Updated February 14, 2020

Average Cost of Car Insurance May Surprise You

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It's not unusual to spend $1,000 - $4,000 per year on car insurance. Young drivers and poor driving records tend to send the prices soaring.

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Read this shocking study to learn about the average car insurance costs and how you can minimize them.

Average Car Insurance Cost

What is the average cost of car insurance?
Drivers spend an average annual rate of $936 on car insurance. That's about an 8% increase over the previous 5-year figure.

Note: Actual figures vary based on the type of coverage chosen. For example, certain states require full insurance coverage, while others only require liability insurance.

Find Affordable Car Insurance

What is the average cost of car insurance per month?
The average driver pays $78 a month for car insurance. This is a 4% increase from the prior year.

What is the average cost of car insurance for a 16-year-old?
The average car insurance premium increases 152% with the addition of a 16-year-old driver. This brings the average premium to $2,474 a year.

What is the average cost of car insurance for an 18-year-old?
Teens and young adults can remain on their parent's car insurance until they are 26 years old. If you choose to get your own insurance policy, expect to pay an average of $4,000 per year for that policy.

What is the average cost of car insurance for a 20-year-old?
Even though auto insurance agencies still view 20-year-olds as risky, their rates decrease a bit. 20-year-olds pay an average of $2,800 a year. This is likely due to the few years of experience they have driving. However, a bad driving record can send that average sky high quickly.

What is the average cost of car insurance for a 21-year-old?
The average price for car insurance is about $1,500 a year when a driver turns 21. This is a roughly 50% decrease from the average annual rates of a 20-year-old.

Average Car Insurance Costs by State

According to data from the National Association of Insurance Commissioners (NAIC), residents of New Jersey spent an annual average of $1,309 for basic car insurance. That's about 29% higher than the national average.

See how your state compares below:

Average Car Insurance Rates by State

  • Alabama - $769
  • Alaska - $859
  • Arizona - $891
  • Arkansas - $772
  • California - $893
  • Colorado - $935
  • Connecticut - $1086
  • Delaware - $1160
  • District of Columbia - $1247
  • Florida - $1260
  • Georgia - $966
  • Hawaii - $782
  • Idaho - $600
  • Illinois - $837
  • Indiana - $692
  • Iowa - $628
  • Kansas - $714
  • Kentucky - $839
  • Louisiana - $1302
  • Maine - $650
  • Maryland - $1077
  • Massachusetts - $1097
  • Michigan - $1271
  • Minnesota - $808
  • Mississippi - $859
  • Missouri - $791
  • Montana - $707
  • Nebraska - $708
  • Nevada - $1026
  • New Hampshire - $802
  • New Jersey - $1309
  • New Mexico - $781
  • New York - $1302
  • North Carolina - $700
  • North Dakota - $639
  • Ohio - $727
  • Oklahoma - $851
  • Oregon - $877
  • Pennsylvania - $918
  • Rhode Island - $1194
  • South Carolina - $923
  • South Dakota - $648
  • Tennessee - $760
  • Texas - $1009
  • Utah - $824
  • Vermont - $692
  • Virginia - $786
  • Washington - $924
  • West Virginia - $870
  • Wisconsin - $688
  • Wyoming - $677
  • National Average - $936

Which states have the most expensive liability insurance premiums?
New Jersey and Florida have the most expensive liability premiums at $903. That's 46% higher than the national average.

New Jersey has always had average car insurance rates as much as 50% more than the rest of the U.S.. According to Marshall McKnight from the Department of Banking and Insurance, the state has the densest population.

This means more cars and more crashes. He also noted that many drivers carry more insurance than is legally required, which raises the state's numbers.

Which state has the cheapest liability insurance premiums?
Iowa lucks out with the cheapest liability insurance premiums in the nation. Iowans pay an average annual of $312 for liability insurance, 58% lower than the rest of the U.S.

Which state has the most expensive combined insurance premiums?
A policy that combines liability, collision, and comprehensive coverage will cost $1,496 in Louisiana, 43% higher than the rest of the nation.

Residents of Louisiana get into more accidents that are taken to court than any other state. This makes for expensive claims and higher rates as a result.

Which state has the lowest combined insurance premiums?
Idaho has the lowest combined insurance premiums. At $711 per year, they pay around 40% less than the rest of the states.

Did You Know? Californians pay an average of $893 a year for minimum coverage. As with other areas, your personal car insurance rates depend on your ZIP code and other factors. (More on this below.)

Average Car Insurance Rates By Coverage Level

What is the average price of full coverage car insurance?
The average nationwide for full coverage car insurance is roughly $89 per month, according to the NAIC.

However, there's no true "full coverage" auto insurance that covers the cost of every possible situation. People often use the term to refer to insurance policies that cover both your car and the other person's damages in most common scenarios.

"Full coverage" policies will usually include comprehensive coverage and collision coverage in addition to state minimum requirements.

What is the average price of basic car insurance coverage?
The average price of minimum coverage is around $40 per month. Basic rates vary based on state requirements for minimum liability insurance.

Most states require some combination of the following for minimum coverage:

  • Bodily injury liability
  • Property damage liability
  • Personal injury protection
  • Uninsured motorist coverage

Where can I get car insurance for $30?
You may find rates as low as $20 or $30 per month if you compare prices with different insurance companies. Look into auto insurance providers that provide discounted rates if you meet specific criteria.

And don't overlook small, local insurance companies. Keep in mind that if you opt for the cheapest car insurance possible, you might get the most basic, minimum coverage.

What Factors Affect the Cost of Car Insurance?

