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How Much Car Insurance Do I Need?

How Much Car Insurance Do I Need?

When buying a new car, selling a car, or dealing with an automobile accident, people are quick to wonder how much insurance they actually need. In every state, the answer is different. Although it depends on many factors, the national average cost for car insurance is about $130 in month in 2021. 

Auto Repairs Are EXPENSIVE


Ah, car insurance. We know all the big names. Their commercials remain in the public consciousness for decades. All the haunting advertisements beg the same question: How much car insurance do I need? And at what cost?

The mystery unravels with a bit of digging, but it comes at cost. Insurance agencies, big and small, now use the Internet to field leads to agents across the nation. If you fill out what looks like an innocent form to find out how much insurance costs, you’ll soon be getting a lot of calls and emails with an answer.

Before getting in over your head, take a moment to reflect on some universal facts on the topic of car insurance rates. There are plenty of details to consider. For example, if you’re living in a state that requires full-coverage on your automobile, the price goes up (but so do benefits).

Other factors can impact the final monthly (or quarterly, biannually or annually, too) fees associated with insuring a four-door sedan. 


The gender of the driver may come into the equation. The age also is taken into consideration. The type of car, length of commute, and zip code are also calculated into the fee.

The insurance company is more or less trying to use a giant mathematical formula to determine how much risk they carry in giving you vehicle insurance. If that risk is higher, because of your gender, age, zip code, or vehicle, you’re going to pay the price., which on average is $130 a month in 2021.

That being said, there is a lot of wiggle room where that approximation is concerned.

How Much Is Car Insurance on Average Per Month?

When determining how much car insurance you need, it might be useful to think about the average costs.

Finding out that the average price of car insurance is roughly about $130 a month may sound like chump change to some drivers; for others, the average price of car insurance pure month might break the bank. 

Adding insult to injury for the folks who find this number steep, the fee is mandatory. Not having it could cost even more money! If you get pulled out by law enforcement, they will ask for proof of insurance. If you don’t have it, they write you a citation. 

Now, not only do you have to buy insurance, required by the state, but you also have to pay a fee and face an appearance in course and suspension of license (in some cases). It’s not worth it not to have it!

Additionally, f you get into an accident while driving without insurance, you’re 100% liable in most jurisdictions. In some cases, you will pay up even if the accident is not your fault simply because you are not compliant with the local ordinances that require a minimum of a certain insurance coverage.

The average price of car insurance may sound like nothing, or a lot, but either way, it’s not optional.

According to a Nerd Wallet article, the 2021 average for an annual insurance fee, for a vehicle, is roughly $1,590.

What Affects Automobile Insurance Rates?

Why’s my car insurance bill so high? This is the question that hits us hard every time we balance our checkbooks. It may all come down to how much car insurance you need.

Car insurance rates different car to car, person to person, zip code to zip code. This is fairly common knowledge just from the local automobile insurance commercials. We recognize the chart with age and gender instantly. However, there are other factors people often forget:

  • Credit score: your credit score shows how you reliable a person you are in terms of making financial payments, at least in the eyes of the banking and insurance industries
  • Driving record: if you are a bad driver, or you’ve been charged with a DUI/DWI, you’re going to struggle when it comes to buying car insurance. It’s not easy to find policies that will take drivers with a record, but it’s not impossible. Sometimes, however, the fees are higher.
  • Past accidents: if you have car insurance, and you total your car with an at-fault accident, don’t be surprised if you later get a call from your agent checking in on you to see if you’re alright… and telling you that the rates are going up based on what has happened.

How much does the cost go up? It goes up by almost $1,000 on average if you cause a car accident out on the road. The fee a good driver pays, if they have bad credit, is nearly double! The rate automatically doubles after a conviction for driving under the influence. 

These estimates account for full-coverage. In insurance terms, this includes liability, comprehensive, collision, protection for uninsured/underinsured motorists, and other fees or policies required by local law. 

What does State Minimum Required Insurance Cost?

For those new to auto insurance, here’s a quick 101. It will tell you all about how much car insurance is required for the average situation.

If you are leasing or lending money to purchase this car, you’re likely to be required to carry full coverage, and it’s a good idea to do so. If you accidentally park your car on a hill and the car starts rolling, you’re going to want the car replaced (at least to pay off the debt).

When you have the minimum required insurance, you only get assistance in paying back the damage to other people. If you lose the value of the car, the loss is yours and not reimbursed.

In other words, if an old junk car with minimum insurance gets into a wreck, the driver will not be reimbursed for the value of his car. However, the person he hits may be rewarded their handsome sum.

