How to Budget for Auto Insurance
If you're wondering how you'll afford car insurance, comparing quotes and asking about discounts are two of the best ways to keep your rates low. Learn how to work the cost of your auto insurance into your budget and how to save the most on your premiums.
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Insurance Feature Writer
Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...
Rachel Bodine
Farmers CSR for 4 Years
Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...
Leslie Kasperowicz
Updated November 2022
- Working your insurance costs into your budget is the best way to keep up with payments
- You may have the option to pay monthly, quarterly, or bi-annually for your insurance premium
- There are certain things you can do to make car insurance costs more affordable
Finding the right car insurance policy may take some time, but once you decide on the right company, all that’s left is to pay the premiums. You must pay your insurance premiums on time to maintain an active policy.
The best way to ensure you don’t have a lapse in auto insurance coverage is to work car insurance premiums into your budget. There are many dangers of letting your auto insurance lapse, so make sure you find a way to pay for it. Whether you pay monthly, quarterly, or bi-annually for your coverage, you can take steps to make sure your budget allows for the cost of insurance.
How can I budget for car insurance?
Before you worry about budgeting for car insurance, you will need to ensure you have auto insurance rates that work for you. Here’s how insurers calculate your car insurance rate:
- Age
- Gender
- Marital status
- ZIP code
- Car make and model
- Driving history
- Credit score
- Coverage types
To learn how much car insurance may cost you, you must shop online and compare auto insurance quotes from multiple companies. Comparing quotes will allow you to find an insurance provider that gives you the best deal on coverage based on your unique factors.
All insurance companies will also take note of any applicants who have previously had a lapse in coverage with other providers. So if you have a perfect record when it comes to paying for car insurance, you’re already on the right track.
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How do I calculate my monthly car insurance payment?
You should get quotes from companies in your area to get a better idea of how much you’ll pay for auto insurance coverage.
Companies consider numerous factors when determining rates. Because of this, there’s no great way to come up with an estimated monthly car insurance payment until you see what a few different companies have to say.
Figuring out your auto insurance premium may take some time, but where you live has much to do with your rates. Insurance costs are higher in some zip codes. For example, if you live in a state with auto insurance rates that are lower than average, you may find that your rates are likely to be low.
The table below shows the average auto insurance rates in each state.
State Average Annual Auto Insurance Rates
Hawaii $2,555.64
North Carolina $3,393.11
Iowa $2,981.28
Virginia $2,357.87
New Hampshire $3,151.77
California $3,688.93
Alaska $3,421.51
New Mexico $3,463.64
Wisconsin $3,606.06
Washington $3,059.32
Missouri $3,328.93
Ohio $2,709.71
Illinois $3,305.48
Arizona $3,770.97
North Dakota $4,165.84
Oregon $3,467.77
Maine $2,953.28
Tennessee $3,660.89
South Dakota $3,982.27
Nebraska $3,283.68
New York $4,958.88
Utah $3,611.89
Massachusetts $2,678.85
Indiana $3,414.97
Median $3,660.89
New Jersey $5,515.21
Nevada $4,861.70
Maryland $4,582.70
Kansas $3,279.62
Delaware $5,986.32
Colorado $3,876.39
Mississippi $3,664.57
Montana $3,220.84
Wyoming $3,200.08
Alabama $3,566.96
Pennsylvania $4,034.50
Georgia $4,966.83
South Carolina $3,781.14
Texas $4,043.28
Oklahoma $4,142.33
Connecticut $4,618.92
District of Columbia $4,439.24
Vermont $3,234.13
Rhode Island $5,003.36
Arkansas $4,124.98
Michigan $4,362
Kentucky $5,195.40
Florida $4,680.46
Louisiana $5,711.34
West Virginia $2,595.36
Idaho $2,979.09
Minnesota $4,403.25
While the average monthly auto insurance rate in New York City is over $400, it’s less than $250 or less in many other areas in the U.S. Understanding how much insurance costs in your ZIP code can help you budget for your coverage.
Can I budget for cheap car insurance?
You should not budget for cheap coverage unless you’ve found a company that will offer you affordable auto insurance. Otherwise, you’ll end up setting aside less for your auto insurance monthly payment than you need, which will throw off your entire budget.
There are a few ways to lower your auto insurance rate. One of the best ways is to shop for quotes online regularly. Shopping online for coverage could help you find cheaper insurance rates and avoid settling for a policy that won’t work.
Many policyholders look for auto insurance discounts when they want to lower their car insurance costs. Insurance providers offer discounts for many different reasons. The table below shows an exhaustive list of the potential discounts on car insurance coverage available with major companies.
