The Average Automobile Insurance Rates

Many factors are used to determine policy rates.

Automobile insurance and policy premiums differ by state and even county. Many factors go into determining a premium amount, including driver and vehicle information. Regardless of area and policy differences, one fact remains the same--everyone who drives a vehicle must obey state laws and become legally insured to do so.

Coverage

Every state has minimum liability requirements recognized by insurance companies as the least expensive policy. Limits are low in some states and high in others. Policy owners are able to increase limits. Often, the state limits are not enough financial coverage in the event of a major accident. Raising limits can protect an individual from lawsuits and personal financial responsibility. For people who lease or finance a car, full coverage, which includes comprehensive and collision, is required coverage until the car is paid for. Bank policy requirements, including limits and deductibles, differ by lender.

Vehicle

Premiums are greatly affected by vehicle cost, use and statistics. A full coverage policy on a vehicle worth $100,000 is more expensive than a full coverage policy on a $20,000 car because of replacement costs. Vehicle theft statistics are also considered. Vehicles with modern safety features and excellent crash test ratings fare a lower policy price than those that do not. Common discountable safety features include anti-lock brakes, passive or active alarm, number of airbags and a vehicle locating device, such as OnStar.

Personal Information

Various personal factors determine policy premiums. Age, location and credit information are used to assess risk for policy premiums. Drivers under the age of 25 are in the riskiest group, while drivers between the ages of 50 and 65 are statistically safer drivers, according to Car Insurance Companies. Insurance companies discount policies based on homeownership, marital status, occupation and education--situations that are statistically proven to reduce risk. Other price factors include weekly mileage and whether the vehicle is used for personal, pleasure or business use.

Accidents and Tickets

At-fault accidents can greatly impact insurance rates for individuals at the time of policy renewal or when switching companies. The numbers of years accidents stay on your insurance and driving history differ by state and insurer. Ticket history and license points are used to assess risk. DWI (driving while impaired) or DUI (driving under the influence) charges increases your risk factor dramatically---people with such charges may have a hard time finding insurance, let alone a fair rate.

Policy Averages

The National Association of Insurance Commissioners (NAIC) ran a report released in December 2009 to show the average premium for all states between 2005 and 2007. The NAIC states that this report was designed to present statistics surrounding auto insurance statistics and average costs to the public.

The top five most expensive states, according to the NAIC, including policy cost averages for 2007, were $1,140 for Washington, D.C, $1,104 for Jew Jersey, $1,096 for Louisiana, $1,047 for New York and $1,043 for Florida, according to Rocky Mountain Insurance Information (RMII).

The three cheapest states, including premium averages in this report, were $512 for North Dakota, $518 for Iowa and $534 for South Dakota.

The average policy premium for the United States in 2005 was $829 and decreased into 2007, ending the average premium cost report for this year at $795 for all states.

References

• Rocky Mountain Insurance Information: Cost of Insurance
• NAIC: The Center for Insurance Policy and Research;
• Car Insurance Companies: Determining Car Insurance Premiums