For this minimum required coverage insurance, drivers should expect to pay about $550 a month (with great credit). If they’re in an accident, that fee climbs at least $300. Bad credit can nearly double the cost as does a DUI on the driver’s record.

Take the average middle-aged driver with excellent credit and no collisions in their history. They’ll be shelling out about $50 per month, give or take a few bucks. The same driver, with a DWI under their belt, may pay about $100.

Is Insurance More Expensive Where I Live?

Maybe! Car insurance varies state to state. For the folks in the Chicagoland area, drivers could find themselves paying more or less for car insurance based on whether their zip code falls into Illinois, Wisconsin, or Indiana. 

How much car insurance a person needs depends on the state of the plate!

Fun fact: Maine is the state known for the least expensive car insurance. Ohio is a close contender. The folks down in Louisiana have the highest average rates, although Michigan and Kentucky don’t fall far behind them. When it comes to the minimum, Iowa has risen above the rest.

The rule remains true when talking stateliness, however. Each state varies, even when we’re looking at the price differences between full-coverage and liability only.

Another point to keep in mind is that the insurance companies “penalize” differently. They would never use the word, but that’s basically what’s happening. A consequence of your past behavior or your demographic (age, gender, zip code) is weighing down the cost of your monthly insurance.

For example, company A may upcharge 10% for bad credit. On the other hand, company B may charge a whole lot more. On the plus side, some companies over discounts instead, especially for great drivers with clean records. All that safe driving finally pays off for some!

The Most Popular Car Insurance Agencies

When it comes to car insurance for a vehicle, most people want something with a national reputation. This can be helpful in terms of buying power and the company’s access to representation should a driver end up in legal trouble as a result of a car accident. Even the branding is makes us laugh.

On the other hand, people like local or regional agencies because they’re more of a person than a number. When drivers work with big companies, it can be difficult to speak to a different person every time a call is made. Sometimes, though, the small ones lack the power to really defend you in court.

Here are some of the most popular names mentioned when talking car insurance these days:

  • Liberty Mutual
  • State Farm
  • Geico
  • Progressive
  • Travelers 
  • Nationwide
  • American Family
  • Allstate
  • USAA
  • Farmers

The companies are a sort of institution in the nation, but plenty of local and reginal options round out the list.

Best Ways to find Cheap Automobile Insurance

When a driver needs to evaluate the fees for car insurance, they’re best bet is to ask friends and family with similar profiles and vehicles.

This is the most accurate way to know the “real market value” of these services. Let’s say you’re a twin sister. You’re the same in every possible way: birthdate, gender, zip code, credit, driving record, etc. On paper, there is no statistical difference between you. You even own the same type of car!

You should be paying roughly, if not exactly, the same for the car insurance! But you probably won’t. Instead, by taking the average of the people who are similar to you, know should get a better idea of what’s “fair.”

Another option is to request estimates from a variety of companies. Some companies and websites even tell you the quotes for competitors. In the past, there were plenty of campaigns that said the cheapest insurance would be recommended to you, even if it wasn’t their own.

That all sounds grand, but if you don’t do your own homework, you’re likely to overpay for car insurance.  Be sure to buy the right policy for your needs. If you don’t care about getting a dollar back on your junk car if in an accident, then perhaps minimum (state-required) coverage fits the bill.

Speaking of which, be sure to ask about add-ons and amenities! That can set one company apart from the other. Maybe the fees are about the same, but one company offers a payout, a discount, or roadside assistance. You may not need those perks today, but you never know when you will! Choose wisely.

I Can’t Afford Auto Insurance

This is a scary realization to have. Not being able to afford auto insurance happens to the best of us, and the first step to dealing with the problem is admitting that it’s true.

If you can’t afford auto insurance, you may need to talk with the agent. Sometimes discounts can be extended in special cases. If that’s not happening for you, talk with close friends and family member who may be able to make you a short-term loan. 

If you are prone to money issues, though, they may not be willing to help this time.

If your insurance lapses, you should not drive the vehicle. That’s obviously easier said than done, though. If you get into an accident, or pulled over, without insurance, you’re going to have much bigger (and more expensive) problems on your hand. 

You might consider just sending the car to the junkyard, especially if it’s barely roadworthy as it is. Instead of paying extra money on insurance for an unreliable ride, you could collect cash on recycling your vehicle.

Take the bus. Call a taxi. Hit up the junkyard. But, whatever you do, don’t drive uninsured cars.