To determine how much your auto insurance will cost, your insurance company will look at many factors, including:

  • Age: Younger drivers pay more for car insurance because they're more likely to get into an accident.

    Insurance prices will go down as they build a safe driving history, but this can take years to establish.

  • Gender: Young male drivers pay more for car insurance than young female drivers. Young men tend to exhibit riskier driving behavior, so insurance companies charge them higher rates.

    Among older drivers, however, gender plays less of a role in how much car insurance costs.

    The states of California, Hawaii, Massachusetts, Montana, North Carolina, and Pennsylvania have banned gender-based auto insurance pricing.

  • Location: Auto insurance rates vary by state and are priced by ZIP code. If you live in a densely populated city, your auto insurance will likely be more expensive than if you lived in a rural area.

  • Driving Record: A driving history with accidents, tickets, and insurance claims will affect your insurance quotes. Even a minor violation can have a big impact on your car insurance rates.

  • Credit Score: Drivers with poor credit tend to pay more than drivers with good credit. Your auto insurance company considers you a higher risk if your credit score is very low.

  • Vehicle Size and Age: Larger cars are generally safer than smaller cars, which makes them cheaper to insure.

    The age of your vehicle also contributes to car insurance premiums. If you drive a newer car with plenty of safety features, you could pay less than someone with an older car.

Reasons Your Car Insurance Rates Could Increase

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How much does car insurance increase after an accident?
The Insurance Services Office reports an average increase of 20 - 40% of the state's base rate after an accident. The state's base rate is the average rate before any discounts are applied.

If you have a one-car policy, your rate will increase 40%. If you have more than one car on the policy, the premium will increase 20% for the first two cars.

How much does car insurance increase after a traffic violation?
If there's any incentive to follow the law and avoid speeding, it could be the 22% increase your premiums can experience with just one ticket.

This is just the average. The actual increase depends on the violation and where you live. It's not unheard of to see over a 100% increase in your premium.

What traffic violations don't affect car insurance premiums?
Non-moving violations like parking and seatbelt tickets typically don't affect car insurance rates. Texting while driving might affect your rates in some states, depending on if your state considers it a moving violation.

How long are premiums affected by a traffic violation?
Simple violations, such as a minor speeding ticket, might only affect your rates for 3 years. However, major violations, such as a DUI, could affect your rates as long as 10 years.

How to Save on Car Insurance

Bundle Your Insurance
Many auto insurance companies offer savings when you carry more than one insurance policy with them. The most common is bundling homeowners insurance and car insurance, with an average savings of $295 per year.

The largest savings are usually seen in Georgia and Oklahoma, both of which offer an average 22% savings for bundled insurance policies.

Florida offers the smallest benefit for insurance bundling. They offer their customers an average of 8% savings. New York is a close second with just an 11% savings.

Your insurance company saves money on administrative costs when you bundle your insurance. Past buying history also shows that many clients who have two types of insurance with a company often buy a third policy.

Pay Your Premium In Full
Paying your premium in full can save you money, but your savings will vary from company to company. If you struggle to afford the full payment and the savings are less than $50, it might not be worth it.

But if you can afford the upfront payment, it could save you $100 or more. Consider making the switch from monthly payments.

Improve Your Credit Score
With all other factors remaining consistent, a driver with good credit will pay more than a driver with poor credit. Improving your credit score takes time, but your patience will be rewarded with lower insurance costs.

You can take steps to address poor credit such as always paying your bills on time and keeping your credit card balance low.

Shopping for Auto Insurance

How often do drivers change auto insurance?
The average American stays with the same carrier for 12 years. About 14% of Americans use the same carrier for 20 - 30 years.

How many drivers check annually to see if they can save money on their car insurance?
Only about 16% of drivers check to see if they are eligible for any new discounts on their car insurance. A few key events that might qualify you for lower rates include:

  • Marriage
  • Working in some industries such as health and education
  • Paying renewal premiums early
  • Short daily commutes (less than 5,000 miles per year), especially for usage-based insurers such as Metromile. Check out our Metromile Insurance review to learn more.

These discounts are not automatic. The driver must alert an agent of their eligibility to get the discount.

What are the top reasons drivers don't shop for cheaper auto insurance?
More than 50% of Americans say they just don't have the time to shop around for insurance quotes. Just over 40% also believe the process is too complicated.

Teen Drivers and Car Insurance

What is the average insurance premium increase when adding a female teen driver?
Adding a female teen driver to your insurance policy as opposed to a male teen usually results in a lower premium increase. On average, girls raise your insurance premium by 129%.

The death rate for motor vehicle accidents for males is double that of females. This contributes to the lower premium increase for females.

What is the average insurance premium increase when adding a male teen driver?
Teenage boys increase the average insurance bill by as much as 176%. This is just about 50% higher than the premium increases for a teenage girl.

Why is car insurance more expensive for teens?
Young drivers don't have much of a driving history. Companies charge more for teens to cover the risk of insuring an unestablished driver.

Data shows that teens are also more likely to engage in risky driving behavior such as speeding and driving under the influence.

How can you keep your insurance rates down with a teen driver?
Luckily, there are ways to lower your insurance rates even with a teen driver:

  • Encourage them to get good grades - a B average or higher can lower your premiums
  • Provide a safe and "older" model car
  • Increase your deductible
  • Don't list your teen driver as the "primary driver" (if you are the primary driver)

Bottom Line

A good driving record and safe car are the best ways to keep your car insurance rates down. But always remember to shop around. You might be paying hundreds of dollars more each month without realizing it.


Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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