How Is the Average Car Insurance Price Determined?

The price of average car insurance is determined by a number of factors that are influenced by the specifics of a car and its driver.  The price of average car insurance is also affected by discounts that the driver may qualify for which can reduce your monthly car insurance payment.

Driver Characteristics

One way that average car insurance rates are calculated is through information about the driver.  If you have a clean driving history with no traffic tickets and no accidents where you were at fault, your car insurance rates will be lower than a driver who has received multiple traffic tickets and been the cause of at least one accident.  Similarly, young, new drivers will generally have higher rates than older, more experienced drivers.


Your location has a lot to do with how much car insurance you will need to pay.  Some states require more mandatory car insurance than others, so right off the bat you will need to pay more than someone in a state where less car insurance is required.  Some areas of America are known to charge more for basic car insurance; Massachusetts, New York, and Washington D.C. are three places where car insurance is typically higher than in other states.  Additionally, the type of area you live in, whether it is in the city or the suburbs or the country, will also affect your costs. If the car is parked off the street or in a garage, you may pay less than if you parked the car in the street.

Features of the Car

The type of car you drive and its safety features will also affect the price of your car insurance.  A newer, more expensive car will typically cost more in car insurance than an older car that is worth less.  If your car is fitted with an anti-theft system, automatic locks, or keyless entry you may be able to lower your costs.


You may be able to apply discounts to the cost of your car insurance, thereby bringing down the price of coverage.  There are many discounts available and it is always good to ask your car insurance agent about any discounts that you might qualify for.  You may be eligible for some of these discounts based on:
  • If your policies for car insurance and homeowners/renters insurance are from the same company.
  • If you have a low-risk profession in the eyes of the insurance company.
  • If you are a member of AAA or other professional organizations
You can also ask about lowering your costs by paying your car insurance bills electronically or insuring more than one car on a family style plan through the same company.

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