The average cost of car insurance

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If you're in the market for your next car insurance policy, expect to pay $1,070 per year, according to recent data from the Insurance Information Institute. It's essential to understand all the factors that can affect your coverage price since not everyone's cost is the same.

Car insurance policies have lots of moving parts, and your premium, or the cost you'll pay for coverage, is just one of them. Insurance is regulated at the state level, and laws on required coverage and auto insurance pricing differ in every state. Insurance companies take into account many different factors, including the state and area where you live and your gender, age, driving history, and the level of coverage you'd like to have.

Insider compiled data from industry regulators, personal finance publications, and comparison sites to determine which factors affected car insurance costs and what the typical driver can expect to pay. Here are the most significant factors influencing the price you'll pay for coverage and what to consider when looking at your car insurance options.

Keep in mind that there have been several major changes to car insurance costs during the coronavirus pandemic. Some car insurers offer discounts as Americans drive less and are helping people affected by the virus postpone payments.

Average car insurance cost by state

Every state handles car insurance differently. States regulate their laws and policies about car insurance coverage, including how much coverage is required, how much insurance is responsible for covering, and what factors insurance companies can use to determine rates.

In some states, like New Hampshire, car insurance isn't required. In Michigan, car insurance is expensive because of a no-fault law requiring unlimited coverage for personal injury protection. Regulations like these will be significant factors in the amount you'll pay for coverage.

Source: 2019 data from S&P Global Market Intelligence

Average car insurance cost by coverage type

As a general rule, the more a policy covers, the more car insurance costs.

You'll often see quotes listed with numbers and slashes — a 50/100/50 policy would cover up to $50,000 of injury protection for each person involved in an accident, up to $100,000 worth of injuries per incident, and up to $50,000 of property damages per incident.

As these coverage limits go up, your premium will increase. Every state has a different minimum requirement, making auto insurance coverage more expensive in some states than others.

Some policies go beyond the minimum coverage in a state, offering additional protection. Collision coverage can help repair your car if it's damaged in an accident, and comprehensive policies can protect it in events like storms and disasters. However, these additional coverage types will increase your costs.

Average car insurance premiums by age and gender

Gender does influence car insurance, at least in states that allow insurers to consider it.

However, six states — California, Hawaii, Massachusetts, Pennsylvania, North Carolina, and Montana — don't allow gender as a factor in premium pricing.

For transgender and nonbinary individuals, auto insurance pricing is generally calculated by the gender marker indicated on a driver's license. In states where X is a gender option on driver's licenses — including Oregon, California, Maine, and soon New York — insurers are still determining how to calculate costs.

The number of years you've been driving will also affect the price you'll pay for coverage. Car insurance costs tend to fall with age. But, that makes insuring a teen driver incredibly expensive. But, it's also important to remember that it will vary from person to person, regardless of your age based on other factors like your driving history.

Here's the breakdown of the average car insurance cost across age groups and gender from Insurify. 

Source: Insurify 

Average car insurance cost by company

The average car insurance cost can vary by insurance company and accidents on your record. Generally, drivers with a DUI, accidents, or traffic violation on record see higher premiums.

Here are rates from the cheapest car insurance companies in the US, according to Insurify:

Source: Insurify

How auto insurance prices vary by driver profile and history

By this point, you're probably starting to see how much information goes into a car insurance quote. There are many more factors that are also considered:

Other factors that can impact the cost of car insurance

There are a few other factors that will contribute to your premium, including:

How to get the best car insurance premium

Car insurance has lots of factors that go into its pricing, perhaps the biggest of which is whether you're shopping around.

Each insurance company looks at all of these factors and prices your coverage differently as a result. It's critical to compare what you're offered. Get quotes from several different auto insurance companies and compare them to make sure you're getting the best deal for you. You'll want to consider big national insurers as well as smaller local ones.

Also, remember to ask about discounts. Most companies list available discounts on their website, but there may be some that aren't listed, including specual deals for verterans or members of professional, special bundle prices for joining your auto insurance policy with your homeowners or other types of policies, and money off for paying your six-month or annual premium all at once instead of monthly.

FAQs

Most US states require car insurance. However, some only require "proof of financial responsibility." This requirement can be met in select states through an insurance bond, bank statement, or otherwise. You can confirm with your state authorities if you live in a state like New Hampshire.

All adults in the US with a driver license should have auto insurance. If you have teens getting their licenses for the first time, you would also need to add them to your auto insurance policy.

We encourage drivers to have at least 50,000/100,000 limits for basic liability. While you can stick to your state minimums, it could leave you vulnerable in a bigger accident. If you're leasing or paying a loan on your car, you may also be required to carry collision and comprehensive coverages.

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Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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