Updated November 4, 2019

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 Costs

  • What is the average cost of car insurance?
    On average, drivers spend $982 per year 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 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 $82 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.

  • 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 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 insurance agencies still view 20-year-olds as risky, their premiums decrease a bit. 20-year-olds pay an average of $2,800 per 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 when a driver turns 21. This is a roughly 50% decrease from the annual rates of a 20-year-old.

CAR INSURANCE BY STATE

  • Which state has the highest average liability insurance premiums?
    New Jersey has always had premiums as much as 50% more than the nation's average. According to Marshall McKnight from the Department of Banking and Insurance, New Jersey 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 average.

  • Which state has the lowest average liability insurance premiums?
    Iowans luck out with the lowest average liability insurance premiums in the nation. They pay an average of $295 per year for liability insurance, 44% lower than the national average for liability insurance.

  • Which state has the highest combined insurance premiums?
    New Jersey, the state with the densest population, also has the highest combined insurance premiums. New Jersey residents pay an average of 46% more than the nation's average, paying $1,264 per year.

  • Which state has the lowest combined insurance premiums?
    Residents of Idaho have the lowest average insurance premiums. At $572 per year, they pay around 33% less than the national average.

Did You Know? Californians pay an average of $130 a month or $1,500 a year for basic coverage. As with other areas, your personal car insurance rates may depend on your zip code and other information.

CAR INSURANCE BY COVERAGE LEVEL

  • What is the average price of full coverage car insurance?
    The national average for full coverage car insurance is roughly $74 per month, according to the National Association of Insurance Commissioners. Several factors affect how much you pay for full coverage policy.

    These include:

    1. Age
    2. Gender
    3. Location
    4. Driving Record
    5. Vehicle Size and Age

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

  • Where can I get car insurance for $30?
    You may find rates as low as $20 or $30 if you shop around. Look into 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 possible rate, you may get the most basic coverage level.

Shopping for Car Insurance

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

  • What percent of drivers check annually to see if they could 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 life events that may qualify you for lower rates include:

    • 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.
    • Marriage
    • Working in specific industries
    • Paying renewal premiums early

    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. Just over 40% also believe the process is too complicated.

How to Save on Car Insurance

  • How much do policyholders save on average when bundling car and home insurance?
    Many insurance companies offer savings when you carry more than one policy with them. The most common is bundling homeowners insurance and car insurance, with an average savings around $295 per year.

  • How does bundling insurance save you money?
    Insurance companies save money when you bundle your insurance. They have fewer administrative costs because all of your personal information is the same. Past buying history also shows that many clients who have two types of insurance with a company often buy a third policy. This furthers the sales efforts of the company with few expenditures.

    Read up on the best car insurance options with our car insurance comparison tool.

  • Which state offers the highest discount for bundling insurance?
    The largest savings are often seen in Georgia and Oklahoma, both of which offer an average 22% savings for bundled insurance.

  • Which state offers the lowest discount for bundling insurance?
    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.

  • Is paying car insurance in full better than paying month-to-month?
    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 may not be worth it.

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

    Thinking about bundling your insurance? Read about average health insurance costs so you can make an informed decision.

Teens and Car Insurance

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

    The death rate for motor vehicle accidents for males is double that of females. This could contribute 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.

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

    • Encourage them to keep their grades up - 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)

Reasons Car Insurance Increases

  • How much does car insurance increase after an accident?
    The Insurance Services Office recommends an increase of 20 to 40% of the base rate in the state 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 could 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 typically don't affect car insurance rates. Parking and seatbelt tickets are the most common. Texting while driving may affect your rates in some states. It depends if it's considered a moving violation in your state.

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

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 may be paying hundreds of dollars more each month without realizing it.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service 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.

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