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Learn more about what an insurance premium is and the factors that insurance companies typically use to determine how much you pay for auto coverage
Daniel is a MarketWatch Guides team writer and has written for numerous automotive news sites and marketing firms across the U.S., U.K., and Australia, specializing in auto finance and car care topics. Daniel is a MarketWatch Guides team authority on auto insurance, loans, warranty options, auto services and more.
Rashawn Mitchner is a MarketWatch Guides team editor with over 10 years of experience covering personal finance, loans, insurance and warranty topics.
A car insurance premium is the amount you pay your insurance provider on a regular basis in return for auto coverage. Your specific premium depends on a range of factors, which we at the MarketWatch Guides Team will examine in this article. We’ve also researched the best car insurance companies to help you find the best match for your budget and coverage needs.
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Powered by The MarketWatch Guides Team is committed to providing reliable information to help you make the best decision possible about insuring your vehicle. Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. After 800 hours of research, the end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Learn more about our methodology.
Car insurance premiums are typically paid on a monthly or bimonthly basis in exchange for insurance coverage for your vehicle. Some customers choose to pay a larger premium every six months or every year. Many companies offer a paid-in-full car insurance discount for customers who pay an annual premium up front rather than in monthly installments.
Remember that your car insurance premium is separate from your insurance deductible. Your deductible is the amount you must pay out of pocket following a claim before your auto coverage takes effect. Choosing a higher deductible typically results in a lower auto insurance premium, while a lower deductible will lead to a higher premium.
Whatever the payment schedule, every insurance company has a slightly different method for calculating premiums. There are some common factors insurers use to determine how much you pay for coverage, including: The amount of coverage you purchase also has a large impact on how much you pay for auto insurance. If you only buy the liability coverage required by state law, you’ll pay less than if you purchase a full-coverage plan with comprehensive and collision insurance.
Whether you buy a policy for a six- or 12-month term, your premium will stay the same for that time unless you add another vehicle or move to a new location. When your policy is up for renewal, your insurer will evaluate your premium amount and decide if it needs to change.
If you have a speeding ticket, at-fault accident or driving under the influence (DUI) violation, you can expect your car insurance premiums to increase. The graph below shows just how much common driving offenses can affect your premium cost: Along with maintaining safe driving habits and avoiding the violations listed above, you can also bring your car insurance premium payment down by taking advantage of discount opportunities. These are a few of the most common discounts auto insurers offer:
There are many factors that go into your car insurance premiums, from the types of coverage you purchase to personalized factors about you and your vehicle. You can also find plenty of ways to reduce your auto insurance costs. We recommend that you compare car insurance quotes from multiple providers and explore all discount opportunities to find the best match for your car insurance needs.
The following highly rated insurers are ideal places to begin your search for affordable and reliable auto coverage.
State Farm, the nation’s most popular car insurance provider, has been in business since 1922. The company holds an A++ financial strength rating from AM Best and also boasts an A+ rating from the Better Business Bureau (BBB). We named State Farm our Editor’s Choice due to its strong industry reputation and consistently affordable rates.
Read more: State Farm insurance review
Geico is the second-largest auto insurer in the U.S. Like State Farm, it also has an A++ financial strength rating from AM Best and an A+ from the BBB. Geico is known for competitive rates across all driver profiles and features higher coverage limits than you’ll typically find with other insurers. The company also offers mechanical breakdown insurance (MBI), which covers a wide range of key components and functions like an extended warranty.
Read more: Geico insurance review
An insurance premium is the amount you pay for coverage on a regular basis. For car insurance policies, you typically pay a premium monthly, every six months or once per year.
Your insurance premium is what you pay on a regular basis for protection from risk or loss, while your deductible is the amount of money you pay out of pocket before your coverage takes effect. The lower your deductible, the higher your premium and vice versa.
Most insurers allow policyholders to pay their insurance premiums monthly, every six months or yearly. Paying your premium up front on a yearly or six-month basis rather than paying monthly premiums may earn you a discount with some providers.
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
*Data accurate at time of publication.
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