How To Budget for Auto Insurance (2024)
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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Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
UPDATED: Dec 16, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Dec 16, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- 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.
Read more: Liberty Mutual RightTrack Review: Can you get affordable auto insurance?
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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.
Average Annual Auto Insurance Rates by 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.
Auto Insurance Discounts Available by Company
Discount Name Allstate American Family Farmers Geico Liberty Mutual Nationwide Progressive State Farm Travelers USAA
Adaptive Cruise Control ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓ ✓
Adaptive Headlights ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓ ✓
Anti-lock Brakes 10% ✓ ✓ 5% 5% 5% ✓ 5%
Anti-Theft 10% ✓ 23% 20% 25% ✓ 15%
Claim Free 35% ✓ ✓ 26% ✓ 10% ✓ 15% 23% 12%
Continuous Coverage ✓ ✓ ✓ ✓ ✓ ✓ 15% ✓
Daytime Running Lights 2% ✓ 3% 5% 5% ✓ ✓
Defensive Driver 10% 10% ✓ ✓ 10% 5% 10% 5% 10% 3%
Distant Student 35% ✓ ✓ ✓ ✓ 10% ✓ 7%
Driver's Ed 10% ✓ ✓ ✓ 10% ✓ 10% 15% 8% 3%
Driving Device/App 20% 40% ✓ ✓ 30% 40% 20% 50% 30% 5%
Early Signing 10% ✓ ✓ ✓ ✓ 8% ✓ ✓ 10% 12%
Electronic Stability Control 2% ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓
Emergency Deployment ✓ ✓ ✓ 25% ✓ ✓ ✓ ✓ ✓
Engaged Couple ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Family Legacy ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 10%
Family Plan ✓ ✓ ✓ ✓ ✓ 25% ✓ ✓ ✓ ✓
Farm Vehicle 10% ✓ ✓ ✓ ✓ ✓ ✓ ✓
Fast 5 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Federal Employee ✓ ✓ 12% 10% ✓ ✓ ✓ ✓
Forward Collision Warning ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓
Full Payment 10% ✓ ✓ $50 ✓ ✓ ✓ 8% ✓
Further Education ✓ ✓ 10% 15% ✓ ✓
Garaging/Storing ✓ ✓ ✓ ✓ ✓ ✓ ✓ 90%
Good Credit ✓ ✓ ✓ ✓ ✓ ✓
Good Student 20% ✓ 15% 23% 10% ✓ 25% 8% 3%
Green Vehicle 10% ✓ 5% ✓ 10% ✓ ✓ ✓ 10% ✓
Homeowner ✓ ✓ ✓ ✓ 5% ✓ 3% 5% ✓
Lane Departure Warning ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Life Insurance ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Low Mileage ✓ ✓ ✓ 30%
Loyalty ✓ ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓
Married ✓ ✓ ✓ ✓ ✓ ✓
Membership/Group ✓ ✓ ✓ 10% 7% ✓ ✓
Military ✓ ✓ 15% 4% ✓ ✓
Military Garaging ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 15%
Multiple Drivers ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Multiple Policies 10% 29% ✓ 10% 20% 10% 12% 17% 13%
Multiple Vehicles ✓ ✓ 25% 10% 20% 10% 20% 8%
New Address ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓ ✓
New Customer/New Plan ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
New Graduate ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓ ✓
New Vehicle 30% ✓ ✓ 15% ✓ 40% 10% 12%
Newly Licensed ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓ ✓
Newlyweds ✓ ✓ ✓ ✓ 5% ✓ ✓ ✓ ✓ ✓
Non-Smoker/Non-Drinker ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Occasional Operator ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Occupation ✓ 10% 15% ✓ ✓ ✓
On-Time Payments 5% ✓ ✓ ✓ ✓ ✓ ✓ 15% ✓
Online Shopper ✓ ✓ ✓ ✓ ✓ ✓ 7% ✓ ✓ ✓
Paperless Documents 10% ✓ ✓ ✓ 5% $50 ✓ ✓ ✓
Paperless/Auto Billing 5% ✓ ✓ ✓ $30 ✓ $20 3% 3%
Passive Restraint 30% 30% 40% 20% ✓ 40%
Recent Retirees ✓ ✓ ✓ ✓ 4% ✓ ✓ ✓ ✓ ✓
Renter ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Roadside Assistance ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Safe Driver 45% ✓ 15% ✓ 35% 31% 15% 23% 12%
Seat Belt Use ✓ ✓ ✓ 15% ✓ ✓ ✓ ✓ ✓
Senior Driver 10% ✓ ✓ ✓ ✓ ✓ ✓ ✓
Stable Residence ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Students & Alumni ✓ ✓ ✓ 10% 7% ✓ ✓ ✓
Switching Provider ✓ ✓ 10% ✓ ✓ ✓ ✓
