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Car insurance protects you and your car financially when the unexpected happens, like if you're responsible for damaging someone else's car in an accident, or if your car is stolen. A minimum amount of car insurance is required in all but two states, but the costs you're liable for after an at-fault accident can add up quickly and bare bones coverage won't be enough.
Let us help you calculate how much car insurance you need at a cost you can afford, all from the nation's top companies.
The average annual cost of car insurance in the U.S. is $1,190, but every driver will see different rates, depending on things like driving history, age and insurance history — that's why it's so difficult to calculate your car insurance rates with no personal information. Insurance companies will consider a number of factors when calculating your car insurance rates, including:
Location - Where you live helps determine what your car insurance rates will be, if your area has a high incidence of car theft claims, for example, that can raise your rates
Coverage amounts - The higher you set your coverage limits, the more you’ll pay for car insurance
Deductible amounts - Your deductible is how much you’ll pay for a covered loss before insurance will pay for the rest. A high deductible means lower rates, but remember, you may actually have to pay it someday
Credit and claims history - If you have multiple claims on your record or have a low credit score, insurance companies may consider you a “high-risk” driver and charge you higher rates as a result
Age - Drivers under the age of 25 are seen as high-risk, and will pay more for car insurance
Driving history - Past accidents and violations can raise your rates, and in some cases, like if you have a recent DUI or a suspended license, can make it hard to get coverage at all
As we mentioned before, almost every state in the U.S. requires a minimum amount of car insurance, and even in the states where it’s not required, drivers are still responsible for any damage they cause behind the wheel. But these required minimums are just a starting point; they don’t provide enough coverage to fully protect you in case of an accident.
Let’s say you live in New Jersey, where the minimum required amount of bodily injury liability is $30,000 per accident. If you cause an accident and the other driver’s medical bills total $50,000, and you’re only insured up to your state’s minimum coverage limit, you'll have to pay the remaining $20,000 out of pocket.
Many states also only require liability coverage, which is what pays for damage or injury you cause in an accident — but most drivers should add comprehensive and collision coverage to pay for damage to their own car, and uninsured/underinsured motorist coverage to pay for accidents caused by drivers without insurance. A car insurance policy with sufficient coverage might look like this:
|BASIC COVERAGES||POLICY LIMITS|
|Bodily injury liability||$50,000 each person, $100,000 each accident|
|Property damage liability||$50,000 each accident|
|Medical expenses||$5,000 each person|
|Uninsured/underinsured motorist||$50,000 each person, $100,000 each accident|
According to the Insurance Information Institute, in 2018 the average bodily injury liability claim was $15,785 and the average property damage liability claim was $3,841.
When choosing your liability coverage limits, insurance experts recommend you buy enough to fully cover the cost of a car insurance claim made against you. But how do you know how much that is?
Your state minimum is usually not enough to cover the costs of an accident. Our experts recommend getting at least $50,000 per person and $100,000 per accident in bodily injury liability coverage and at least $50,000 in property damage liability in order to make sure your insurance will fully cover the cost of any injury and damage for which you’re responsible.
Drivers who own homes and other valuable assets might want to consider getting even more liability coverage, because your assets are at risk if the cost of the damage you cause is more than what your insurance will cover.
Comprehensive and collision coverage pay for damage to your car itself, unlike liability coverage, which pays for damage you cause to other drivers. Drivers typically buy both coverages together and while they’re technically optional, we recommend adding them to your policy, unless the value of your car is so low that you’d pay more to cover it than it’s actually worth. If you lease or finance your car, your lessor or lienholder may require you to add comp and collision to your policy.
These coverages both require a deductible, usually set at $500 or $1,000, and the deductible amount you choose will have an effect on how much you’ll pay each month.
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Along with liability, comprehensive and collision coverage, there are a couple of other types of coverage that make up a “full coverage” policy, including personal injury protection and uninsured motorist/underinsured motorist insurance:
Personal injury protection (PIP): Also called no-fault insurance, personal injury protection pays the expenses you and your passengers end up with after being hurt in a car accident, regardless of who was at fault. PIP coverage applies to a range of expenses, including medical expenses, lost wages, death benefits, funeral services, and essential services like childcare and house cleaning. This coverage is only required in some states, including so-called “no fault” states, where drivers cover their own injuries after a car accident.
Uninsured motorist/underinsured motorist insurance (UM/UIM): This covers injuries to your or your passengers or property damage caused by a driver who doesn’t have car insurance, or whose car insurance isn’t enough to pay for the damage they caused. Some states mandate UM/UIM insurance, but it’s a relatively cheap type of coverage that can be incredibly useful even if you’re not required to have it.
According to a 2021 report from the NAIC, this is the average annual premium for different types of car insurance coverage in 2018, the most recent year for which that data is available.
|TYPE OF COVERAGE||AVERAGE ANNUAL COST NATIONWIDE|
The following states surpass the countrywide average of $1,190 with the most expensive car insurance rates in the nation:
Washington D.C.: $1,574.09
New York: $1,558.66
The states with the least expensive average car insurance rates in the country are:
North Dakota: $844.18
The kind of car you drive can also affect your car insurance rates. Newer cars may have added safety features that make accidents less likely, but new tech can also mean higher repair costs.
AAA’s 2020 Your Driving Costs study found that the most expensive vehicle to insure was a small sedan, with an annual cost of $1,342 and the cheapest car to insure was a small SUV, at an annual cost of $1,087.
|TYPE OF CAR||ANNUAL COST OF CAR INSURANCE|
The average cost of auto insurance in the U.S. is $99 per month for a “full coverage” car insurance policy. In the most expensive state for car insurance, Louisiana, rates averaged as $136 a month, and in Maine, the least expensive state for car insurance, rates averaged as $64 per month.
The average cost of auto insurance in the U.S. is around $1,190 per year, and car insurance premiums are largely determined by your driving history, the type of car you drive, and where you live. That means that you may wind up paying either much more or much less than the average cost of car insurance in your state.
Young drivers, especially teens, typically pay the most for car insurance of any age group. That’s because insurance companies see teens as high-risk drivers who are more likely to get into an accident and file a claim. But rates for young drivers drop each year until they turn 25 and exit that high-risk category, so a 25-year-old with a clean driving record shouldn’t necessarily pay higher rates than any other adult driver.
You need car insurance before you can drive a new car off the lot, but what if you don’t know which specific car you’re buying? If you know what make and model you’re getting, an independent insurance agent can help you get a policy all ready to go so you can put it in-force as soon as you purchase the car.