Jessica Sautter is a Content Writer for with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 18, 2020

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Key takeaways...

  • Car insurance rates depend on a number of different factors
  • Your driving history negatively or positively affect your monthly premiums
  • Always compare at least three different quotes before making a final decision

When searching for car insurance, many consumers have a difficult time determining whether they are getting a good deal.

Since most people are unsure of what other drivers are paying, they don’t know if their rates are higher or lower than the average,

Enter your zip code into our search tool above and start comparing quotes for FREE!

What the Average Driver is Really Paying for Insurance

According to CPI, the average cost of car insurance was $1,736 in 2009. This comes to approximately $145 each month.

The cost of car insurance has been steadily climbing for the past few years. In 2007, the average driver was paying $1,589 a year.

In 2008, the average cost of insurance was $1,600. This means that, since 2007, insurers have increased their rates by around 11.5 percent.

When looking at these figures, it’s important to understand that these averages are based on what consumers are paying.

According to the National Association of Insurance Commissioners, 77 percent of insured drivers purchased comprehensive and liability insurance in 2008.

Seventy-two percent also bought collision coverage. This is not taken into consideration when determining the average.

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How Location Affects Car Insurance Rate

Car insurance rates depend on a number of different factors. Once such factor is where an individual lives. This is because drivers tend to file more claims in certain states than they do in others.

This may be due to crime, weather-related damages, or other factors. State car insurance varies as well.

The top nine most expensive states are:

  1. New Jersey
  2. Washington D.C.
  3. New York
  4. Louisiana
  5. Maryland
  6. Delaware
  7. Rhode Island
  8. Michigan
  9. Alaska

Drivers in New Jersey paid an average of $2,371.63 in 2009, which is $635 more than the national average. Drivers that lived in Newark, New Jersey paid even more.

These drivers were charged an average of $3,126.96 for insurance. Generally speaking, city dwellers can expect to be charged higher car insurance rates than drivers living in more rural areas.

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Fortunately, in some states, drivers are given a break on their rates.

The top nine least expensive states are:

  1. Illinois
  2. South Dakota
  3. Iowa
  4. Arkansas
  5. Vermont
  6. Hawaii
  7. North Dakota
  8. Nebraska
  9. Ohio

In 2009, Illinois residents paid an average of $977.57 for car insurance, which comes to about $81 a month. This is a staggering $1,394 less than what New Jersey residents were charged.

The average Chicago resident did pay more, at an average of $1,290.21 per year.

Yet, considering that Chicago is one of the United States’ busiest metropolitan areas, this average is still decently low. This just proves location can impact a person’s insurance rates.

Other Factors that Affect Car Insurance Rates

In addition to location, other factors will also affect a driver’s rates.

These factors include:

  • Age
  • Driving history
  • Claims history
  • Credit score
  • Make and model of vehicle
  • Number of drivers in the household
  • Vehicle safety features
  • Vehicle security features
  • Distance of daily commute
  • Gaps in coverage

A great place to learn about certain special car insurance factors would be the Insurance Information Institute.

How Insurers Calculate Rates

When a person requests a car insurance quote, an insurer will consider a variety of information. Insurers put a lot of emphasis on certain factors, like age, driving history, credit, and past claims.

All of this information will be used to determine the probability of a driver filing a future claim.

Statistically speaking, young drivers get into more accidents than more experienced drivers.

On average, drivers with bad credit scores more claims than those with good credit. Insurance providers take these things into consideration when assigning rates.

It’s also important to remember that if a driver is deemed to be a high risk, they may be quoted a high rate, regardless of their state’s average.

For instance, if an Illinois driver has a history of accidents, they can’t expect to pay only $977.57 a year for insurance.

Reversely, if a person is a safe driver, but lives in an expensive state like New Jersey, they will be given higher rates simply because of where they live.

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How to Lower Your Rates

Calculating insurance rates is very complicated. Different insurance providers use different algorithms to predict risk.

One insurance provider may place more emphasis on credit, while another will put the most emphasis on driving history!

The best way to keep rates low is to shop around. Knowing the average cost of insurance is only a starting point.

Once a person knows what other drivers are paying, they need to determine how much they should expect to pay.

The best way to get the most affordable rates is to take the time to request quotes from several different insurance providers before deciding on a policy.

Find affordable rates today! Enter your zip code below to get started!