If you own or rent a vehicle, car insurance is an essential expense that protects you from liability in the case of injuries or damages suffered in an accident.
In the U.S., the average cost of car insurance is $1,457 per year. That’s $704 per six-month policy or about $121 per month. However, there are a lot of variables that determine your car insurance rates.
Compare Affordable 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 on your car insurance.
Average car insurance rates by state
The state where you live impacts car insurance prices due to a variety of factors. Places with a higher population density, lower incomes and a large percentage of uninsured drivers are more likely to have a higher average car insurance cost. Various other factors affect individual car insurance premiums including coverage requirements, your car make and model and your driving history.
Below, you’ll see how the cost of car insurance varies by state for a six-month and annual premium. The first number is the average car insurance customer’s annual policy cost in each state. The second is the average six-month premium in each state.
If you’re wondering, “how much is car insurance”, the average annual cost across the United States is $1,457.
5 states with cheapest annual car insurance rate
- Maine – $845
- Wisconsin – $951
- Idaho – $1,040
- Iowa – $1,047
- Virginia – $1,063
5 states with priciest annual car insurance rate
- Michigan – $2,611
- Louisiana – $2,298
- Florida – $2,219
- Oklahoma – $1,966
- District of Columbia – $1,876
Annual car insurance rates by state
|State||Average annual car insurance premium||Average 6-month car insurance premium|
|District of Columbia||$1,876||$748|
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 choose
- The type of coverage you choose
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 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 far apart can vary dramatically on average costs.
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.
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.
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.
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.
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.
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 to save on car insurance
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, you need to conduct a car insurance comparison. You should always look around to make sure you get the best deal because each company places a different emphasis on the factors outlined above.
Take a look at the average cost to insure a car with each of these major insurance companies.
|Company||Average 6-Month Premium|
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. Insurers like Geico, State Farm and Progressive are frequently recognized for having cheaper car insurance rates.
Online quote tools, like the one below, can be particularly helpful as you start your search.
Another tactic to save on your car insurance is to improve your credit score. This smart move can reduce costs in other areas as well, like credit card APRs. Start by paying all of your bills on time, checking your credit report for errors and paying down high interest debt. All of these strategies can give your credit score a major boost over time.
If you don’t drive one of your vehicles frequently or carpool to work, you may also qualify for a low mileage discount with your carrier. As you shop around, look for insurers that offer this extra perk so you don’t pay more for driving less.
Frequently asked questions
What is the minimum coverage required in my state?
It varies by state, but in general, you can expect to need coverage for bodily injury liability, property damage liability, and uninsured/underinsured motorist protection. You can find the exact requirements for your state here.
Should I buy collision and comprehensive coverage?
It depends on a few factors. You should consider the likelihood of your car being damaged (based on your area, your vehicle’s age and similar factors) and your ability to pay for repairs if damages were to occur. You should also think about how often you drive your car, since using it more frequently could put you at higher risk for an accident.
Does age influence your car insurance rate?
Yes. Insurance policies are more expensive for teens, who are statistically more likely to be involved in accidents. Having a teenager on your policy can nearly double your rates. For the average driver, your premium will decrease as you get older and remain steady until you reach your late 50s and 60s, where age influences your rate more strongly.
Does filing a claim increase my premium?
After an at-fault accident, you can expect to see a 42% rise in your premium, according to data from InsuranceQuotes and Quadrant Information Services. Unfortunately, these rates were measured from people with relatively clean driving histories. If you have a less-than-perfect record, you may be subject to even higher premium increases.