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How much is your car insurance?

I had a discussion with an insurance agent recently. He lamented that all the phone calls an emails he was getting were from price shoppers that wanted the state required minimal coverage.

All the callers wanted a low price on auto coverage. But some needed higher limits esp. if you have income and assets to protect. Not all the jobs have been sent to either China or India yet. Still, you can't blame someone for trying to save a buck, esp. on this economy. Hard to comprehend from an agent's standpoint, but a consumer has other needs besides insurance. Like rent, food, mortgage, car note, etc.

Here in California, the average price per year is about $1,362 per year. In Maryland (where I originated), the average is $1,979 per year. So the answer is "it depends." And whose average anyway? Like the commercial, I'm not a number, I'm Craig.

Car Insurance Price vs. Value

A typical exchange between close friends may go like "What do you pay? I only pay $50 per month." "That's funny, I only pay $500 per year." Price has turned into the end all with insurance. Maybe because the policy limits ate confusing to most. We'll de mystify those in a moment.

The Flawed Price Example: Protection Against Uninsured Lunatics

Having the lowest priced policy is perfect IF you never have a incident. But life happens, and if you do not have an at fault accident in your life time, chances are someone will run into you. And they may not have adequate coverage. Uninsured motorist is an add on that will increase the price of your policy. Because 8 - 25% of drivers have NO INSURANCE. If they are driving without insurance, they most likely will have no income or assets to pay your damages. Don't have uninsured or under insured motorist coverage? That could be a problem very soon.

You can control yourself, if you run red lights (to save 2 seconds), drink and drive, speed etc. We all make the same correct choices everyday. But you'll never be able to control the other raging lunatics on the road. Esp. the ones who don't maintain their brakes, suspension, tries, etc. Think it's not a problem? Next time you drive through a parking lot, listen for something called a brake wear indicator. It's a wire that's placed on brake calibers to tell the driver "it's time to replace the brakes" if they do not feel like bending over and looking at their disk wear. You will hear some of the cars brakes squeaking.

Under insured motorist aside, how do we unfocus on price and examine our financial / insurance needs vs. other necessities?

The Car Insurance Price Answer:

In two words, "coverage limits." Don't just look at the price per month. Examine your limits. Buy enough car insurance that you can maintain the policy, long term. If times are tough, and you can't afford more than the state minimums, it's better than driving uninsured.

Not all of us are 1 paycheck from living in our car yet. If your finances will allow you to buying tickets on game day, why not skip the game? That cash could be used for an extra $150,000 in liability coverage, or damage I cause to others. I am not exaggerating, that's exactly what I did. My policy with Ameriprise has the max benefits, $250,000 per person bodily injury, $500,000 per accident of total bodily injuries and $100,000 in property damage. It costs us about an extra $300 per year from the state minimum. And that includes uninsured motorist. So my total policy is just over $600 every 6 months for 250/500/100 in insurance talk.

Don't believe me? Call, email, or chat your current insurance company right now and ask how much it would be to increase everything to their max available. You may be shocked.

Regarding the age old question: How much is your car insurance? Should be changed to: How much is the maximum coverage?

Try asking and email me if I've wrong. You see, I told you what I was paying, but also with what limits.

While your at it, get rates at the top in the yellow box from your carrier's competitors. They are eager for your business and will provide excellent service to get it. Just go regional. The larger well known carriers have huge overhead, huge salaries, huge bonuses, nice jets, etc. You don't want to finance that. The smaller regionals are often more professional, more polite, they don't have to buy ratings, etc.

In summary: If you are asking "how much is your car insurance?" it's largely because of insurance company advertising and the gift of the internet. Auto insurance prices have been dropping. I am with Ameriprise and my car insurance has dropped by 30% over several years, thanks to competition and California state regulations. With the safe driver / loyal customer discount, I did not save even more and drop the limits to the minimum, instead I increased my coverage from 100/300/50 to 250/500/100. Still confused? That is why price is an easier conversation. Just the wrong topic.

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

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