How much should car insurance cost?
One question our insurance brokers get pretty often is: “How much does car insurance cost?” Another question that follows is: “How much should car insurance cost?”
Your car insurance premium (the amount you pay for coverage each month) depends on your age, where you live, your driving record, what kind of car you drive, and what kind of coverage you need.
Choosing the best car insurance policy can be tough. Customers should always compare insurance policies and shop for the best quotes.
But one thing’s for sure: getting auto insurance and paying your monthly premium is always cheaper than getting in an accident without coverage!
Uninsured drivers face huge costs not just from accidents, but from the penalties and fees associated with driving uninsured in the state of California. One question people should ask instead is: “How much can my insurance save me in the event of an accident?”
What makes up the cost of car insurance?
Did you know that all vehicles driven or parked on a California street, road, or Highway must be insured? The premium you pay each month depends on what type of driver you are and what type of coverage you need.
Unlike other states, California doesn’t allow your credit rating to affect your premium (the amount you pay monthly for coverage).
Car insurance providers in California typically look at your age, your driving record, and how many miles you drive on average when determining your premium rate, though all insurance companies handle risk assessment differently. Here’s how it breaks down:
Cost Factor #1: Age
Your age plays a big role in determining your premium rate. The younger you are, the more difficult you are to insure. Think about it this way: your age is basically an average measure of your overall driving experience.
The hardest drivers to insure are new teen drivers and elderly drivers, whereas the cheapest drivers to insure are aged 50-55. Some student drivers can save money on their insurance premiums through Good Student Discounts and other discounts.
Cost Factor #2: Location
Your zip code can matter more than you think in determining the price of your car insurance policy.
High theft and vandalism rates can affect the pricing of your car insurance policy, as well as the number of uninsured drivers in your area. California ranks #12 in the U.S. for uninsured drivers.
Cost Factor #3: Vehicle
What car you drive can also drive up the cost of your car insurance. Newer vehicles cost more to insure because they’re worth more, whereas older or damaged vehicles cost less.
Older cars are more likely to be considered “totaled” in an accident, whereas newer cars are not, resulting in higher coverage premiums.
If your car is less than 10 years old, you should buy collision and comprehensive coverage. Vehicles with higher safety ratings also cost less to insure, along with cars that have smaller engines.
Cost Factor #4: Deductible
One of the things you’ll need to choose when getting car insurance is your deductible. Your deductible is the amount you have to pay after an accident before your insurance kicks in.
Let’s say you have liability coverage for $15,000 and a deductible of $500. You get into an accident that costs $1,000. You first have to pay your $500 deductible, then your insurance kicks in and covers the rest.
If you choose to have a low deductible, the cost of your car insurance increases. If you choose to have a high deductible, the cost of your car insurance decreases.
Lower income drivers need more protection from their insurance, whereas those with more expendable income can choose to have a higher deductible.
Cost Factor #5: Driving Record
Nothing matters more than your personal driving record when determining your premium. Under Prop 103, drivers can get a “Good Driving Discount” on their car insurance premiums if they meet certain eligibility requirements.
Steering clear of accidents, tickets, and previous auto insurance claims will keep your car insurance premiums low.
What’s the average cost of car insurance in California?
In California, the average cost of car insurance is about $70 per month or $841.45 per year.
You’re required as a driver in California to get a minimum bodily injury liability coverage of one person for $15,000 and $30,000 for two people along with a minimum property damage liability coverage of $5,000.
That means if you get in an accident that causes more than $15,000 in bodily injury or more than $5,000 in property damage, you’ll have to pay out of pocket.
Even a minor accident can exceed the minimum liability coverage limits. For instance, the average car accident claim for bodily injury last year was $17,024 in California, and the average property damage claim is $3,493.
If you can’t pay the total amount, your assets can be taken as collateral, even your car!
Luckily, getting more protection is affordable in California. Lots of drivers choose to get “full coverage” car insurance: a combination of liability car insurance, comprehensive insurance, and collision insurance. It’s also advisable to exceed the basic coverage requirements stipulated by California law.
For instance, you might have a collector car and need Classic Car Insurance. You might also want Uninsured or Underinsured Motorist Protection, Gap Insurance, Rental Reimbursement, or Medical Payments Coverage.
Lower income drivers over 19 years old with a valid driver’s license and a vehicle valued under $25,000 can also enroll in the California Low Cost Auto Insurance program, which permits $10,000 per person bodily injury liability or $20,000 per accident, and property damage liability of $3,000 per accident.
Be careful of auto insurance agencies that offer dirt-cheap coverage, otherwise known as “non-standard carriers”.
What they won’t tell you is that the cheap price comes at a high cost: there are usually hidden fees and taxes you might not realize are included in your car insurance policy that will drive your rates through the roof.
Many times, drivers under 21 are not covered by these premiums. Other hidden costs associated with non-standard carriers include frequent record checks, repair checks, and loss of benefits like roadside assistance.
Non-standard carriers also don’t offer insurance coverage if you use your car for business purposes, for instance as an Uber driver.
How do I decrease the cost of my car insurance?
Decreasing the cost of your car insurance is easy! Being a safe driver and comparing insurance policies to find the coverage that’s best for you will help you save the most money down the road.
Installing safety features in your car and choosing vehicles with high safety ratings can drastically lower your insurance premiums.
Drivers who have never filed a previous property damage or bodily injury claim can also save big on their premiums. Finally, customers can get a multi-policy discount by getting a policy that bundles several types of coverage.
When we think about the cost of car insurance, we typically think about our monthly premiums. It’s important to always ask your insurance broker for their best quote, and to shop around and compare car insurance policies to find the best coverage.
But what customers should always remember is that the real cost of insurance is not having it.
Getting in an accident without insurance will always cost more than getting the right policy coverage, staying insured, and working to reduce your premiums by being a cautious driver.
Ask your friendly Frontlight insurance broker for a quote on a policy today. Stay safe, stay covered, and stay in front, with Frontlight!