Car insurance is a type of coverage that provides financial protection to drivers in the event of an accident, theft, or other incidents involving their vehicle. It is a contract between the policyholder and an insurance company, where the policyholder pays a premium in exchange for the insurer’s promise to pay for damages or losses caused by covered events.
Understanding the cost of car insurance is crucial for anyone who owns or operates a vehicle. Car insurance premiums can vary widely depending on several factors, such as the driver’s age, driving history, location, type of vehicle, and the coverage amount. Therefore, it is essential to know how car insurance costs are calculated and what factors affect them to make informed decisions about coverage and budgeting.
Meanwhile, cost of car insurance is an essential part of responsible vehicle ownership. By knowing what factors affect insurance premiums and how coverage works, drivers can make informed decisions about their insurance needs and budget. Whether you are a new driver or a seasoned one, taking the time to learn about car insurance costs can help you save money, protect your assets, and drive with peace of mind.
Factors Affecting Car Insurance Cost
Factors affecting the cost of car insurance can vary greatly from person to person. Below are some of the most common factors that insurance companies take into consideration when determining how much to charge for car insurance:
- Age and driving experience: Younger, less experienced drivers are generally more likely to get into accidents, and as a result, are charged higher premiums. Conversely, older, more experienced drivers are generally seen as less of a risk and are charged lower premiums.
- Location: Where you live can also play a big role in how much you pay for car insurance. Areas with higher rates of accidents, theft, and vandalism will generally have higher insurance rates than areas with lower rates of these incidents.
- Type of car: The make and model of your car can also impact your insurance rates. Cars that are more expensive to repair or replace, or that have a higher likelihood of being stolen, will generally have higher insurance rates.
- Driving record: Your driving history is another major factor that insurance companies consider when determining your insurance rates. Drivers with a history of accidents or traffic violations are generally seen as higher risk and will be charged higher premiums than those with clean driving records.
- Credit score: Your credit score can also impact your car insurance rates. Insurance companies view people with lower credit scores as being more likely to file claims and are charged higher premiums as a result.
It’s important to note that not all insurance companies weigh these factors equally. It’s always a good idea to shop around and compare rates from different providers to find the best deal for you.
Average Car Insurance Cost
Car insurance is an important expense that every driver needs to consider. The cost of car insurance can vary depending on a variety of factors such as the driver’s age, gender, driving record, the type of car being insured, and the state in which the driver resides. In this section, we will explore the national average cost of car insurance, the state-by-state breakdown of the average cost, and the average cost by age and gender.
1. National Average Cost
According to a recent study, the national average cost of car insurance in the United States is approximately $1,674 per year. However, it is important to note that this figure is just an average and the actual cost can vary significantly depending on the aforementioned factors.
2. State-by-State Breakdown of Average Cost
The cost of car insurance can vary greatly depending on the state in which the driver resides. For example, the average cost of car insurance in Michigan is approximately $2,611 per year, which is more than double the national average. On the other hand, the average cost of car insurance in Maine is approximately $845 per year, which is almost half of the national average. Other factors such as the state’s minimum insurance requirements and the number of uninsured drivers in the state can also impact the cost of car insurance.
3. Average Cost by Age and Gender
Age and gender are also important factors that can impact the cost of car insurance. In general, younger drivers and male drivers tend to pay higher premiums due to the higher risk associated with their demographic. For example, a 16-year-old male driver can expect to pay approximately $4,500 per year for car insurance, while a 45-year-old female driver can expect to pay approximately $1,400 per year for the same coverage.
In conclusion, the cost of car insurance can vary greatly depending on a variety of factors. It is important for drivers to compare rates from multiple insurance companies to ensure that they are getting the best possible coverage at a reasonable price.
How much is car insurance?
As previously stated, the average cost of car insurance is $2,148 per year, according to our 2023 rates analysis. But that’s for a good driver with good credit — rates vary widely depending on your history as well as the level of coverage you select.
National average car insurance rates for policies with full coverage are:
- $2,148 for a good driver with good credit.
- $3,455 for a good driver with poor credit.
