Most people think of car insurance as an extra expense that would only eat a significant chunk of their monthly budget. While car insurance premiums can be hefty, they can save you from future and unforeseen events like accidents and emergencies. If you weigh the benefits against the risks, you’ll see the scales tilt in favor of the former. So, f car insurance is necessary and beneficial, the more pressing question that needs an answer now is this — what is a reasonable amount to pay for car insurance?
What factors determine insurance cost?
The total insurance cost you’ll pay is determined by many factors — from where you usually park your car, how you drive, and your preferred coverage. However, the evaluation parameters are not the same among all companies; here some of the factors they consider when assessing your total insurance cost.
- Owner’s driving record: If you or your car driver has a sterling record, your premium will be lower. However, if you’ve committed severe traffic violations and got involved in accidents, there’s a high chance that you’ll also pay a higher insurance premium. If you’re a new driver with no insurance history, you’ll also have to pay more than a seasoned driver.
- Frequency of car use: If you’ve driven more miles, there is a very high chance that you might be involved in car accidents. In this case, you’ll have to pay more if you use your car to commute long distances or for work. On the other hand, if you only use it for pleasure use,’ the lesser insurance premium you pay.
- Location: Because of higher incidences of accidents, theft, and vandalism, city drivers often pay more expensive car insurance premiums than those living in rural areas and small towns. If you park your car in a secure garage, you also pay less premium. Its anti-theft features will also impact your insurance bottom line.
Besides these, your insurance credit score will also be used to determine your likelihood of filing a claim and the cost of the said claim. And lastly, your preferred insurance coverage will also be determining factor of your total insurance cost.
The specific insurance cost couldn’t be ascertained right away because of the variables mentioned above. However, for those looking for a ballpark figure, the National Association of Insurance Commissioners (NAIC) released a report stating that, on average, American car owners pay $95 per month or $1,134 per year.
According to NAIC, most American car owners spend about $611.12 per year for property damage and bodily injury liability, and $364 and $160 for collision and comprehensive coverage, respectively. Again, your car insurance agent can help you go through these items and provide an explanation for the same.
Owning and driving a vehicle pose risks that might cause harm and damage to public properties and private individuals. Therefore, as a vehicle owner, you need to exercise diligence while ensuring that you’ll cover future and unforeseen expenses. This is quickly offered to you by comprehensive car insurance.