Discounts 21st Century Discounts Offered AAA Discounts Offered Allstate Discounts Offered American Family Discounts Offered Ameriprise Discounts Offered Amica Discounts Offered Country Financial Discounts Offered Esurance Discounts Offered Farmers Discounts Offered Geico Discounts Offered Liberty Mutual Discounts Offered MetLife Discounts Offered Nationwide Discounts Offered Progressive Discounts Offered
Adaptive Cruise Control ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✓ ✓
Adaptive Headlights ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✓ ✗ ✓ ✓ ✓ ✓
Anti-lock Brakes ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Anti-Theft ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Claim Free ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Continuous Coverage ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✗ ✗ ✗ ✓
Daytime Running Lights ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Defensive Driver ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Distant Student ✗ ✓ ✓ ✓ ✓ ✓ ✗ ✗ ✓ ✓ ✗ ✗ ✓ ✓
Driver's Ed ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✓
Driving Device/App ✗ ✓ ✓ ✓ ✗ ✗ ✓ ✗ ✓ ✓ ✓ ✓ ✓
Early Signing ✓ ✗ ✓ ✓ ✗ ✗ ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓
Electronic Stability Control ✗ ✗ ✓ ✓ ✗ ✓ ✓ ✗ ✓ ✗ ✓ ✓ ✓ ✓
Emergency Deployment ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✗
Engaged Couple ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗
Family Legacy ✗ ✗ ✗ ✓ ✗ ✓ ✗ ✗ ✗ ✓ ✗ ✓ ✗ ✓
Family Plan ✗ ✗ ✗ ✓ ✗ ✗ ✓ ✗ ✓ ✗ ✗ ✗ ✓ ✗
Farm Vehicle ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗ ✗ ✗
Fast 5 ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✗
Federal Employee ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✓ ✓ ✗ ✗
Forward Collision Warning ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗ ✗ ✓ ✓ ✓ ✓
Full Payment ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✗ ✓
Further Education ✗ ✗ ✗ ✗ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✗
Garaging/Storing ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗
Good Credit ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓
Good Student ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Green Vehicle ✓ ✗ ✓ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✓ ✗ ✗ ✗
Homeowner ✓ ✓ ✗ ✗ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Lane Departure Warning ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✓ ✓
Life Insurance ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗
Low Mileage ✗ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Loyalty ✗ ✗ ✗ ✓ ✓ ✓ ✓ ✗ ✗ ✓ ✗ ✓ ✓ ✓
Married ✗ ✓ ✗ ✗ ✗ ✓ ✓ ✓ ✗ ✗ ✓ ✓ ✓ ✓
Membership/Group ✗ ✓ ✗ ✗ ✓ ✗ ✗ ✓ ✗ ✓ ✓ ✓ ✓ ✗
Military ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✓ ✓ ✓ ✓ ✓ ✗ ✗
Military Garaging ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗
Multiple Drivers ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗
Multiple Policies ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Multiple Vehicles ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
New Address ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗
New Customer/New Plan ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗
New Graduate ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗
Newer Vehicle ✓ ✓ ✓ ✗ ✗ ✗ ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓
Newly Licensed ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗
Newlyweds ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗
Non-Smoker/Non-Drinker ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗
Occasional Operator ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗
Occupation ✗ ✗ ✓ ✗ ✗ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗
On Time Payments ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗
Online Shopper ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✓
Paperless Documents ✗ ✗ ✓ ✓ ✗ ✓ ✗ ✗ ✓ ✗ ✗ ✓ ✓ ✓
Paperless/Auto Billing ✗ ✗ ✓ ✓ ✗ ✓ ✗ ✓ ✓ ✗ ✓ ✓ ✓ ✓
Passive Restraint ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Recent Retirees ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗
Renter ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✓ ✗ ✗ ✗ ✓ ✗ ✗
Roadside Assistance ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✗
Safe Driver ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✗ ✓ ✓ ✓
Seat Belt Use ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✗
Senior Driver ✓ ✗ ✓ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗ ✓ ✗ ✗
Stable Residence ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓
Students & Alumni ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✓ ✗ ✓ ✓ ✓ ✓ ✗
Switching Provider ✓ ✗ ✗ ✓ ✗ ✓ ✗ ✓ ✓ ✗ ✓ ✓ ✗ ✓
Utility Vehicle ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗ ✗ ✗
Vehicle Recovery ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓
VIN Etching ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✓ ✓ ✓ ✓
Volunteer ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗
Young Driver ✓ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✗ ✗ ✓ ✗ ✗ ✓
Some discounts on coverage can help you save as much as 20% on your insurance coverage, so it’s a good idea to ask your provider whether you qualify for any.
You can also budget for cheaper car insurance if you drop the coverage you don’t need or set a higher auto insurance deductible on your policy, but these strategies are not always recommended. If you lower your coverage or increase your deductible, you could end up paying more out of pocket if you’re ever in an accident.
What should I do if my budget changes?
Once you’re happy with your auto insurance costs and you set your budget, all you have to do is make your payments on time. But you may need to revisit your budget if you experience a significant life event such as marriage, divorce, or having a child.
If your budget increases, you don’t have anything to worry about. You may consider adding coverages to your auto insurance policy if you carry only liability auto insurance coverage. But if your budget decreases, you may need to revisit your variable expenses.
Expenses that change every month, like groceries, gas, and electricity, can be difficult to budget for. If your budget changes, these variable expenses are the first place you can go to see how you could save.
If adjusting your variable spending doesn’t help balance your budget, you may need to find car insurance quotes online that work for you. Before making any insurance changes, ensure you have the coverage you need.
Budgeting for Car Insurance: The Bottom Line
Once you compare quotes online, it’s not very difficult to budget for car insurance. Factor in any additional costs as you learn about them, and always account for payments that you make quarterly or bi-annually instead of monthly.
You can do several things to lower your auto insurance costs. Finding discounts and shopping for cheaper quotes are the two best ways to save money if you need to.
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