- $3,164 for a driver with an at-fault accident and good credit.
- $3,933 for a driver with a recent DUI and good credit.
For minimum required coverage, national average car insurance rates are:
- $685 for a good driver with good credit.
- $1,118 for a good driver with poor credit.
- $1,044 for a driver with an at-fault accident and good credit.
- $1,403 for a driver with a recent DUI and good credit.
Average rates for full coverage insurance are generally more than twice as high as minimum coverage, according to our analysis.
But averages don’t say much about your car insurance rates. Several personal factors, within and outside your control, inch rates up or down until your price is personalized.
And because NerdWallet can’t anticipate which factors apply to you, we used a specific driver profile throughout this article, unless stated otherwise:
- 35 years old.
- Good driver. Defined as a person with a clean driving record, meaning no accidents, DUIs or other traffic violations.
- Good credit. Drivers with a good credit rating. Insurers use a credit-based insurance score, which is similar to your regular credit score, to calculate rates in most states. Although they aren’t the same, your credit score can be a good indicator of your credit-based insurance score.
How much does car insurance cost in my state?
Where you live can have an enormous impact on auto insurance rates because each state has different regulations.
Here’s what our state-by-state analysis of car insurance rates shows for drivers with good credit and no recent accidents:
- Maine is the cheapest state for full coverage car insurance with an annual average rate of $1,323, followed by Idaho and Vermont.
- Florida is the most expensive state for full coverage auto insurance at $3,605 per year on average, followed by Louisiana and Kentucky.
- Wyoming is the cheapest state for minimum required coverage at an annual average car insurance rate of $289, followed by South Dakota and Iowa.
- Rhode Island is the most expensive state for minimum required coverage at $1,272 per year, on average, followed by New York and Nevada.
Average car insurance costs for full and minimum coverage by state
| State | Full coverage | Minimum coverage |
|---|---|---|
| Alabama | $2,269 | $681 |
| Alaska | $1,955 | $475 |
| Arizona | $2,155 | $711 |
| Arkansas | $2,160 | $569 |
| California | $1,659 | $506 |
| Colorado | $2,698 | $636 |
| Connecticut | $2,604 | $1,070 |
| Delaware | $2,601 | $1,031 |
| Florida | $3,605 | $1,006 |
| Georgia | $2,509 | $845 |
| Hawaii | $1,631 | $492 |
| Idaho | $1,349 | $408 |
| Illinois | $1,747 | $554 |
| Indiana | $1,433 | $463 |
| Iowa | $1,596 | $328 |
| Kansas | $2,290 | $631 |
| Kentucky | $3,357 | $1,073 |
| Louisiana | $3,399 | $1,063 |
| Maine | $1,323 | $483 |
| Maryland | $2,998 | $1,136 |
| Massachusetts | $1,394 | $480 |
| Michigan | $3,229 | $1,103 |
| Minnesota | $1,931 | $701 |
| Mississippi | $1,950 | $563 |
| Missouri | $2,706 | $738 |
| Montana | $2,831 | $534 |
| Nebraska | $1,788 | $422 |
| Nevada | $3,058 | $1,147 |
| New Hampshire | $1,557 | $494 |
| New Jersey | $2,809 | $1,146 |
| New Mexico | $2,127 | $576 |
| New York | $2,600 | $1,180 |
| North Carolina | $1,487 | $565 |
| North Dakota | $1,869 | $513 |
| Ohio | $1,423 | $502 |
| Oklahoma | $2,438 | $589 |
| Oregon | $1,888 | $905 |
| Pennsylvania | $2,266 | $544 |
| Rhode Island | $3,300 | $1,272 |
| South Carolina | $2,715 | $965 |
| South Dakota | $1,593 | $318 |
| Tennessee | $1,997 | $554 |
| Texas | $2,398 | $774 |
| Utah | $2,240 | $855 |
| Vermont | $1,376 | $361 |
| Virginia | $1,922 | $682 |
| Washington | $1,759 | $617 |
| Washington, D.C. | $2,260 | $819 |
| West Virginia | $2,075 | $616 |
| Wisconsin | $1,683 | $465 |
| Wyoming | $1,553 | $289 |
Here are the cheapest states for full coverage auto insurance:
- Maine: $1,323 a year, or about $110 a month, on average.
