prpri The Basics of Car Insurance: What You Need to Know The Basics of Car Insurance: What You Need to Know

Whether you own a car or intend to get one, it’s important to be familiar with how car insurance works. After all, car insurance is the third largest expense a car owner will shoulder, aside from car loan and gas.

However, this subject can be overwhelming and tricky, especially for those who have no idea what car insurance covers. To help you out, here’s a brief checklist of what you need to know.

The Average Cost of Car Insurance in the US

The average cost of car insurance in the US is $1,429 annually and $730 per six months — according to the 2018 study by Carsurance. However, it’s important to note that rates vary depending on your state.

For instance, Michigan holds the most expensive rate with an average premium annually of $2,241, while Vermont holds the lowest rate at $934. The main factors contributing to the varying rates in different states include the presence of a no-fault insurance system, high population density, and frequent car accidents.

Car Insurance by Age

The youth might be enjoying some of the best things in life, but these exclude car insurance. Apparently, the younger you are, the more you need to pay, and costs continue to decline with each birthday. Car insurance quotes for 16-year-olds are three times more expensive than for those in their mid-30s.

Male vs Female 

Most cars are unisex but, believe it or not, your gender is a contributing factor to car insurance rates. However, in most US states, there’s only a percentage of the difference between male and female drivers.

You may wonder why women pay less than men? It’s because about 80% of vehicular accidents involve male drivers.

How to Save on Car Insurance

This is perhaps the best part — with all the costs that come with car insurance, how can you actually save? Here are the top three tips:

  • Get quotes from multiple insurance companies. Don’t stick with one. You can find insurance rates as low as $504 to as high as $1,488.
  • Keep your credit score high. The lower the credit score, the higher your car insurance rate.
  • Consider paying by the mile. It can cost you lower.

Getting a car is necessary for most of us, but just like with any luxury, it comes with a price. To make the most out of your car insurance, it’s best to learn even the basics, so you don’t end up getting a bad deal and draining your funds.

That said, our advice is to conduct a throughout research before choosing your next insurer and insurance policy. Good luck!

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August 2021