Car insurance is a considerable expense for vehicle owners. There are many factors that affect rates, such as the owner's location, vehicle type and credit score. Average costs vary by state and the age of the drivers attached to the policy too.
This article will present car insurance costs in the U.S. and examine how they are affected by different factors. It will also explore different ways that you can lower your car insurance premiums and answer some of the most commonly asked questions regarding insurance rates such as:
- The average car insurance rates in the U.S.
- Which factors determine car insurance rates?
- How to lower your car insurance premiums
The average car insurance rates in the U.S.
For a variety of reasons, prices for auto insurance have soared in recent times, increasing nearly 20% in 2023 alone. That said, there’s a wide range of car insurance rates in the U.S., with prices that vary wildly depending on location, coverage level, type and age of the vehicle and many other factors.
For drivers with clean driving records and good credit scores, a full-coverage policy costs an average of about $1,700 a year, according to a 2023 AAA estimate. This assumes deductibles of $100,000 per person, $300,000 per accident for bodily injury liability and $100,000 for property damage liability, which is known as 100/300/100 liability, for a vehicle that's driven roughly 12,000 miles in a year.
Rates by state
Average auto insurance costs vary depending on the state where the driver lives and the car is registered. Different state laws require different minimum levels of coverage, and insurers also look at state-level incidences of theft, vandalism and urbanization. So how much is the average car insurance premium in each state?
Different sources will give you different numbers. Insurance marketplace Insure.com estimates that the average policy in 2024 costs nearly $1,900 per year, and that Maine has the country's lowest insurance costs, averaging $1,175 for full coverage and $341 for liability only. New Hampshire, Vermont, Ohio and Idaho are among the other states where car insurance costs are well below the national average.
Louisiana is reportedly the state with nation's most expensive auto insurance rates, averaging $2,883 annually for full coverage in 2024. Florida, California, Colorado and South Dakota are the next most expensive states for car insurance, with average rates of $2,280 and up for full coverage.
One general rule of thumb can give you an idea of where insurance costs will be higher or lower: Urban areas with higher vehicle theft and vandalism rates will typically have more expensive rates than rural zones, since the latter are considered lower risk. But there are many exceptions to this rule.
Vermont, Maine and New Hampshire, for instance, are very rural states, and their car insurance rates tend to be lower. Florida, on the other hand, has some of the most expensive rates in the U.S., but it’s not due to urbanization, but rather because of its no-fault auto insurance laws, extreme weather and high number of uninsured drivers.
Rates by driver age
The age of the vehicle owner (and any other drivers attached to the policy) is a key factor in determining car insurance rates, due to risk perception. Actuarial math determines that younger and elderly drivers, at both sides of the age spectrum, are considered higher risk.
Rates by credit score
In many states, insurance companies are allowed to use credit scores when determining insurance rates. Although credit scores have nothing to do with your driving record, a 2007 study by the Federal Trade Commission found that individuals with lower credit scores file more car insurance claims and higher cost claims, on average. This is one reason why insurers typically charge higher rates for drivers with poor credit scores.
Which factors determine car insurance rates?
A number of factors go into the calculation of auto insurance rates. Age, location, type of vehicle, annual miles driven, credit score and driving history are all elements that car insurers may look at when setting rates.
Having young drivers or old drivers on a car insurance policy will lead to higher rates. So how much is car insurance for teens? Teenagers tend to have higher accident rates and face more expensive car insurance rates, as they’re considered high-risk. The idea is that since teens are new drivers without much experience on the road, they are more likely to be involved in an accident. As a result, car insurance for teens can cost hundreds or even thousands of dollars more per year than for drivers in their 20s and older.
Rates steadily decline from age 25, until drivers reach 65 years old. At this point, rates begin to rise, as senior drivers are more likely to be involved in collisions. According to the Centers for Disease Control, some of the reasons for this are changes in vision, decreased cognitive ability, age-related physical changes, medications and some age-related diseases. All of these factors taken together make senior drivers more likely to be involved in accidents and file car insurance claims, leading to higher premiums.
Car insurance companies look at more than just the state you live in when using location to calculate your car insurance rates. They also look at your city and your zip code. There are some location-related factors that impact how often you may need to file a claim. For instance, if you live in an area that regularly experiences extreme weather conditions, such as heavy winds and flooding, there is a higher probability that your car will experience weather-related damage. To compensate for this, the insurer will probably charge you higher premiums.
Similarly, if other people in your area file a lot of claims, your insurance company assumes that you’ll be more likely to file a claim as well. You will be charged a higher rate to offset the high probability that the insurer will have to pay out during the duration of your policy.
Other location-related factors are road conditions, crime levels and population density.
Vehicle make, model, year and safety features
The type of car you have plays a role in determining your car insurance rate. Here are some of the ways car type impacts rates:
- Cost of the car: Expensive makes and models will lead to higher premiums. Car insurers have to replace cars that are stolen or totaled in a collision and the more expensive the car, the more the insurance company will have to pay out.
- Cost of repairs: Some vehicle makes and models are more expensive to repair than others. Parts may be more difficult and costly to obtain, for example. Insurers will charge higher rates for these cars to make up for the extra expense they will incur if they wind up needing to cover the cost of repairs. Electric cars in particular have a reputation for high-price repairs, along with higher-price insurance.