- Idaho: $1,349 a year, or about $112 a month, on average.
- Vermont: $1,376 a year, or about $115 a month, on average.
- Massachusetts: $1,394 a year, or about $116 a month, on average.
- Ohio: $1,423 a year, or about $119 a month, on average.
These are the most expensive states for full coverage auto insurance:
- Florida: $3,605 a year, or about $300 a month, on average.
- Louisiana: $3,399 a year, or about $283 a month, on average.
- Kentucky: $3,357 a year, or about $280 a month, on average.
- Rhode Island: $3,300 a year, or about $275 a month, on average.
- Michigan: $3,229 a year, or about $269 a month, on average.
Note that full coverage isn’t a type of policy you can select from a list. In our analysis, full coverage insurance rates include comprehensive and collision insurance, liability and uninsured/underinsured motorist coverage.
Average car insurance costs by company
Every car insurance company sets rates based on dozens of factors, including your driving history, location, vehicle and demographics. They’re making an educated guess about how likely you are to file a claim and setting your price accordingly.
Each insurer treats each factor differently. If you have poor credit, one insurer might charge you 10% more for the policy, while another would charge 40% more. A discount for being claim-free in recent years might earn you a 20% discount with one company and 5% at another.
All this results in different rates from one person to the next. This is why the company that gives your friend super-low rates might not be the cheapest for you.
Here are annual rates for many of the nation’s largest insurers, for full and minimum coverage.
Average car insurance costs from large companies
| Company | Full coverage | Minimum coverage |
|---|---|---|
| Allstate | $3,110 | $933 |
| American Family | $1,547 | $774 |
| Farmers | $2,807 | $939 |
| Geico | $2,009 | $603 |
| Nationwide | $2,016 | $673 |
| Progressive | $2,075 | $744 |
| State Farm | $1,431 | $450 |
| Travelers | $1,751 | $568 |
| USAA* | $1,120 | $341 |
| *USAA is available only to active-duty military members, veterans and their families. | ||
Small insurers may have cheaper rates than nationwide carriers. However, many regional insurers are available in only a few states. We analyzed rates from large insurers to provide the most relevant information for all readers.
Additionally, although it’s one of the largest insurers in the country, Liberty Mutual is not included in our analysis because it does not provide rate data.
Average car insurance costs for good and poor credit
Having poor credit has a large impact on auto insurance rates in most states. On average, car insurance rates for drivers with poor credit are more than 61% higher than for people with good credit.
Average car insurance rates for a driver with poor credit are:
- $3,455 per year for full coverage.
- $1,118 per year for minimum coverage.
Average auto insurance rates for drivers with good versus poor credit
| Type of policy | Good credit | Poor credit |
|---|---|---|
| Full coverage | $2,148 | $3,455 |
| Minimum coverage | $685 | $1,118 |
Remember, insurers use a credit-based insurance score, similar to a regular credit score, to help set rates in most states. The insurance score uses all the same factors as a regular credit score — things like on-time payments and delinquencies — but weighs them differently.
California, Hawaii, Massachusetts and Michigan don’t allow insurers to use credit when determining car insurance rates.
Insurance companies point to data linking poor credit to more frequent insurance claims to justify the higher prices to state regulators.
The score’s impact on your premium depends on where you live and which car insurance company you choose. For instance, average rates more than double in New York and Wisconsin.
Some companies are more forgiving of poor credit than others, so it’s worthwhile to shop for quotes while you’re trying to build your credit. For example, here’s what we found for a 35-year-old buying full coverage:
- State Farm’s rates for a driver with poor credit in Mississippi, South Dakota, Texas and Wisconsin are more than quadruple its rates for someone with good credit.
- On the other hand, Nationwide’s rates in Indiana and North Carolina are just about 25% higher for a driver with poor credit than for one with good credit.
Average car insurance rates after a DUI
Getting caught drinking and driving will mean significantly higher prices for car insurance. On average, auto insurance rates go up about 83% for a driver with a recent DUI, NerdWallet’s analysis found.
