How much is car insurance?

If you’re wondering how much car insurance is going to cost you, well, the answer is “it depends.” Rates are based on your zip code, driving record, age, marital status, credit score, choice of ride, insurance history, how much coverage you decide to buy and a bunch of other things, so, unless you’ve entered most of that info to compare car insurance quotes, it’s hard to estimate for sure.

But if you’re just trying to get a ballpark figure about how much people pay for coverage, you’re in luck. The average cost of auto insurance in the U.S. is around $1,190 per year (or about $99 per month ), according to a report from the National Association of Insurance Commissioners. The report, from January 2021, comprises the NAIC’s most recent data.

Per NAIC, Americans pay around $644.11 a year for liability insurance (which includes bodily injury liability and property damage liability), $377.62 for collision coverage, and $167.91 for comprehensive coverage. If you have no idea what any of that jargon means, we have a handy explainer on how car insurance works. Some of the other components of car insurance include personal injury protection (PIP), which protects you and your passengers, and uninsured motorist coverage, for when the other party doesn't have insurance coverage.

Average car insurance rates by state

The average cost of car insurance in the U.S. in 2018 was about $1,190 per year, according to the NAIC, but average rates vary state-to-state.

In every state except New Hampshire and Virginia, driving without at least some insurance is illegal. You can go here to find out exactly how much car insurance is required in all 50 states.

There are state-mandated car insurance discounts for certain safety features, rate increase approvals and limits on what factors can be used to set premiums. But it’s not just laws driving state-by-state differences in car insurance rates. Insurance companies may charge higher prices in places where people are filing more claims. And if a state’s densely populated, crime rates are high, the weather’s consistently bad and/or its highways are messy, well, then, there’s a good chance people are filing claims on the reg.

So where is car insurance likely to cost you? Below is a breakdown of the average annual cost of car insurance by state, courtesy of the NAIC report. The NAIC’s methodology folds average premiums for personal injury protection (PIP) coverage into its average for liability coverage, but it is possible, depending on your coverage needs, to get lower premiums by reducing coverage in either liability or PIP.

Average Annual Premium by State, 2018

The most expensive states for car insurance

Louisiana, Michigan, Washington D.C., New York, and Florida are the states with the most expensive average car insurance rates, per the National Association of Insurance Commissioners.

As you can see, car insurance rates are determined by many different variables. There’s not a lot of rhyme or reason to why these states yield the highest auto insurance rates, and it’s possible that other states will take their place the next time insurers update their rates.

Highest Average Premium by State, 2017

The cheapest states for car insurance

Maine, Iowa, Idaho, Wisconsin, and North Dakota are the states with the cheapest average car insurance rates, per the National Association of Insurance Commissioners.

The cheapest states for car insurance are generally among the least densely populated. Plus, state car insurance minimums are largely less intense. Idaho, for instance, doesn’t mandate PIP or uninsured/underinsured motorist coverage.

Lowest Average Premium by State, 2017

Average cost of car insurance by coverage type

The specific kinds of car insurance coverage that make up your policy will also help determine the price of your monthly premiums. You'll almost certainly have liability insurance, which is required by law in almost every state. Liability insurance protects you from the costs incurred if you injure someone or damage their property with your car.

Then there are the types of coverage that protect your vehicle, like comprehensive and collision, which aren’t required by law but are part of what’s often referred to as “full coverage” insurance.

Comprehensive and collision insurance cover you if your car is damaged, whether it was in a car accident or was damaged in some other way. Skipping out on comp and collision can lower your monthly premiums, but it can lead to bigger costs down the road if you're stuck paying for major repairs.

According to 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.

How much is cheap car insurance?

Because no state mandates that you buy collision or comprehensive insurance, you may be able to get away with buying only liability insurance, as we mentioned above. You could save hundreds of dollars per year on your premiums that way. However, this means you could be on the hook for tens or even hundreds of thousands of dollars out of pocket, so in the long run buying cheap car insurance may not be the most cost-effective option.

You can figure out how much your policy will cost using our car insurance calculator.

Average car insurance rates by age and gender

Because car insurance rates are based on so many individual factors, it's difficult to predict what any given person will pay for car insurance. Car insurance premiums are calculated based on everything from your zip code to your driving history to your age, credit score and the type of car you drive. You'll also get different quotes from different providers.

