When it comes to car insurance costs, the big question on everyone’s mind is: How much am I going to pay per month? Well, according to NerdWallet’s 2023 rate analysis, the national average cost of car insurance stands at $2,148 per year. That translates to a monthly car insurance rate of approximately $179.
But hold up! Before you start budgeting, it’s important to note that these figures represent full coverage insurance rates, which include liability, comprehensive, collision, and any additional state-mandated insurance. Plus, your personal car insurance costs will be influenced by various factors like your driving history, where you live, the coverage you choose, and your car’s make and model. Read on as we dive into the nitty-gritty of how these factors might impact your monthly car insurance expenses.
- 1. Average Car Insurance Cost for Good and Poor Credit
- 2. Average Car Insurance Cost After An At Fault Accident
- 3. Average Car Insurance Cost After A DUI
- 4. Average Car Insurance Cost For Young Drivers
- 5. Average Car Insurance Cost By Gender
- 6. Average Car Insurance Cost By Vehicle Type
- 7. Average Car Insurance Cost By Company
Snapshot of Average Car Insurance Costs
Car insurance costs can vary significantly based on your personal profile, driving history, and the level of coverage you choose. In this article, we’ll explore the average car insurance rates for different scenarios and discuss the factors that can influence your insurance premiums.
National Average Car Insurance Rates
The average cost of car insurance in 2023 is $2,148 per year for a good driver with good credit. However, rates can change dramatically based on your history and the coverage you select. Here’s a breakdown of national average car insurance rates for various situations:
Full Coverage Policies:
- A good driver with good credit: $2,148
- A good driver with poor credit: $3,455
- Driver with an at-fault accident and good credit: $3,164
- Driver with a recent DUI and good credit: $3,933
Minimum Required Coverage Policies:
- A good driver with good credit: $685
- A good driver with poor credit: $1,118
- Driver with an at-fault accident and good credit: $1,044
- Driver with a recent DUI and good credit: $1,403
As you can see, full coverage insurance rates are generally more than twice as high as minimum coverage rates. However, it’s essential to remember that these are averages, and your personal car insurance rates will depend on various factors.
State-by-State Car Insurance Costs: Full and Minimum Coverage Averages
The location where you reside can greatly influence your auto insurance rates, as each state has its own set of regulations governing insurance coverage. Our 2023 state-by-state analysis of car insurance rates for drivers with good credit and no recent accidents reveals the following insights:
- Maine takes the top spot as the cheapest state for full coverage car insurance, with an annual average rate of $1,323. Idaho and Vermont closely follow as the next most affordable states for full coverage.
- On the other end of the spectrum, Florida has the highest average cost for full-coverage auto insurance, coming in at $3,605 per year. Louisiana and Kentucky are the runners-up for the most expensive states for full coverage.
- For minimum required coverage, Wyoming is the most budget-friendly state, boasting an annual average car insurance rate of just $289. South Dakota and Iowa are also among the cheapest states for minimum coverage.
- Rhode Island ranks as the priciest state for minimum required coverage, with an average annual rate of $1,272. New York and Nevada follow closely, making them the next most expensive states for minimum coverage.
Here’s a breakdown of average car insurance costs for full and minimum coverage in each state:
|State||Full Coverage||Minimum Coverage|
Cheapest and Most Expensive States for Full Coverage Auto Insurance
Here’s a list of the five cheapest states for full coverage auto insurance, along with their average annual and monthly costs:
- Maine: $1,323 a year, or about $110 a month, on average.
- Idaho: $1,349 a year, or about $112 a month, on average.
- Vermont: $1,376 a year, or about $115 a month, on average.
- Massachusetts: $1,394 a year, or about $116 a month, on average.
- Ohio: $1,423 a year, or about $119 a month, on average.
The following are the five most expensive states for full coverage auto insurance, along with their average annual and monthly costs:
- Florida: $3,605 a year, or about $300 a month, on average.
- Louisiana: $3,399 a year, or about $283 a month, on average.
