Car Insurance Premium Explained
Posted September 12th, 2019 by Jason Metz
What's a car insurance premium?
A car insurance premium is the amount you must pay when your bill is due. Car insurance premiums are often paid monthly, but you can choose to pay a larger premium less often, such as every six months or year.
What’s the average car insurance premium?
The average car insurance premium is $1,684 a year, or about $140 a month. See the average car insurance cost in your state.
How is my car insurance premium calculated?
Each car insurance company applies its own calculation to determine your premium. Companies will usually be looking at the following:
How can I lower my car insurance premium?
- Compare quotes – Car insurance premiums can vary by hundreds of dollars for the same coverage at different car insurance companies. One of the best ways to get cheaper insurance is to compare auto insurance quotes.
- Bundle your insurance – “Bundling” is when you buy two types of insurance from the same insurance company, which typically gets you a discount. While bundling home and auto insurance is one of the best ways to save, you can also often bundle auto insurance with renters, condo, RV, boat, life insurance and other types of insurance.
- Ask for discounts – There are several types of auto insurance discounts you might be eligible for, like good driver, good student and multicar discounts.
- Lower your deductible – The higher the deductible you choose, the lower your car insurance premium will be.
- Go paperless – Some auto insurance companies offer small discounts if you receive policy documents and bills electronically.
- Electronic funds transfer (EFT) – You may get a small discount if payments are automatically withdrawn from your bank account.
- Drop coverage types you don’t need – If you have an older car, you may not need collision and comprehensive insurance. A good rule of thumb is to look at how much your vehicle is worth (the maximum insurance payout) versus how much you’re paying for collision and comprehensive coverage per year.
- Improve your driving habits to avoid tickets and accidents. To evaluate your driving skills, consider trying a free safe driving app like EverDrive, which tracks and scores driving habits.
Is it better to pay car insurance premiums monthly or in full?
It’s usually better to pay your car insurance premium in full if you can. Car insurance companies typically offer discounts for paying in full, and you’ll avoid any installment charges.
What happens if I don't pay on time?
While some insurance companies have a grace period (typically seven days after the due date), failure to pay can result in a policy being canceled for nonpayment. Having your car insurance canceled creates a gap in your insurance history, which can lead to in a premium increase when you re-apply. And driving without car insurance could result in fines, license suspension and even jail time.
Will my car insurance premium increase?
Premiums can increase when you renew a policy, even if you haven't had a claim or accident. EverQuote users with good driving records reported a 2% increase in car insurance premiums last year. If you've caused a crash, the average insurance increase after an accident is about 36%.
Check out the map below to see the average car insurance premiums in your state.
Fast, Free Auto Insurance Quotes
The Best Car Insurance CompaniesCar Insurance Quotes
Liability Car InsuranceComprehensive and CollisionMotorcycle InsuranceGap InsuranceNon-owner Car InsuranceRideshare InsuranceSR-22 Insurance
3 Kinds of Insurance You Don’t Know You’ll NeedLife Insurance Coverage For You And Your Family6 Things You May Not Know Are Increasing Your Insurance CostsWhat Is Flood Insurance?Is Your Car Insurance Hurricane Ready?