That said, we can still take a look at some sample car insurance quotes to see how much the average driver might pay based on factors like age and gender.

Take, for example, an average driver: Female, age 30, unmarried, with a clean driving record and a 2014 Toyota Camry. Let's say she lives in Minnesota, a state that falls in the middle when it comes to the average cost of car insurance in every state in the U.S. Her quote for full coverage insurance from one of the largest auto insurers in the country came to an annual total of $1,136 for the year.

The rate fell slightly for an average male driver with the same profile, and fell even more when the driver was older, married and retired. But an average 18-year-old driver, attending college full time and getting their own car insurance would face much higher costs, as is typical for teen drivers. Check the table below to see how the rates changed for the same car, from the same provider, when the age and gender of the driver changed.

Average cost of car insurance by vehicle type

The kind of car you drive will also affect your insurance costs. Your vehicle's make and model will, in part, determine your insurance premiums.

AAA’s 2020 Your Driving Costs study examined the ownership costs associated with different types of vehicles. The study found that the cheapest car to insure was a small SUV, at an annual cost of $1,087, and the most expensive vehicle to insure was a small sedan, with an annual cost of $1,342.

Average cost of car insurance before and after an accident

A single accident can raise your rates significantly when it’s time to renew your policy. According to one major insurer, an at-fault claim can raise your rates by an average of 28%. And even a not-at-fault accident can raise your rates.

A 2017 study by the Consumer Federation of America found that drivers across the country saw rate increases after filing claims for accidents they didn’t cause. Drivers in Baltimore, MD, and Minneapolis, MN, saw over $200 in average rate increases, according to the study. And of the major insurers included in the study, Progressive had the highest average penalty for not-at-fault accidents, with average increases of over 16%.

What determines the cost of my car insurance?

There are over a dozen factors that go into determining your car insurance rates. While each company will have their own list of factors and their own formula for assessing risk, there are a few standard factors that you can expect to be taken into account no matter where you’re shopping for auto insurance.

Here’s a breakdown of the big factors that determine your car insurance rates:

1. Your driving record

Typically, car insurance companies look back at about five years of driving history when determining your rates. You can see what they see by ordering your Motor Vehicle Report (MVR) from your state’s driver’s license agency. Each state’s DMV will have their own fees for ordering an MVR, but it should be relatively cheap. Contact your local DMV office for more details.

If you’ve got a clean driving record, you’re seen as less of a risk. If you’re one moving violation from having your license revoked, you’re seen as a big risk. Low risk, lower rates. High risk, higher rates — pretty straightforward, right?

2. The kind of coverage you want (and how much you want)

In states that mandate car insurance coverage, you’ll need to purchase a minimum amount of coverage. Coverage includes:

• Liability insurance - Reimburses the victim in a car accident when a driver is liable for bodily injury or property damage

• Personal injury protection - Pays your medical bills and those of your passengers when you’re in an accident

• Collision insurance - Pays for damage to your car incurred in a collision. Optional unless your car is leased or purchased with a car loan

• Comprehensive insurance - Pays for damage to your car or the theft of your car when it’s parked somewhere. Optional unless your car is leased or purchased with a car loan

• Uninsured/underinsured motorist insurance - Pays the difference when the other party is at fault but he or she doesn’t have insurance or his or her insurance doesn’t cover enough of your resulting medical or repair bills. Optional unless your car is leased or purchased with a car loan

• Gap insurance - When your car is stolen or wrecked beyond repair, gap insurance pays for the difference between how much the car’s value has depreciated and how much you owe on the car loan or lease. Depending on the lienholder, it may be optional

Beyond what your state requires as a minimum, you can purchase more or less coverage in each auto insurance component, although your premiums will increase the more coverage you add on and decrease if you purchase less coverage. Get a free quote from Policygenius, and one of our agents can help you find a car insurance policy that not only fits your needs but also won’t break the bank.

3. Age

A young driver may turn out to be the best driver ever, but they’re also less experienced behind the wheel and, therefore, more likely to get into an accident. The general rule of thumb is that your car insurance rates will start to drop once you reach the age of 25 — but only if you’ve got the track record to prove it.

