Car insurance is a legal requirement across most states, but the cost of coverage varies significantly. Several factors influence your premium, including the make and model of your vehicle, your location, the level of coverage you choose, and your credit score. This article explores car insurance expenses and offers helpful tips for lowering your premium.
What Makes a Car Expensive to Insure?
Luxury and high-performance sports cars often carry the highest insurance costs. This is because these vehicles are expensive to repair and replace, directly impacting insurance rates. Furthermore, they are also more likely to be targeted by thieves.
Here are some of the most expensive cars to insure in 2023, according to data from CarInsurance.com:
- Maserati Quattroporte: $5,176 a year.
- Maserati Quattroporte Modena Q4: $5,118 a year.
- BMW M8 Competition Grand Coupe: $4,231 a year.
- Porsche Panamera Turbo S E-Hybrid Executive: $4,221 a year.
- Audi RS e-tron GT: $4,150 a year.
- Porsche Panamera Turbo: $4,129 a year.
- Tesla Model S Plaid: $4,115 a year.
- BMW M8 Competition XDrive: $4,054 a year.
- Porsche Taycan Turbo S: $4,028 a year.
- Audi R8 5.2L V10 Quattro Performance: $3,967 a year.
- Audi RS6 Avant Quattro: $3,922 a year.
- BMW M760i xDrive: $3,911 a year.
- BMW M850i xDrive Gran Coupe: $3,854 a year.
- Maserati Ghibli Trofeo: $3,840 a year.
- Alfa-Romeo Giulia Quadrifoglio: $3,695 a year.
- Acura NSX Type S: $3,626 a year.
- Dodge Charger SRT Hellcat Redeye: $3,533 a year.
- Dodge Charger SRT Hellcat: $3,528 a year.
- Porsche 911 Carrera Targa 4 GTS: $3,527 a year.
- Tesla Model S Long Range: $3,503 a year.
Where is Car Insurance the Most Expensive?
Car insurance costs fluctuate between states due to several variables, including the risks associated with weather, population density, the number of uninsured drivers, and the frequency of costly lawsuits. Consumer Affairs compiled the following list of the most expensive states for full-coverage car insurance in 2023:
- Louisiana: $2,865 a year.
- Rhode Island: $2,645 a year.
- New York: $2,642 a year.
- Washington, D.C.: $2,630 a year.
- Michigan: $2,606 a year.
- Florida: $2,480 a year.
- New Jersey: $2,451 a year.
- Georgia: $2,421 a year.
- Nevada: $2,322 a year.
- Delaware: $2,293 a year.
International Car Insurance Costs
Car insurance expenses are also subject to international differences. Various laws and economic circumstances affect the average insurance costs in each country. Average car insurance premiums are listed in US dollars by the Australian financial comparison website ComparetheMarket.com.au for 2023:
- Canada: $1,316 a year.
- United States: $1,018 a year.
- Ireland: $970 a year.
- Norway: $848 a year.
- Finland: $720 a year.
- Germany: $717 a year.
- Australia: $704 a year.
- United Kingdom: $692 a year.
- France: $672 a year.
- Netherlands: $660 a year.
Factors That Influence the Cost of Insurance
Insurance companies factor in a variety of elements when determining your car insurance policy’s price. While the exact factors vary between insurance providers and states, some elements are universal.
Risk Profile Assessment
When you apply for a policy, the provider will conduct a risk profile assessment. This assessment evaluates your risk level. Insurers may consider your age, driving history, and credit score to predict the likelihood of accident involvement or the filing of a claim.
Car Model and Age
As shown in the examples earlier, sports cars, luxury automobiles, and electric vehicles are among the most expensive vehicles to insure. Their high prices and the cost of their components mean they’re expensive to replace and repair. Also, they’re more attractive to thieves, potentially leading to more claims. Generally, newer cars are more expensive to insure because they haven’t depreciated much. Insuring them is more costly than insuring similar, older used cars.
