Want to know how much you should spend for vehicle insurance because you’re in the market for a new automobile or are just being smart? With the help of the auto insurance calculator from Forbes Advisor, you can quickly and easily determine how much car insurance will cost.
Table of Contents
How to Calculate Your Car Insurance Coverage Needs
The simplest approach to determine how much auto insurance you require is to examine each component independently because a car insurance policy can include a number of different parts.
How to choose the right amount of liability insurance
Most states mandate liability auto insurance, which covers accidental loss of property and harm to third parties. If you are sued due to an accident, it also pays for your defence costs, verdicts, and settlements.
Choosing the appropriate amount of auto insurance requires an understanding of liability insurance limits. Generally speaking, you should purchase enough liability insurance to protect your assets from any lawsuit losses.
Liability limits are written as a group of three numbers, such as 15/30/15, and breaks down to mean:
- 15 = $15,000 of bodily injury liability coverage per person
- 30 = $30,000 of bodily injury liability coverage per accident
- 15 = $15,000 of property damage liability coverage per accident
Because these levels are frequently insufficient if you cause a costly accident, buying only the minimal amount of liability coverage required by your state could prove to be a costly error.
Do you need collision and comprehensive insurance?
A wide range of issues are covered by collision and comprehensive insurance, which are sometimes sold together. These issues include damage from accidents involving your own automobile, auto theft, collisions with animals, floods, fires, hail, vandalism, and falling items (like tree branches).
Despite the fact that collision and comprehensive insurance are not mandated by state law, if you have a car lease or loan, your leasing company or lender will likely insist on this coverage.
Your coverage will be determined by the value of your automobile or the amount paid to you if your car is declared a total loss, so you won’t need to select a collision or comprehensive amount. Only a deductible needs to be selected. If you file a $500 collision or comprehensive insurance claim, this sum will be deducted from your settlement.
Even if you own your automobile outright, collision and comprehensive insurance are worth considering if you want to be covered for the cost of replacing or repairing it if it is damaged due to an issue covered by your policy.
What other car insurance could be required?
Certain states, like California, just demand liability insurance. Others, like New York, call for different kinds of coverage in addition. Here are some additional types of auto insurance that your state might mandate:
- Auto insurance lapse (UM).voluntary in certain states and required in others.If you or your passengers are hurt by a driver who doesn’t have liability insurance, uninsured motorist insurance will cover your medical costs and those of your passengers. UM limitations typically correspond to your liability limits.
Personal injury protection insurance (PIP). mandatory in several states. No of who was at blame for the accident, if you reside in a state where there is no-fault insurance, you must use your own personal injury protection insurance to cover medical expenses. PIP also covers additional expenses like missed pay and substitute services like child care if you are unable to care for your children after the accident.
Medical payments (MedPay). necessary in some states. Regardless of who is at fault, medical payments coverage pays for treatment of injuries you and your passengers sustain in an auto accident.
What Factors Impact Your Car Insurance Estimate?
Giving thorough information about yourself and other drivers who will be covered by the policy is the easiest method to acquire an accurate quotation when you shop around for vehicle insurance among several car insurance companies. The elements listed below typically influence an automobile insurance quote.
Your age
Young drivers pose a greater risk for accidents, so those under age 25 see much higher car insurance rates than other age groups.
Except in California, Hawaii, or Massachusetts, auto insurance companies use age when determining rates. In your middle years, from your 30s to your 50s, car insurance premiums are generally stable, but as you get closer to your 70s, they start to gradually increase.As you approach your 70s and 80s, your senior driver’s insurance costs start to gradually increase as a result of age-related impairments that increase your likelihood of filing an accident claim.
Driving experience
The less time you’ve had behind the wheel, the more you’ll pay for auto insurance. Younger and inexperienced drivers are more likely to be in more accidents, which results in higher car insurance rates.
Driving record
Driving safely and keeping a clean driving record leads to cheaper rates. Here’s how certain infractions can result in rate increases:
At-fault accidents. If you cause property damage in an accident, your auto insurance rates increase by, on average, 45%. If there are injuries, the increase rises to 47%.
Speeding. Your car insurance rates go up after a speeding ticket 24% on average.
DUI. Your car insurance rates go up after a DUI 74% on average.
Your location automobile insurance firms Look at your area to find out what kinds and how many claims are made there. Accidents, theft, vandalism, and other car-related crimes and claims, as well as weather-related claims like hail or flooding, are examples of location-driven risk factors. Where you live will also effect how much auto insurance rates are for things like vehicle repairs and medical treatment.
You will typically pay more than drivers in the suburbs or in rural areas if you live in an urban area. Even if you’re a fantastic driver, cities have greater incidence of auto accidents, auto theft, and auto vandalism, which will be reflected in your car insurance rates.
Your vehicle model
Your car’s make and model affects how much insurance you’ll pay. The cost of repairs and theft rates are two factors that insurers look at when evaluating historical claims for particular automobile models. These factors might affect the price of supplemental coverage kinds like collision and comprehensive insurance. Expect to spend extra for auto insurance if the model of your car is more expensive to fix or replace.
Credit
Car insurance companies usually use a person’s credit when setting rates—except in California, Hawaii, Massachusetts and Michigan.
Although it is debatable whether or not a credit-based insurance score should be used to determine auto insurance premiums, vehicle insurance providers cite a Federal Trade Commission report that links a person’s credit score to their propensity to file an insurance claim. As a result, if you have bad credit, your car insurance will likely go up.
According to our data study, drivers with bad credit typically pay 76% more for auto insurance than those with good credit. However, not all insurers utilise credit the same way, which is why it’s essential to compare prices.
Lapses in car insurance coverage
You will be charged more for auto insurance if you have a gap in coverage compared to drivers who maintain continuous coverage. When you have gaps in your history of auto insurance, auto insurance companies view you as a higher risk driver. Maintaining insurance demonstrates stability, which reduces your risk.
Coverage and deductibles selected
A basic liability auto insurance policy will be less expensive than a full coverage policy that also includes comprehensive and collision protection. However, the cost of doing so is that you’ll expose yourself to substantial vehicle accident lawsuits that aren’t entirely covered by insurance.
Car insurance collision and comprehensive coverage deductibles go together. Your deductible, which normally ranges from $500 to $2,500, is something you choose. You’ll pay less the larger deductible you select. This is so that your insurance company pays less when you select a higher deductible since your deductible is the sum deducted from a claim check.
How to Lower Your Car Insurance Costs
Here are ways to save money on car insurance:
Shop around. The best way to find a good policy at a fair price is to compare car insurance quotes among multiple insurance companies.
Ask for discounts. You may be qualified for more than a dozen popular auto insurance discounts, such as the good driver discount or the multi-vehicle discount. When you are eligible, many savings are automatically applied. Others, like an excellent student discount if you have a teen driver with a B average or higher, you’ll need to request as your auto insurance provider won’t be aware that you qualify for these.
Raise your deductible. If you have collision and comprehensive insurance, you can reduce your auto insurance premiums by boosting your deductible. You’ll pay less in premiums because if you make a claim, your insurer will pay less.