Comparison Shopping for Automobile Insurance: What Affects Your Rate?

Pure coincidences aside, every driver who goes shopping for automobile insurance ends up paying a different rate. The auto insurance market is big, nationwide, and not regulated for pricing. So, the insurance rate you get will depend (for starters) on where you live (by state and zip code), your age, your driving record, and the company with which you insure.

Add into that framework such specifics as what types of insurance you buy (for example, liability, collision, comprehensive, medical); how much insurance coverage you buy from the company (for example, both auto and home); and other factors.

The big ones that affect everyone, though, are age of the driver, state, driving record, and the insurance company. Here are comparisons of average automobile insurance rates by age, state you live in, insurance company you choose, and your driving record. All numbers are averages.


Age is a big factor because, on average, different driver age-groups have very different accident rates. So, for example, national average insurance rates range from $715 a year for 45-year-old drivers to $3,343 for 16-year-old drivers. Teenage drivers are far, far more likely to get into an accident, and it is far more likely to be serious or fatal. That means expensive claims on the insurance company.

Notice in the table below that starting at 16, the average annual rate by age drops each year. By age 19, it is half of the rate at age 16. And the rate drops steadily by decade until the mid-50s, and then rises, again. The reason is that older drivers begin to have more accidents.

But individual circumstances will affect rates. Parents with teenagers will pay much higher rates if the teenagers are at home using the car. If they are away at college and only home on holiday, some companies will offer a lower rate. Also, in some states, taking a defensive driving course earns you an automatic rate reduction and that applies to teenagers. 



Now, add in the impact on rates of the state where you live and drive, plus your age. The age differences remain significant, but if you are 16 and live in New York, you will pay $7,305 a year and in Hawaii $596. One factor, but only one, is that rural states with less dense populations tend to have fewer accidents. But states also treat the age factor differently. In Wyoming, the average annual rate for a 16-year-old, $1,342, drops to $274 at age 65. Following chart illustrates how much the insurance costs can vary across the states


Here is a map of average insurance costs in each state

Since these are average figures for what drivers in a given state spend on insurance, if the insurance company you choose is in another state that fact will not help to lower your rate; the company will be using accidents and claims data from the state where you live.

Insurance company

Insurance companies offer very different automobile insurance rates, but some of the cheapest companies are in only a few states or, for example, offer coverage only to individuals with a military service record and to some of their family members.

Here is a chart showing some of the cheapest car insurance companies and what they charge (on average) for minimum coverage (say, just liability) and what they charge (on average) for full coverage (liability, collision, comprehensive, medical, uninsured motorist). Concealed within these overall averages, of course, are the differences every company will charge by age and state.

You cannot hold the insurance companies to these rates, which are estimated averages.

Driving record

You have some control over your insurance rate because it is affected by your driving record. The insurance penalty (rate increase) you pay after various types of incidents does not vary a lot by age and state, but these are the U.S. averages

● Yearly rate increase for speeding ticket:        $216

● Yearly rate increase after at-fault accident:     $421

● Yearly rate increase after DUI:                   $791

A bad driving record can be costly, increasing your rate for three years. But you can shop around because different insurance companies will give you a different rate increase for incidents.

Making rate comparisons

Again, the rates given here are averages, so when you shop for insurance and make more specific comparisons relevant to yourself, you should be sure to make valid comparisons. When you decide what types of coverage you want (and how much insurance), your comparisons will be meaningful. For example, what is termed a "full coverage policy" will include liability, collision, and comprehensive (and perhaps medical and uninsured motorist coverage). For full coverage, the average rate nationally is about $2,125. In most states, a minimum car insurance policy is required and usually means only liability coverage. The average rate nationally is about $1,050.

A lot of things will determine if you can purchase only liability. For example, if financed your purchase (say, with a bank loan) you will be required to have collision and perhaps comprehensive because the car is collateral for the loan.

Here are the chief types of insurance coverage and what they protect:

● Liability covers claims against you for injuries or damages to property if you cause an accident.

● Collision covers damage to your own car if you crash into another car or have some other moving accident.

● Comprehensive covers almost any non-collision damage from your car like fire, theft, vandalism, storms, or animals.

● Medical covers certain medical bills that may not be covered by liability and related medical costs of an accident.

● Uninsured and under-insured motorists policy coverage protects you when you get into an accident with a motorist who (illegally) is driving without liability insurance (an unfortunately increasingly common problem).

Asking Select My Insurance

With this information, you can approach your insurance specialist ready to ask specific questions. For example:

● What companies provide automobile insurance in your state.

● Discounts for which you qualify based on defensive driving education, how you pay, how much you drive, and other factors.

● Moving automobile, home, and other policies to one company for a better overall price.

● And what types of coverage you and your family may need.