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How to Estimate Car Insurance Before Buying a Car

Your next car will have costs beyond the monthly payment. Find out how to estimate car insurance before you buy.
Aug. 21, 2020
Auto Insurance, Insurance
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Use a car insurance estimator before buying

Even the savviest car shoppers can forget to estimate car insurance costs before buying.

The type of car you drive is just one variable car insurance companies plug into their formulas to determine how much to charge you. Depending on the vehicle and insurance company, the cost of car insurance can vary by hundreds of dollars a year for the same driver.

 

That’s why it pays to get some initial car insurance quotes for models you’re thinking about buying. Along with gas mileage and maintenance costs, car insurance costs should be included when calculating the total cost of owning a car.

The national average car insurance rate is $1,427 per year for “full coverage,” according to NerdWallet’s 2020 rate analysis, but your rates will differ based on the car you buy, among other factors. Full coverage car insurance isn’t a specific type of policy. Rather, it refers to a combination of coverages. For our rate analysis, full coverage includes liability, comprehensive, collision, uninsured/underinsured motorist protection and any additional state-mandated coverage.

Why some cars cost more (or less) to insure than others

Certain cars cost more to insure than others because carriers use crash and theft statistics to help set rates for each model separately. So if the car you choose tends to be stolen or crashed more, chances are you’ll pay more for insurance. The reason sports cars cost more to cover, for example, is because they’re more likely to be driven fast and crashed hard by their owners.

Here are some specific characteristics that affect the cost of auto insurance:

  • Retail price. Generally, the pricier the car, the more expensive it will be to insure. Assuming you buy comprehensive and collision coverage, the insurance company will be on the hook to pay out the car’s market value if the vehicle is stolen or wrecked beyond repair.
  • Cost of parts. High-end models often use parts made from carbon fiber and other specialized materials that are expensive to repair, which drives up the cost of damage claims.
  • Safety. Over time, cars that do a good job of protecting drivers and their passengers bring down insurance costs. Fewer injuries mean fewer claims for medical payments and personal injury protection.

» MORE: Ranking the cheapest cars to insure

How to get car insurance estimates

In your search for a car, follow these steps for estimating the cost of car insurance:

  1. Narrow down your top choices for vehicles. Learn how to pick the right car for you.
  2. Decide how much coverage you need. If you’re buying a new car, include collision and comprehensive, which cover damage or loss of the vehicle. If you get a car loan for a used car, you’ll need this coverage because the lender will require it.
  3. Get quotes for the same amount of coverage for the vehicles you’re thinking about buying. NerdWallet’s car insurance comparison tool can help you get started.

Now you can factor in the cost of car insurance to help you make a final choice.

» MORE: Auto loan calculator: Estimate your car payments

Other factors that can affect your car insurance quote

Your car make and model aren’t the only factors that go into an auto insurance quote. Other factors that affect your quote include:

  • Personal characteristics like age, gender and marital status. For example, teen drivers have higher car insurance quotes on average than any other age group.
  • The coverage you choose. The more coverage you have, the higher your insurance rates are likely to be.
  • Your driving record. A recent DUI, speeding ticket or at-fault accident can raise your rates.
  • Your location. Every state has different car insurance minimums, and factors like your neighborhood’s crime rate and population density will affect your insurance price.
  • Your credit score. Drivers with poor credit typically have higher car insurance rates. Insurers use a credit-based insurance score, which is different from your regular credit score, to determine the likelihood you’ll file a claim. A credit-based insurance score looks at factors such as payment history and outstanding debt but can’t use any personal information like your income or occupation to determine your score. California, Hawaii and Massachusetts have banned insurers from using credit scores when calculating car insurance rates.
  • Your car insurance history. This can include whether your car insurance has lapsed, insurance claims, how long you’ve been with your insurer and your last insurance company.

» MORE: Car insurance quotes: What you need to know

How much car insurance do you need?

Most states require a minimum amount of car insurance, but you’ll likely want to have more than minimum coverage. Some drivers opt to get full coverage to help protect themselves against any type of accident. Remember, full coverage isn’t a type of policy, but generally a combination of required and optional coverages. But full coverage doesn’t include everything. Extras like roadside assistance and gap coverage may have to be added separately.

» MORE: What does car insurance cover?

Full coverage car insurance may include:

Coverage typeWhat it pays for
Bodily injury liabilityMedical costs due to injuries or deaths from an accident you caused.
Property damage liabilityRepair costs for property you damaged in an accident.
Uninsured motorist bodily injury liability Medical costs after an accident with an uninsured driver.
Uninsured motorist property damage coverageRepair costs after an accident with an uninsured driver.
Collision coverageRepair expenses from traffic-related accidents, regardless of who is at fault.
Comprehensive coverageRepair costs from events outside your control — including weather events, hitting an animal while driving, theft and vandalism.

How can I save on car insurance?

The best way to find the cheapest car insurance rates is by shopping around. Check car insurance quotes and look for a company with a good reputation for customer service.