- Kentucky: $3,357 a year, or about $280 a month, on average.
- Rhode Island: $3,300 a year, or about $275 a month, on average.
- Michigan: $3,229 a year, or about $269 a month, on average.
7 Category-Based Average Car Insurance Cost Per Month
We’ve already told you about the various factors that can influence individual auto coverage rates. Now, let’s see how some of those items will affect your average car insurance cost per month.
1. Average Car Insurance Cost for Good and Poor Credit
The impact of credit scores on car insurance costs is significant in most states. On average, drivers with poor credit pay more than 61% higher rates than those with good credit.
For drivers with poor credit, average car insurance rates are:
- $3,455 per year for full coverage.
- $1,118 per year for minimum coverage.
Comparing average auto insurance rates for drivers with good and poor credit, we see the following:
|Type of policy||Good credit||Poor credit|
Keep in mind that insurers use a credit-based insurance score, similar to a regular credit score, to set rates in most states. The insurance score considers factors like on-time payments and delinquencies but weighs them differently.
In California, Hawaii, Massachusetts, and Michigan, insurers are not allowed to use credit scores when determining car insurance rates. Insurance companies argue that poor credit is linked to more frequent insurance claims, using this data to justify higher prices to state regulators.
The effect of your credit score on your insurance premium depends on your location and the car insurance company you choose. For example, average rates in New York and Wisconsin more than double for drivers with poor credit.
Some companies are more lenient towards poor credit than others, so it’s a good idea to shop around for quotes while you’re working on improving your credit. For instance, we found the following for a 35-year-old buying full coverage:
- State Farm’s rates for drivers with poor credit in Mississippi, South Dakota, Texas, and Wisconsin are more than four times higher than for those with good credit.
- In contrast, Nationwide’s rates in Indiana and North Carolina are only about 25% higher for drivers with poor credit compared to those with good credit.
So, when searching for the best insurance rates, remember that your credit score plays a significant role, and be sure to explore different providers for the most competitive offers.
2. Average Car Insurance Cost After An At Fault Accident
When you’re at fault in an accident, average auto insurance costs typically rise:
- $3,164 per year for full coverage.
- $1,044 per year for minimum coverage.
On average, a driver who has caused an accident will see their car insurance rates increase by about 50% compared to someone without an accident.
|Type of policy||Clean record||After one at-fault accident|
Between states, rate increases after an accident generally range from 30% to 60%. Massachusetts and Texas stand out, with average rate increases of 88% and 70%, respectively, after an accident. In Texas, this means an additional $1,668 a year in car insurance premiums; in Massachusetts, the difference is around $1,224 per year.
The amount your rates increase also depends on the severity of the damage, whether you have accident forgiveness on your policy, and any “good driver” discounts you might lose. In our analysis, the hypothetical accident caused $10,000 in property damage with no injuries. Accidents involving medical expenses could result in even higher rate increases.
It’s crucial to shop around for the most affordable insurer after an accident, as each company weighs factors like accidents differently when setting prices. For example, our analysis found that American families’ rates increase by roughly 27% on average after an accident, while Geico’s rates go up by an average of 60%.
An at-fault accident can affect your auto insurance costs for three to five years, depending on the carrier. That’s why it’s a good idea to shop for car insurance quotes around the third and fifth anniversary of your accident to see if you can find a better deal.
3. Average Car Insurance Cost After A DUI
When you get caught with a DUI, expect your car insurance rates to spike considerably. On average, auto insurance rates increase by around 83% for drivers with a recent DUI, according to NerdWallet’s analysis.
For a 35-year-old driver, average car insurance rates after a DUI are:
- $3,933 per year for full coverage.
- $1,403 per year for minimum coverage.
|Type of policy||Clean record||Recent DUI|
Nationally, our analysis reveals an average yearly increase of about $1,852 for full coverage car insurance after a DUI. In Connecticut, Michigan, and North Carolina, the average increase exceeds $4,000 per year.