- Age: Cars depreciate quickly so insurance rates generally go down as a car ages. Replacing an older car is usually less expensive for the insurance company so they can charge less for premiums.
- Theft rate: Some vehicles are notorious for being stolen, such as Chevrolet and Ford full-size pick-up trucks and Honda Civics and Accords, according to the National Insurance Crime Bureau. With comprehensive coverage, your insurance company will pay to replace your car if it’s stolen, so if you have a vehicle that is more prone to theft, your rates will be higher.
- Horsepower: Vehicles with a lot of horsepower are able to travel fast. Speeding increases the likelihood of a car being involved in an accident, and to offset this, auto insurers increase rates.
- Safety features: Many new vehicles come with advanced safety features, such as collision warning and blind spot detection. These features help drivers avoid becoming involved in an accident, but also increase repair costs when accidents do occur. Some companies may give discounts for safety features, but it is not a widespread practice at this time.
Average annual mileage
The more time you spend driving, the more likely you are to get into an accident at some point. This is why some insurance companies offer discounts for drivers who have low annual mileage. Discounts are given on a company-by-company basis, so details vary.
Companies use different thresholds as a cutoff for low-mileage discounts and each determines its own discount percentage. Also, some companies use the mileage reported by the driver on the insurance application, while others utilize monitoring technology to track a policyholder's actual miles driven and driving habits throughout the year.
Credit scores sometimes play a role in determining car insurance premiums. Some states have restricted how much auto insurers can use credit history when calculating rates. Here's a look at the states that have laws in place to limit or ban the use of credit scores by car insurance companies:
- California, Hawaii, Massachusetts and Michigan: Credit-based scores and credit history cannot be used to deny or cancel coverage or be used to calculate rates.
- Maryland: Credit can be used as a factor when setting initial rates, but it cannot be used to deny or cancel coverage or to increase rates upon renewal.
- Oregon: Credit can be used as part of the decision-making process when deciding whether to cover a driver, but it cannot be the only factor used. After 60 days, policies cannot be canceled or denied renewal based on credit. Insurance discounts can be given for good credit, but bad credit cannot be used to charge higher premiums.
Traffic violations and accidents will cause your insurance rates to skyrocket. If you have a bad driving record, you can expect to pay more than double what you would pay with a clean record. As with most factors that affect insurance rates, the state you live in has an impact on how your driving record impacts what you pay.
Interestingly, despite the tired trope that women are bad drivers, they’re actually statistically less likely to cause car accidents, even accounting for their usually driving less miles than men. Insurers therefore tend to charge women lower rates.
How to lower your car insurance premiums
Now that you understand the factors that go into calculating your insurance rate, you're probably wondering what you can do to lower your premiums. Luckily, there are some things that are in your control and are short of buying a new car or moving out of state.
Below are a few simple ways you can pay less. You may also want to browse through Money's more comprehensive look at how to lower your car insurance premiums.
Pay in full rather than monthly
Most insurance policies offer a discount if you pay your premium in full upfront rather than making monthly payments. Pay-in-full discounts are usually about 5% to 10% off, which can equal hundreds of dollars depending on your premium amount.
Build good credit history
Since credit-based scores have a significant impact on insurance rates in most states, building a good credit history can lead to big savings on your premiums. The best way to do this is to use credit cards responsibly and always pay your balances and other bills in full each month. If you have poor credit, you may want to consider working with a credit counseling agency. It will take some time to see your score go up but when it does you will find that your car insurance bill drops drastically.
Adjust your coverage levels
Car insurance costs less if it covers less or requires you to pay more out of pocket before a claim is paid. If you're comfortable with these tradeoffs, you may want to increase your deductible or decrease your coverage to save some money on premiums.
If your vehicle is very old has depreciated significantly and it's only worth a few thousand dollars, for example, you may decide that comprehensive and collision coverage is no longer worth the money. Before making any decisions about changes in your coverage, however, it's important to properly assess the state of your vehicle and your household insurance needs. You should also read (and thoroughly understand) the fine print in your insurance policy too.
Join your parent's existing policy
Teen drivers pay considerably more for car insurance than any other age group. If you're a teenager, one way to avoid paying high premiums is to be added as a driver to your parent's policy. As long as your permanent address is the same as your parent's (even if, for example, you live on a college campus for part of the year) and your name isn’t on the car title, you can join your parent's existing policy. This will almost always result in lower premiums than if you were on your own policy as a teen driver.
Comparison shop to find affordable car insurance
When your policy length is up and it is time to renew, don't forget to look around again. You might be able to get a better price if you switch car insurance companies from time to time rather than sticking with the same one forever.
When shopping for the best car insurance at the lowest price, always compare prices from multiple companies. Shopping for car insurance online makes this easy. Most companies offer no-obligation car insurance quotes so you can compare multiple policies and prices until you find the best deal.
When you get a quote for car insurance, check the coverage limits. Depending on your needs, you may be able to request lower limits to reduce your premiums. You can also ask a company if they offer any additional discounts that are not offered in your initial quote.
As mentioned above, if you have an old vehicle and can afford to repair or replace it if need be, it may not be worth paying for comprehensive and collision coverage. You will reduce your premiums without these optional coverages, but make sure you only forgo them if you are confident they are not worth it for your vehicle.