When you shop for car insurance, remember to compare quotes for the same levels of coverage. A company that offers a particular discount might still be more expensive than an insurer that offers low-cost coverage overall.

Although the cost of insurance may not make or break your final car decision, it’s important to know how much you’ll pay for coverage before you make an offer on a vehicle.

Car insurance estimator FAQs

How much should I be paying for auto insurance?

This is hard to answer without knowing specifics about you, such as your car make and model, your driving record and where you live.

We can tell you the national average car insurance rate is $1,427 per year, according to NerdWallet’s 2020 rate analysis. That’s for full coverage auto insurance for 40-year-old drivers with a clean record and good credit.

Other national average car insurance rates are:

  • $1,781 after a speeding ticket.
  • $2,146 after an at-fault wreck.
  • $2,506 for a good driver with poor credit.
  • $2,531 after a DUI.
  • $2,106 for a 50-year-old married couple with two cars.
  • $3,906 for a married couple plus an 18-year-old driver, with two cars.

These rates are for full coverage car insurance, which includes liability, comprehensive, collision, uninsured/underinsured motorist protection and any additional state-mandated coverage. Our car insurance calculator above can help you estimate rates in your state.

What is the cheapest car insurance company?

You’ve used the car insurance estimator to calculate potential rates. But what company will give you the best rates?

Where you find cheap car insurance quotes will differ from person to person based on your driving history, personal characteristics and other factors. NerdWallet’s 2020 auto insurance analysis of the best cheap car insurance companies found that among the largest insurers, Geico had the cheapest car insurance quotes with an average of $1,198 a year. State Farm and Progressive offered the next-cheapest auto insurance rates, respectively.

While USAA had the cheapest auto insurance quotes overall, it was not ranked because the company offers insurance only to active military members, veterans and their families.

Here are the best car insurance companies according to our 2020 reviews, ranked by average car insurance premium per year.

CompanyAnnual insurance premiumStar rating
Erie$835
5.0 NerdWallet rating
Texas Farm Bureau Insurance$1,041
5.0 NerdWallet rating
Country Financial$1,136
4.0 NerdWallet rating
Amica$1,183
5.0 NerdWallet rating
Geico$1,198
5.0 NerdWallet rating
American Family$1,233
4.5 NerdWallet rating
NJM$1,301
5.0 NerdWallet rating
Safeco$1,317
4.0 NerdWallet rating
Nationwide$1,349
4.0 NerdWallet rating
Auto-Owners$1,357
4.5 NerdWallet rating
State Farm$1,511
4.5 NerdWallet rating
Travelers$1,528
4.5 NerdWallet rating
AAA $1,610
4.5 NerdWallet rating
Progressive$1,766
4.5 NerdWallet rating
Liberty Mutual$1,778
4.0 NerdWallet rating
Shelter $1,825
5.0 NerdWallet rating
Allstate$1,834
4.5 NerdWallet rating
Farmers$1,865
4.5 NerdWallet rating
Esurance$1,951
4.5 NerdWallet rating
USAA*$1,023
5.0 NerdWallet rating
*USAA is available only to military, veterans and their families.

How can I find the cheapest car insurance for me?

Your car insurance rates will depend on several factors, from your driving record to your age and gender.

Location can also make a big difference in your car insurance rates. To get a good benchmark for price comparisons, check out average rates in your state along with the car insurance cost calculator.

Want even more specific rate information? Compare car insurance quotes to find the best company for you.

Estimator methodology

NerdWallet averaged rates for 40-year-old men and women for all ZIP codes in any of the 50 states and Washington, D.C., in which the insurer was one of the largest insurance companies (by premiums written). “Good drivers” had no moving violations on record and an insurance credit score considered “good” by each insurer; a “good driving” discount was included for this profile. Sample drivers had the following coverage limits:

  • $100,000 bodily injury liability coverage per person.
  • $300,000 bodily injury liability coverage per crash.
  • $50,000 property damage liability coverage per crash.
  • $100,000 uninsured motorist bodily injury coverage per person.
  • $300,000 uninsured motorist bodily injury coverage per crash.
  • Collision coverage with $1,000 deductible.
  • Comprehensive coverage with $1,000 deductible.

In states where required, minimum additional coverages were added. We used the same assumptions for all other driver profiles, with the following exceptions:

  • For drivers with minimum coverage, we adjusted the numbers above to reflect only the minimum coverage required by law in the state.
  • We changed the credit tier from “good” to “poor” as reported to the insurer to see rates for drivers with poor credit.
  • For drivers with a ticket, we added a single speeding violation for driving 16 mph over the speed limit.
  • For drivers with one at-fault crash, we added a single at-fault crash costing $10,000 in property damage.
  • For drivers with a DUI, we added a single drunken driving violation.

We used a 2016 Toyota Camry LE in all cases and assumed 12,000 annual miles driven. In all cases, a paperless discount, e-signature discount and electronic funds transfer discount were automatically applied. These are sample rates generated through Quadrant Information Services. Your own rates will be different.

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