What are the most affordable car insurance options for a first-time driver with a limited budget?
In the US, the average annual cost of car insurance is around $1,300, but it can vary greatly depending on factors like age, location, and driving record.
According to a study by the National Association of Insurance Commissioners, 44% of drivers with low incomes (less than $25,000 per year) do not have auto insurance, which can lead to further financial strain in the event of an accident.
In most states, insurance companies are allowed to use credit scores to determine insurance premiums, which can result in higher rates for low-income drivers.
Research has shown that insurance companies often charge higher premiums to drivers in low-income neighborhoods, even if they have similar driving records to drivers in higher-income areas.
The Federal Insurance Office reports that in 2019, the top 10 most expensive states for auto insurance were Michigan, Louisiana, Kentucky, West Virginia, Mississippi, Alabama, Arkansas, Oklahoma, Tennessee, and Missouri.
On the other hand, the cheapest states for auto insurance are Maine, New Hampshire, Vermont, North Dakota, South Dakota, Iowa, Nebraska, Wisconsin, Minnesota, and Indiana, according to data from the National Association of Insurance Commissioners.
Some car insurance companies offer special discounts for low-income drivers, such as the California Low-Cost Automobile Insurance Program.
The major factors that affect car insurance premiums are driving record, credit score, age, location, and type of vehicle.
According to a study by the Consumer Federation of America, some insurance companies charge higher premiums to drivers who are not married, even if they have similar driving records to married drivers.
The National Highway Traffic Safety Administration (NHTSA) estimates that in 2019, there were over 6 million police-reported crashes in the US, resulting in 36,560 fatalities and 2.9 million injuries.
Some insurance companies offer "usage-based" insurance, which uses telematics data to track driving habits and rewards safe driving with lower premiums.
The National Association of Insurance Commissioners recommends shopping around for insurance quotes from at least three different companies to find the best rates.