For a 35-year-old driver, average car insurance rates after a DUI are:
- $3,933 per year for full coverage.
- $1,403 per year for minimum coverage.
How much a DUI raises average car insurance costs
| Type of policy | Clean record | Recent DUI |
|---|---|---|
| Full coverage | $2,148 | $3,933 |
| Minimum coverage | $685 | $1,403 |
Our analysis found an average increase of about $1,852 a year for full coverage car insurance after a DUI nationally, and in Connecticut, Michigan and North Carolina, the average increase is more than $4,000 a year.
Shopping around for the cheapest car insurance after a DUI can lessen the blow. Among the largest companies in our analysis, average annual rates for full coverage car insurance after a DUI ranged from $1,977 at American Family to $4,464 at Geico, a difference of more than $2,480 a year between companies.
Switching to your state’s minimum required insurance coverage is another way to lower the cost. For minimum coverage, we found average annual rates ranging from $817 at State Farm to $1,446 at Geico.
Although minimum insurance is the cheapest option, it’s not always the best choice. If you’re looking for coverage for your vehicle after an at-fault accident, you’ll want collision insurance. And if you have a loan on your car or it’s leased, you may be required to keep collision and comprehensive coverage.
Average cost of car insurance by vehicle
In other analyses, we used a 3-year-old Toyota Camry (the most popular sedan in America by sales in recent years) to show how rates vary by personal history and demographics. But the make and model of your vehicle will certainly affect rates.
Insurers charge more to cover certain cars, including:
- Sports cars, which have higher top speeds. People tend to drive them faster, increasing the likelihood of a wreck or traffic violation. If you get a speeding ticket, insurers think you’ll be more likely to cause an accident, which increases rates further.
- Luxury cars, which tend to have expensive parts and details that are costlier to replace if damaged in a crash.
- Electric vehicles, which have more expensive engine parts to replace. The batteries alone can cost thousands each.
- Cars that are stolen often, which tend to be the nation’s more popular makes and models. These vehicles generally have higher rates for comprehensive insurance, the part of an auto policy that pays out when your car is stolen or damaged by something not traffic-related, such as floods, fire and vandalism. It is typically optional unless you have a loan or lease.
To see how rates differ depending on your vehicle, we looked at average car insurance rates for the most popular vehicles based on sales in a separate analysis from 2021. As shown below, the Camry is far from the cheapest model. That honor goes to the Subaru Outback, with an average car insurance cost of $1,336 per year.
| Rank | Average annual insurance premium |
|---|---|
| 1. Subaru Outback | $1,336 |
| 2. Subaru Forester | $1,347 |
| 3. Honda CR-V | $1,359 |
| 4. Jeep Wrangler | $1,406 |
| 5. Hyundai Tucson | $1,406 |
| 6. Mazda CX-5 | $1,412 |
| 7. Ford Escape | $1,427 |
| 8. Honda Pilot | $1,442 |
| 9. Chevrolet Equinox | $1,459 |
| 10. Ford F-150 | $1,465 |
| 11. Toyota RAV4 | $1,472 |
| 12. Toyota Tacoma | $1,477 |
| 13. Chevrolet Silverado 1500 | $1,524 |
| 14. Nissan Rogue | $1,530 |
| 15. Toyota 4Runner | $1,534 |
| 16. Jeep Grand Cherokee | $1,543 |
| 17. Ford Explorer | $1,570 |
| 18. Honda Accord | $1,601 |
| 19. Honda Civic | $1,603 |
| 20. GMC Sierra 1500 | $1,606 |
| 21. Toyota Highlander | $1,617 |
| 22. Toyota Corolla | $1,623 |
| 23. Toyota Camry | $1,641 |
| 24. Dodge Ram 1500 | $1,641 |
| 25. Tesla Model Y | $2,268 |
Going down the list, the average price between vehicles typically changes by only a few dollars per year, but between the Outback and the Tesla Model Y, there’s an annual difference of $932, on average. That works out to about $78 per month. Back to top
What else affects my car insurance cost?
