Car insurance is a monthly expense that protects you from liability in the case of injuries or damages suffered in an accident. If you’re in the process of shopping for a new vehicle, it’s also helpful to know how much you’ll need to pay for insurance so you can create a realistic budget.
While there is no simple answer for how much car insurance will cost you, it might be helpful to know that the average cost to insure a car in the U.S. is $1,457 a year, which is about $121 a month.
However, as anyone who pays much less or much more than this can tell you, there are a lot of variables that determine your car insurance rates.
If you want to be more precise when creating an estimate, however, there are a number of variables considered when calculating car insurance rates. Some factors, including where you live and what kind of car you drive, can be tough to change. Others, such as your driving habits and the level of coverage you choose, are easier to tweak. We’ll break down these factors and discuss what, if anything, you can do to save a dime on your car insurance.
Comparison Shop to Lower Your Car Insurance Cost
Before we get started, it’s important to mention one thing you can always do to save money: Shop around. It’s easiest to start online. Our quote generator can help you do that quickly, eliminating the hassle of calling individual insurers and repeating the same information.
Find the Best Car Insurance
Enter your ZIP code below and be sure to click at least 2-3 companies to find the very best rate.
What Factors Affect the Cost of Car Insurance?
There are many factors that contribute to the overall cost of car insurance, including:
- Basic demographics
- The car you drive
- Your driving history
- Your credit score
- Your driving habits
- The amount of coverage you chooose
- The type of coverage you choose
Cost Factor No. 1: Basic Demographics
Your age, sex, marital status and location all weigh heavily on how much your car insurance costs. That’s because your insurance company has an enormous amount of data that tells them how each of these things makes you more or less of a risk for filing claims.
For instance, if you’re younger (typically, age 25 or below), unmarried and male, you’ll pay more than an older married female, who is statistically less likely to file a claim. Statistically, married people are less likely to have a car accident, which is why they are offered lower cost premiums. If you travel frequently for work, you might have a higher premium due to the heightened risk of an accident.
Location also has a huge impact on your car insurance rates. State laws that regulate car insurance can have a big effect.
You’ll also almost always pay more in densely populated areas, where you’re at higher risk for an accident. Areas vulnerable to natural disasters can mean car insurance costs a premium, too, which is why hurricane-prone Louisiana ranks second in the U.S.
How to save: Unfortunately, this is the toughest category for pulling out some savings. You’re unlikely to move or get married just to save on how much car insurance costs.
Still, it’s worth keeping in mind how big an impact where you live can have on what you pay. Even ZIP codes that aren’t very far apart can vary dramatically on average costs. For more details on how costs vary from state to state, keep reading.
How much is car insurance? A state-by-state breakdown
Below, you’ll see how the cost of car insurance varies by state according to two measures. The first number is the average auto insurance customer’s policy cost in each state. This figure includes customer spending on liability, comprehensive and collision premiums, divided by the number of insured vehicles.
The second number is the national average for the same coverage. The study averaged quotes for a full-coverage policy for the same customer driving 20 of the best-selling cars in 10 ZIP codes per state.
As you’ll see, just because a state has a high average expenditure doesn’t necessarily mean it has a high average premium (and vice versa). Remember that the first number takes into account how much customers actually choose to spend — they may opt out of pricier coverage options or choose lower coverage limits — whereas the second number is simply an average of quotes for a policy that includes everything.
Cheapest and Priciest Car Insurance Costs by State
The average annual cost of car insurance across the United States is $1,457. Various factors affect individual car insurance premiums including the state you live in, coverage requirements, your car make and model, along with your driving history.
5 States with Cheapest Car Insurance
- Maine – $845
- Wisconsin – $951
- Idaho – $1,040
- Iowa – $1,047
- Virginia – $1,063
5 States with Priciest Car Insurance
- Michigan – $2,611
- Louisiana – $2,298
- Florida – $2,219
- Oklahoma – $1,966
- District of Columbia – $1,876
Car Insurance Rates by State
|State||Average annual car insurance premium|
|District of Columbia||$1,876|
Cost Factor No. 2: The Car You Drive
You probably didn’t think about how your car would affect your insurance rates when you bought it, and you probably won’t trade it in just because of your rate. However, just as your insurance company assumes you’re a bigger or smaller risk based on your demographics, it assigns risk based on the car you drive, too.
How to save: When it’s time to shop for a car, keep this rule of thumb in mind: The faster the car can go, the bigger the risk of a crash, and the more you’ll pay.
If you drive a sensible family car such as a minivan, sedan or SUV, you probably won’t pay nearly as much as someone who drives a pricey, high-performance sports car. Larger cars are also considered safer than smaller cars because they absorb impact more efficiently in an accident. You can also save a bit of money by considering a used car, which will almost always be cheaper to insure than a new one. Anti-theft devices such as alarms, anti-lock brakes and other safety-focused equipment can also save you some cash.