Your age affects your car insurance premiums throughout your entire driving life. In fact, 20-year-old drivers may pay twice as much for car insurance than drivers closer to age 29 or 30, and car insurance companies consider the prime age target to be between 45 and 55 years old.

Other car insurance companies increase rates during that time — make sure you get new quotes whenever you feel like your rates could be lower. However, after age 55, your rates will probably plateau until around age 65, when they'll start rising again.

4. Gender & marital status

Blame statistics, which show men and single people are more likely to get into an accident. This increased risk to the car insurance company means if you’re a man or unmarried, you’ll pay higher insurance premiums.

5. How far your drive

The more time spent on the road, the higher the chance that you’ll get into an accident. You’ll pay more for the added risk.

6. Your car

Drive an expensive car? Well, then, comprehensive and collision coverage is going to cost more. On the less obvious side, some insurers also consider the car’s history on the road, though that doesn’t necessarily mean buying a “safer” car will lower your car insurance rates.

7. Your credit

Insurers generally look at some version of your credit score (it’s considered a metric of responsibility) and the better it is, the lower your rates could be. Some states prohibit auto insurance companies from using a credit score to determine your rates.

8. Your ZIP code

Do a lot of accidents happen in your neighborhood? What about car thefts or vandalism? Unfortunately, that means you’ll pay higher rates than someone who lives in a less risky neighborhood. (That’s because insurance only works if everyone pools their risk together.) The same thing happens to renters insurance and home insurance rates for the same reason.

Does filing a claim increase your premiums?

Filing a claim can raise your premiums. You should always file if you’re at fault in an accident, but be prepared to pay a higher premium as a result, which could be as high as nearly 50% of your current premiums. The insurance company does this to reduce its risk and make sure you don’t repeatedly get into accidents.

If the loss you suffered isn’t particularly bad, you may want to consider not filing a claim. The increased premiums you see after filing can stay for months and may eventually become more expensive than the loss in the first place.

How to save money on car insurance

From the second you start shopping around for car insurance, there are a number of ways you can save. Even if you already have an existing car insurance policy, there are still some steps you can take to lower your premiums:

1. Bundle your home and auto insurance 

Many car insurance companies offer discounts for “bundling” multiple insurance products, which means buying your auto insurance along with your home, renters, or condo insurance. If you have policies with multiple insurers, you can consider moving them to one carrier for more savings. 

2. Take advantage of car insurance discounts

You can reduce your car insurance premiums by taking advantage of any available discounts. Every carrier is different, so check with your car insurance company to see what discounts you're eligible for but some of the most common car insurance discounts are:

• Safe driver discounts - Save if  you’ve been accident free for enough years in a row

• Safety and security equipment discounts - Save if you have anti-theft devices, such as a car alarm or a GPS tracker, installed in your vehicle

• Student discounts - Save if you’re a full-time student who maintains above a certain GPA in school

• Paid-in-full discounts - Save if you opt to pay your annual car insurance premiums all at once instead of monthly

3. Change your coverage limits or deductibles

Deciding how much coverage you need is one of the most important steps of the insurance buying process. Your coverage limit is how much your insurer is willing to pay for each type of coverage in the event of an accident, so you want to set your limits high enough to fully cover you in case you need it. 

The higher you set your coverage limits, the more you’ll pay per month. You can set lower limits if you want to pay less each month, but keep in mind that a lower coverage limit also means that you may not be sufficiently covered in case of an accident. For example, if you have a property damage liability limit of $20,000 and cause $30,000 worth of damage to another car, you’ll have to pay the remaining $10,000 out of pocket. Lower coverage limits essentially mean you pay less upfront, but you could end up paying way more later if you don’t have enough coverage. 

You can also raise your comprehensive and collision deductibles if you want to save on your premiums each month, but you just need to make sure you can actually pay that deductible amount when it’s time to file a claim. 

4. Shop around for new car insurance

Car insurance rates change over time, and can go up even if you’ve been a safe driver. Even if you’re satisfied with your insurer, you may be able to find cheaper coverage elsewhere, and most major companies offer a discount just for switching. If you want to compare your options and save, you can consult with an insurance agent at Policygenius to make sure you’re finding the best coverage.