There are additional factors you may need to consider that can affect insurance rates. Here are some of them:
- More specific location data such as your ZIP code or city.
- Your occupation, in many states.
- Your previous insurance company. If it was a nonstandard insurer specializing in high-risk drivers, you might see higher insurance rates with some companies.
- Continuous insurance coverage. Companies charge more for drivers with lapses in coverage.
- Annual mileage driven per car.
- Your marital status. Some insurers believe married people drive more responsibly, which means single people — even widows, widowers and divorced folks — tend to have higher insurance rates.
- Whether you own your home (and whether you bundle home insurance with auto).
- How much education you’ve completed.
- Additional coverage options you choose, such as new-car replacement coverage and gap coverage.
- Discounts you’re eligible for, which vary widely by company.
- Whom you live with. Some companies won’t allow you to exclude people such as roommates or nondriving adults from your policy.
Tips for Lowering Car Insurance Cost
If you’re looking to reduce your car insurance costs, there are a few tips you can follow to help lower your premiums:
1. Comparison shopping: One of the most effective ways to lower your car insurance costs is to compare rates from different providers. Shopping around can help you find a policy that offers the coverage you need at a price you can afford. You can use online comparison tools to make the process easier and faster.
2. Raising deductibles: Your deductible is the amount you pay out of pocket before your insurance coverage kicks in. If you’re willing to raise your deductible, you can lower your monthly premiums. However, make sure you have enough money set aside to cover the higher deductible in case of an accident.
3. Taking advantage of discounts: Many car insurance companies offer discounts for things like safe driving, low mileage, and multiple policies. Make sure you ask your provider about all the discounts you may be eligible for.
4. Improving driving record: Your driving record is a major factor in determining your car insurance premiums. If you have a clean driving record, you may be able to qualify for lower rates. So, make sure to drive safely, follow traffic rules, and avoid accidents or tickets.
5. Bundling policies: If you have multiple insurance policies, such as home and auto, consider bundling them with the same provider. Many insurance companies offer discounts for customers who have multiple policies with them, which can help you save money on your car insurance.
Frequently asked questions
What’s the average cost of car insurance per month?
The national average cost of insurance is $58 per month, or $693 per year, for minimum coverage. Your rate will vary based on where you live, what kind of coverage you have and your driving history.
What is the cheapest car insurance company?
The cheapest major insurance companies are Auto-Owners, Erie, State Farm and USAA. State Farm is widely available and a good choice for most people. Auto-Owners and Erie are only available in certain states. USAA is often the cheapest, but it’s only available to those in the military and their families.
How much more expensive is full-coverage car insurance?
Depending on your car and driving history, full-coverage insurance is typically twice the cost of liability-only coverage. This includes collision coverage, which pays for damage to your car in a crash, and comprehensive coverage, which covers other forms of damage like hail.
Is $200 a lot for car insurance?
Yes, $200 per month is a lot for car insurance. Only four states have average rates for full coverage higher than $200 per month, and no state has average rates that high for minimum coverage.
Does my car insurance cost go down after my car is paid off?
No. Your car insurance rates are not determined by how much you still owe on your car. However, once your car is paid off, you can drop comprehensive and collision coverage. This will lower your rates, but you’ll have less coverage if your car is damaged.
How much does car insurance cost for a beginner?
A 16-year-old driver pays an average of $584 per month for full coverage for their own policy. Young drivers who are on their parents’ insurance will pay less than that.
Conclusion:
Understanding car insurance costs is crucial for any driver who wants to save money and protect their assets in the event of an accident. By knowing the factors that determine insurance premiums, such as age, driving record, and vehicle type, you can take steps to lower your rates and get the coverage you need.
In conclusion, finding affordable car insurance requires some research and effort, but it is worth it in the long run. Start by comparing quotes from multiple providers, raising your deductibles, and taking advantage of discounts.
Additionally, always drive safely, obey traffic laws, and avoid accidents and traffic violations to keep your insurance costs as low as possible. By following these tips, you can find a car insurance policy that fits your budget and provides the protection you need.