Geographic Location
Your location impacts your car insurance rate. Areas prone to hurricanes and hailstorms tend to have higher rates because residents in these locations make more claims for the resulting damage. Prices also vary within a state; for example, drivers in rural areas with fewer cars on the road may pay less for their insurance than drivers in urban areas, due to a lower likelihood of accidents.
Car Usage and Driver’s History
The way you use your car also impacts your insurance. For instance, a person who works from home or uses public transportation is less likely to get into an accident than someone who drives to the office daily. Many insurers offer discounts if you drive fewer miles than average. Your driving record significantly impacts your insurance costs, particularly any moving violations and claims history.
Type of Coverage
It’s critical to carry adequate coverage to protect yourself and your car, and the more expensive your vehicle, the more insurance you may need. State laws also affect the minimum coverage you must carry. Depending on your location, consider the following types of coverage:
Liability Coverage
Liability insurance is legally mandated in most states. It covers your financial obligations if you cause an accident. While liability insurance is required nearly everywhere, the minimum mandated coverage may not be enough to cover the full cost of an at-fault accident. It’s often a good idea to purchase enough liability insurance to protect your personal assets and protect you from potential lawsuits.
Collision and Comprehensive Coverage
If you’re financing or leasing a vehicle, your lender will most likely require you to purchase collision and comprehensive insurance. Collision insurance covers damage to your car after an accident with another vehicle or structure. Comprehensive insurance covers non-collision damage claims such as theft, vandalism, or natural disasters. This is also known as full coverage.
Personal Injury Protection Coverage
If you live in a no-fault state, you’re likely required to have PIP coverage, although this type of coverage is also sold as an optional add-on in other states. PIP pays for your medical bills if you’re hurt in an accident, regardless of who is at fault. It also covers the medical care of your passengers.
Gap and New Car Replacement Coverage
If you total your car and owe more than your insurance will pay to replace it, gap insurance covers the difference. New car replacement coverage pays for a new vehicle of the same make and model if your car is beyond repair.
How to Reduce Your Car Insurance Premium
There are various ways to reduce your car insurance premium. Applying these steps may help:
Choose the Right Insurance Plan
Insurance plans and rates vary among providers, so comparing prices and inclusions can help ensure your plan provides the coverage you want without paying for features that don’t matter. Loyalty discounts can make renewing a policy more appealing. If your current insurer does not offer this, you may find a better deal with a different company that offers a welcome bonus.
Increase Your Deductibles
Raising your collision and comprehensive deductibles can often lower your premium. This is especially true if you maintain a good driving record. Make sure, however, that you can afford a higher deductible out of pocket if you need to file a claim.
Improve Your Credit Score
Insurance companies view drivers with lower credit scores as less financially responsible and a greater risk to insure. Raising your score can reduce your rates. You can improve it by consistently:
- Paying your bills on time.
- Paying your credit card balance in full each month.
- Removing inaccuracies from your credit report.
- Limiting requests for new credit.
- Managing any delinquent accounts.
- Consolidating your debts.
Inquire About Discounts
Insurance companies offer various discounts you may qualify for. Consider bundling your homeowner’s or renter’s insurance policy with your car insurance for a multi-policy discount if you haven’t already. Getting a discount for adding all your household’s vehicles to the same policy is another option. Your insurer may offer a safe driver program that allows a discount for tracking your driving habits with a telematics device or smartphone app. Any teen drivers on your policy may qualify for discounts depending on their GPA. Be sure to ask your insurer about any possible discounts.
Maintain a Clean Driving Record
Aside from potential discounts from a safe driver program, maintaining a good driving record can lower your premiums. Insurance companies reduce your premium if you have a good driving record, as it shows you are less likely to cause accidents. They base your premiums on the presence of any moving violations on your record and also factor in your claims history.
By knowing the factors that can impact the cost of your car insurance and the different methods you can use to reduce your premium, you can make sound decisions when shopping for a new vehicle and car insurance.