Cost Factor No. 3: Your Driving History
This one is probably the most obvious factor affecting your car insurance, and it may seem like the fairest one. The more tickets and violations you have, the higher your rates are going to climb. Some tickets will be worse than others: For instance, if you’re cited for DUI or reckless driving, your insurance premium could nearly double.
How to save: You can’t rewrite the past, but you can be a safer driver going forward. If your insurer offers one, consider installing a tracker that records data on driving habits such as mileage, sudden acceleration or deceleration, excessive speed, rough turns and whether you drive a lot at night. Typically, you won’t be penalized for bad driving, but you could be rewarded for safe driving. You may also be able to save by taking a defensive driving course.
Cost Factor No. 4: Your Credit Score
If you’re wondering what your credit score has to do with how much you pay for car insurance, that’s a good question. Insurers cite an abundance of data showing the higher your credit score, the less likely you are to file a claim. The reverse is also true: If your credit score is poor, you’re more likely to file a claim. Using credit scores to assess risk is illegal in a few states (California, Hawaii and Massachusetts), but otherwise, it’s fair game.
How to save: There’s no quick fix for bad credit, but raising your credit score is still enormously worthwhile because it affects far more than what you pay for car insurance. Paying your bills on time for an extended period is one of the best things to do for your credit score. Reducing large balances and being judicious about opening new credit accounts can also help.
Cost Factor No. 5: Your Driving Habits
Do you commute daily via car, and for how long? Do you ever use your car for business purposes? Does your car gather dust until the weekend because you use public transportation during the week? Do you park on the street, in a shared lot or in your own private garage? All of these things indicate your risk of getting into a crash. Accordingly, they can affect your car insurance premium.
How to save: It sounds obvious, but the less you drive, the less of a risk you are for your insurance company. Moving closer to work to reduce your mileage, taking public transportation or carpooling are a few tactics that can save you a lot of money. Just be sure to report any such chances to your insurer so that you can reap the benefits.
Cost Factor No. 6: The Amount of Coverage You Choose
When you’re shopping for car insurance, there are a couple of numbers that will weigh heavily on what you pay. The first is your limits — that is, the maximum amount your insurance company will pay in the event of a claim. Limits are usually written like this: $50,000/$100,000. That means your insurer will pay up to $50,000 per person and $100,000 per accident.
The second number to know is your deductible. That’s how much you’ll pay out of your own pocket before your insurance company will pay anything when you file a claim. A common deductible is $500, but they can go as low as around $100 and as high as $1,000 to $2,000.
How to save: You don’t want to overpay for coverage you don’t need, but you also don’t want to skimp and leave yourself on the hook for thousands of dollars after an accident.
You’ll be required to have a certain minimum limit depending on where you live. However, just because you are legally required to have only a certain amount of coverage doesn’t mean it’s a good idea to carry only the minimum, even if that will save you money. That’s because you could lose your assets, such as your savings or even your house, if someone’s medical or property damage bills exceed your ability to pay when you’re at fault.
Your deductible can be a better place to save. Agreeing to pay $1,000 instead of $100 in the event of a claim can save you a lot of money — but it’s a tactic you should use only if you have that $1,000 stashed away in your emergency fund, ready to pay the bill should you need it.
Cost Factor No. 7: The Type of Coverage You Choose
The types of coverage discussed above — bodily injury liability and property damage liability — are required when you buy car insurance. There are some other types of coverage that you may be able to skip, however.
How to save: Instead of blindly paying for every kind of coverage, carefully evaluate whether it makes sense for your individual situation.
For instance, personal injury protection (PIP) isn’t required in all states. It helps pay for your medical bills or your family’s medical bills after a crash. However, it’s probably not necessary if you and your family have adequate health insurance. It also doesn’t make sense to pay for roadside assistance if you’re already a member of AAA.
Comprehensive and collision coverage will be required if you’re financing or leasing your car, but they are optional if that’s not the case. Comprehensive covers theft and damage to your vehicle due to vandalism and other calamities that don’t involve crashes. Collision coverage is similar to comprehensive coverage, but it covers actual crash-related damage to your vehicle.
If you’re not required to have comprehensive or collision, it might make sense to drop this pricey coverage if you drive infrequently or your car’s value is very low.
How Much Does Car Insurance Cost? A Lot — If You Don’t Shop Around
Remember that one of the best things you can do to save on car insurance has nothing to do with who you are, where you live, the coverage you select or how you drive. Instead, it’s simple car insurance comparison: You should always look around to make sure you get the best deal since each company places a slightly different emphasis on the factors outlined above.
One other critical reason to shop around is that different insurers offer different discounts. Some will offer you a break for being a good student, for being a member of certain organizations, for being active-duty military, or for bundling other policies such as home insurance with the same company. That’s on top of common price breaks for driving less, driving a low-risk car or having a good credit score, among the other factors discussed here.
Online quote tools, like the one below, can be particularly helpful as you start your search. Good luck!
Find the Best Car Insurance
Enter your ZIP code below and be sure to click at least 2-3 companies to find the very best rate.