How much wrecks, DUIs, and low credit scores are driving up auto insurance costs
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Ah, the joys of the open road and carefree driving until something happens that costs even more.
There are events – that is, accidents, arrests for driving under the influence, loss of coverage – that can drive up the cost of your car insurance. At what time? This will depend on a variety of factors including where you live and the violation or circumstances in which the premium increases.
“Drivers in certain parts of the country pay significantly more for their auto insurance, especially after certain life events,” said Stephen Kates, a certified financial planner, an insurance analyst at Bankrate.
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Auto insurance generally consumes a small fraction of a person’s budget: an average of 2.4%, according to a report from Bankrate. Part of this will depend on the car you drive, your coverage, as well as your driving history – and even your creditworthiness.
The average annual premium paid by drivers is $ 1,674, although this can vary widely from state to state, research shows. For example, the average in Maine is $ 965 and Louisiana is $ 2,724. And even within states there can be big differences.
How much things like accidents and other incidents can add to premiums is the most expensive event, according to Bankrate, of adding a teenage driver to your policy. The average additional cost is $ 1,662.
When the premiums go up *
|life event||Additional costs||Annual premium|
|Significant decline in creditworthiness||$ 1,351||$ 3,025|
|Received a ticket||$ 355||$ 2,029|
|In a car accident||$ 731||$ 2,405|
|Termination of auto insurance coverage||$ 187||$ 1,861|
|Convicted of a DUI||$ 1,662||$ 3,336|
|Insured a young driver||$ 1,883||$ 3,557|
Receiving just one ticket increases your annual premium by an average of $ 355. And that’s on top of the fine that comes with such a violation – that can be several hundred dollars, depending on how fast you’re driving and what laws apply in the jurisdiction where you’re being run over. Even if you let your auto insurance expire, you can make an average of $ 187 a year.
In general, the better your credit rating – which is usually between 300 and 850 – the cheaper an insurance rate is. The average annual premium for someone with excellent credit (a score of 800 or higher) is $ 1,487, according to the study. For those with bad credit scores – below 580 – the average is $ 3,026.