Car insurance is essential for every car owner. It provides financial protection in case of car accidents or theft. However, the cost can vary significantly depending on several factors such as location, age, driving history, and coverage level. In this article, we’ll explore everything you need to know about the average car insurance premium in 2021.
What is the Average Car Insurance Premium in the US?
The average car insurance premium in the US is $1,548 per year or $129 per month. However, this number varies significantly depending on several factors, such as location, age, driving history, and coverage level. Let’s explore how these factors affect the cost of car insurance.
Location
Location is one of the most important factors that affect the cost of car insurance. In general, car owners in urban areas pay more for car insurance than those in rural areas. This is because urban areas have higher traffic density and more cases of car theft and accidents.
According to a report by Insure.com, Michigan has the highest average car insurance premium in the US, with an average of $2,878 per year. On the other hand, Maine has the lowest average car insurance premium, with an average of $864 per year.
Age
Age is another crucial factor that affects the cost of car insurance. Young drivers (below 25 years) and older drivers (above 65 years) usually pay more for car insurance. This is because young drivers are considered high-risk drivers and older drivers may have underlying health issues that may affect their driving ability.
According to a report by The Zebra, young drivers in the US (16-19 years) pay an average of $5,335 per year for car insurance. On the other hand, drivers aged 60-69 pay an average of $1,347 per year for car insurance.
Driving History
Driving history also plays a significant role in determining the cost of car insurance. Car owners with a history of accidents or traffic violations usually pay more for car insurance than those with a clean driving record.
According to a report by ValuePenguin, car owners with a DUI (Driving Under Influence) conviction pay an average of $4,500 per year for car insurance. On the other hand, car owners with a clean driving record pay an average of $1,427 per year for car insurance.
Coverage Level
The coverage level is the amount of financial protection that a car owner gets from an insurance policy. Car owners with a higher coverage level usually pay more for car insurance than those with a lower coverage level.
According to a report by NerdWallet, car owners with a comprehensive coverage policy (which covers theft and damages) pay an average of $1,621 per year for car insurance. On the other hand, car owners with a liability-only policy (which covers damages to third parties only) pay an average of $516 per year for car insurance.
How to Lower Your Car Insurance Premium?
Car owners can take several measures to lower their car insurance premium. Here are some tips:
Shop Around
Car owners can compare car insurance quotes from different insurance providers to find the best deal. This can help them save significantly on their car insurance premium.
Improve Your Driving Record
Car owners with a clean driving record usually pay less for car insurance than those with a history of accidents or traffic violations. Therefore, car owners can take measures to improve their driving habits to lower their car insurance premium.
Choose a Higher Deductible
A deductible is the amount that a car owner has to pay out of pocket before the insurance policy kicks in. Car owners can choose a higher deductible to lower their car insurance premium. However, they should ensure that they can comfortably afford the deductible in case of an accident or theft.
Bundle Your Policies
Car owners can bundle their car insurance policy with other insurance policies such as homeowner’s insurance or life insurance to save on their car insurance premium.
FAQ
What is car insurance?
Car insurance is a type of insurance that provides financial protection in case of car accidents, theft, or damages. Car owners pay a premium to an insurance company, and in return, the insurance company covers the financial losses incurred in case of an accident, theft, or damages.
What factors affect the cost of car insurance?
Several factors affect the cost of car insurance, such as location, age, driving history, and coverage level.
How can I lower my car insurance premium?
Car owners can lower their car insurance premium by shopping around, improving their driving record, choosing a higher deductible, and bundling their policies.
How often should I review my car insurance policy?
Car owners should review their car insurance policy annually or whenever there is a significant life event such as marriage, divorce, or the purchase of a new car.
Is car insurance mandatory?
Car insurance is mandatory in most states in the US. Car owners who fail to have car insurance may face hefty fines and legal consequences.
Conclusion
Understanding the cost of car insurance is essential for every car owner. The cost can vary significantly depending on several factors, such as location, age, driving history, and coverage level. However, car owners can take several measures to lower their car insurance premium. By shopping around, improving their driving record, choosing a higher deductible, and bundling their policies, car owners can save significantly on their car insurance premium while still getting adequate financial protection.
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