Utility Vehicle 15% ✓ ✓ ✓ ✓ ✓ ✓ ✓
Vehicle Recovery 10% ✓ ✓ 15% 35% 25% ✓ 5%
VIN Etching ✓ ✓ ✓ ✓ 5% ✓ ✓
Volunteer ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Young Driver ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ $75
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.
Read more: Cheap West Virginia Auto Insurance
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. (read our ”How does a divorce affect auto insurance?” for more information).
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.
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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.
Frequently Asked Questions
Why is it important to budget for auto insurance?
Budgeting for auto insurance is crucial because it helps you plan and allocate funds to cover the cost of your insurance premiums. Auto insurance is a legal requirement in most places, and driving without insurance can lead to severe penalties. By budgeting for auto insurance, you ensure that you have the necessary funds to maintain coverage and protect yourself financially in the event of an accident or damage to your vehicle.
Can I pay my auto insurance premium in installments?
Many insurance companies offer flexible payment options, allowing you to pay your auto insurance premium in installments. However, it’s important to note that some insurers may charge additional fees or interest for spreading payments over time. Be sure to inquire about installment plans and associated costs when obtaining quotes from insurance providers.
What happens if I can’t afford my auto insurance premium?
If you’re unable to afford your auto insurance premium, it’s important to reach out to your insurance provider as soon as possible. They may offer alternative payment plans or options to help you maintain coverage. Delaying or missing payments without prior communication can result in a lapse in coverage, potentially leading to legal consequences or financial risk if an accident occurs. Communication with your insurance provider is key to finding a solution that works for both parties.
Are there any cost-saving strategies for auto insurance?
Yes, here are a few strategies to help you save on auto insurance:
- Compare quotes: Obtain quotes from multiple insurers to find the best rates and coverage options.
- Bundle policies: Consider bundling your auto insurance with other insurance policies, such as homeowners or renters insurance, to potentially receive a discount.
- Maintain a good driving record: Safe driving and avoiding accidents or traffic violations can help you qualify for lower premiums.
- Increase deductibles: Opting for a higher deductible can lower your premium but remember to choose an amount that you can comfortably afford to pay out-of-pocket if needed.
- Seek discounts: Inquire about available discounts, such as multi-car discounts, good student discounts, or discounts for safety features in your vehicle.
- Review coverage periodically: Regularly reassess your coverage needs and adjust your policy accordingly to avoid overpaying for unnecessary coverage.
What factors determine the cost of auto insurance?
Several factors influence the cost of auto insurance. These include:
- Your driving record: A clean driving record with no accidents or traffic violations generally leads to lower premiums.
- Age and experience: Younger and less experienced drivers often face higher insurance costs.
- Type of vehicle: The make, model, and age of your vehicle can impact insurance rates.
- Location: Where you live and park your vehicle can affect insurance premiums.
- Coverage and deductible: The level of coverage you choose and the deductible amount you select will affect your premium.
Compare over 200 auto insurance companies at once!
Secured with SHA-256 Encryption
Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.