacks and limitations that affect their effectiveness.

So, if you want to make sure your car is fully insured, it might be worth looking into insurance providers that are slightly above the base cost. 

However, don’t forget to keep your budget in mind. You should never sign up for an insurance plan that you can’t afford because it may lead you into debt, but more on that later.

Some popular insurance providers include MetLife, Farmers, Allstate, and Geico. There are many other excellent providers out there, too, but these are just some reliable household names to help you get started in your search for the ideal insurance provider.

Remember that not every provider will be able to cover your car’s insurance needs. Each auto insurance company will offer you different OT deals, which will encompass different things. It’s up to you to decide your priorities in terms of what you want from the insurance provider and things you are willing to forgo in exchange for a discounted price. 

Factors Determining Car Insurance Rates

As mentioned above, many factors can affect your car’s insurance rate. Here is a list of the most important elements that can raise or reduce the amount you are charged for auto insurance:

The make and model of the car you’re driving

The most important factor contributing to determining your insurance rate is the type of car you are driving. More expensive, large, or luxury cars typically cost more to insure than their more affordable counterparts. This is because repairing them or replacing their parts will cost the insurance provider a hefty sum, so they need to make sure they get that inflated amount back in premiums. 

Also, if you own a car that comes with built-in safety features, you might be able to grab a discount on your premium. Examples include anti-lock brakes and anti-theft technology, as these can reduce the likelihood of your car experiencing damage.

Driving habits and age

If you have a driving record that’s smeared with multiple accidents, you can expect to pay more for insurance than a person who has a cleaner record. On the other hand, if you’ve just started driving and don’t have much of a record to prove how good (or bad) your driving habits are, you can also expect to pay a slightly higher premium than someone who has been driving for much longer and has been able to maintain a healthy, clean record.

Young drivers typically pay higher premiums than older, more experienced drivers simply because younger people are more prone to accidents. This is a reflection of a lack of experience, combined with a higher chance of recklessness on the road. 

How Much You Drive

An insurance company will always analyze how often you drive your car—the frequency of usage factors into your car's likelihood of experiencing damage. Hence, if you are on the road for more hours in a day than another person, your premium may be higher than theirs. 

Also, cars that are driven more are bound to garner small internal damages over time and need regular servicing. A car that’s not serviced is more likely to get into collisions or experience problems that could lead to an insurance claim. Hence, the premium for such vehicles is generally higher than those that are not driven as often.

Location

If you live in an area that has a high crime rate (particularly crimes involving cars, like auto theft), then you can expect a higher premium for sure. Urban areas are highly likely to experience traffic collisions, accidents, and the like, which is why cars that are driven in big cities or more populated states typically have higher insurance rates.

How to Reduce Your Car Insurance Premium

Insuring your car can cost an arm and a leg, there’s no denying it. Luckily, there are a few ways in which you can reduce this amount. Below is a list of tips and tricks to consider when applying for auto insurance. Use them to get a discount on your car insurance premium:

Safe drivers

If you have managed to avoid accidents and traffic code violations in the past, go ahead and cash it in now! People with clear driving track records can contact their insurance provide and ask for a safe driver discount.

Claims

You can also apply for a discount on your premium if your record is free from claims in the past several years. The policy varies depending on where you’re getting your insurance from, so it’s best to contact your current (or future) provider for more information.

Owning and insuring multiple cars

If you belong to a household that owns multiple vehicles, try applying for the multi-car discount. However, this is only possible if all your cars get their insurance from the same company.

Bundles

Pairing up your car insurance policy with a home or life insurance plan (usually from the same provider) can reduce the amount you’ll have to pay for your car’s coverage.

Paying All at Once

Paying your car insurance premium as a lump sum at the start of the year can help you save money. Many insurance providers find it more convenient when the payment is made upfront in one go. You also have the opportunity to save on interest since you won’t be spreading your insurance premium over 12 months. Companies usually offer discounts in exchange for this as it saves them the hassle of sorting through your paperwork each year.

The good student premium

Did you know that many insurance providers will offer you a discount on your premium if you hold good grades in school? That’s right! Full-time high school or university students between ages 16 and 24 can apply for the discount by proving that they have met the minimum grade requirement (for most companies, this is a B average). 

If you’re looking to save up and cut back on payments, look into these tips to help reduce your car insurance premium. 

Auto Insurance Coverage

When it comes to insuring your car, there are many different policies to choose from. But before selecting a package, you should look into your state’s minimum car coverage requirements. Each state has a minimum threshold for insurance that needs to be met. If your policy doesn’t match up to it, it can cause a host of problems from a law enforcement and claims perspective.

Whether you choose to settle for the minimum or raise the bar is entirely your call. The higher the bar (ie. the more things your insurance policy covers), the more money you can expect to pay for your premium.

Coverage values are typically listed in sets of three and separated by slashes. So, for example, you might see 40/60/30 written on your policy statement. The first set of digits (40, in this case) represents the bodily injury liability per person. The second set (60) denotes the bodily injury liability per accident. The third set of digits (30) highlights the property damage liability per accident. 

Each of these values represents a thousand dollars. So, by writing 40/60/30, the insurance provider is essentially saying $40,000, $60,000, and $30,000 for each type of coverage, respectively. 

Type of Coverage and Add-Ons

There are two fundamental types of coverage: minimum and full.

Minimum coverage is equipped to protect you against liability claims from others, but full coverage is all set to protect your vehicle, too. 

Full coverage is achieved by merging your regular minimum coverage plan with a set of extended add-ons. The most popular car insurance add-ons include collision and/or comprehensive coverage. 

Collision coverage provides protection if your car ever collides with another vehicle, a building, or other objects by the road and you are found liable for repair costs. 

Comprehensive coverage protects your car from non-collision-related incidents. Common examples include crime, like theft, or a natural disaster like a flood or an earthquake.

While full coverage may sound like a handy thing to have by your side, remember that it costs a lot and that not everyone needs it. 

If you’re wondering whether or not your car needs full coverage, take the following pointers into consideration:

  • Older vehicles might end up having a higher deductible than the value of the car, so you may not need full coverage in such cases. 
  • If you don’t take your car out often or have no history of accidents, then full coverage won’t be as useful for you as for someone who drives a lot and has a history of road accidents.
  • However, some people may be expected to maintain full coverage regardless of whether or not they actually want to. If you have a lease or a car loan, your lender may expect you to maintain full coverage. Check with them to see what their expectations are and make your insurance decisions accordingly.

Note: A “policy limit” is the amount your insurance company will pay for a certain type of incident. A “deductible” is how much you are responsible for paying in case of damage before your insurance provider pitches in cash from their side.

Full coverage is more than what your state’s laws demand from car owners. Minimum coverage is enough to help you stay out of legal trouble. Whether or not you want your car insured against collisions, crime, and natural disasters depends on what you can afford and how far you’re willing to bump up your policy costs.

Conclusion

As you can see, there is much more to owning a car than just buying it. You have to keep paying for maintenance and insurance premiums, too.

Use this guide as a reference when applying for car insurance policies. To compare car insurance rates between multiple carriers, visit our homepage!