To lessen the financial impact, shop around for the most affordable car insurance after a DUI. Among the largest companies in our analysis, average annual rates for full coverage car insurance after a DUI ranged from $1,977 at American Family to $4,464 at Geico, a difference of over $2,480 per year between companies.
Another way to lower costs is to switch to your state’s minimum required insurance coverage. For minimum coverage, we found average annual rates ranging from $817 at State Farm to $1,446 at Geico.
While minimum insurance is the cheapest option, it’s not always the best choice. If you want coverage for your vehicle after an at-fault accident, you’ll need collision insurance. Additionally, if you have a loan on your car or it’s leased, you may be required to maintain collision and comprehensive coverage.
4. Average Car Insurance Cost For Young Drivers
Car insurance companies tend to view less experienced drivers as a higher risk, often leading to steeper rates for young drivers. Typically, insurers classify young drivers as those between 16 to 25 years old, or sometimes even under 30. In our analysis, we looked at rates for 20-year-old drivers.
As you move past your 20s, insurance rates generally decrease until you hit your 70s. On average, a 20-year-old driver pays around $2,050 more per year for car insurance than a 35-year-old driver, according to our findings.
|For a 20-year-old driver with good credit and a clean driving record, average car insurance rates are:|
|$4,372 for full coverage.|
|$1,491 for minimum required coverage.|
However, young drivers with poor credit or a spotty driving history can expect to pay even more for car insurance.
|Driver profile||Full coverage||Minimum coverage|
|Clean driving record, good credit||$4,372||$1,491|
|One at-fault crash, good credit||$5,573||$2,053|
|One DUI, good credit||$6,440||$2,689|
|Clean driving record, poor credit||$6,460||$2,420|
Almost 40% of Americans aged 20 to 24 have no credit history or too little to generate a score, as reported by the Consumer Financial Protection Bureau. Similar to a regular credit score, limited credit history can have a negative impact on your credit-based insurance score, which can lead to higher car insurance rates.
5. Average Car Insurance Cost By Gender
The difference in average car insurance costs by gender is generally less significant when compared to factors like company, state, credit score, and driving history. However, this doesn’t mean that gender-based pricing is insignificant, just that it’s not as easily demonstrated by national statistics. Seven states have banned gender-based pricing by law: California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania.
Generally speaking, young adults experience a more substantial price discrepancy based on gender than older drivers. Men tend to pay more than women across all age groups we analyzed for full coverage insurance.
For instance, in states where gender-based pricing is allowed, we calculated average full coverage insurance rates separately for men and women and found the following:
|Age group||Gender-based price difference per year|
|Age 20||Men pay about $531 more than women|
|Age 30||Men pay around $48 more than women|
|Age 35||Men pay about $25 more than women|
These numbers show that the gap in car insurance costs based on gender narrows as drivers age, but it’s still important to keep this factor in mind when comparing rates.
6. Average Car Insurance Cost By Vehicle Type
The average cost of car insurance can vary quite a bit depending on the vehicle you drive. In some of our previous analyses, we used a 3-year-old Toyota Camry (America’s top-selling sedan in recent years) to demonstrate how rates are affected by personal history and demographics. However, your car’s make and model will definitely impact the rates.
Insurance companies tend to charge more to cover specific vehicles, such as:
- Sports cars, which possess higher top speeds. These cars encourage faster driving, increasing the likelihood of accidents or traffic violations. If you receive a speeding ticket, insurers may consider you more accident-prone, leading to higher rates.
- Luxury cars, often have pricey parts and details that cost more to replace if damaged in an accident.
- Electric vehicles, come with more expensive engine components to replace, including batteries that can cost thousands of dollars.
- Frequently stolen cars, which are typically the nation’s most popular makes and models. These vehicles usually have higher comprehensive insurance rates, covering theft or damage from non-traffic-related incidents like floods, fire, or vandalism. Comprehensive insurance is usually optional unless you have a loan or lease.
We examined average car insurance rates for the most popular vehicles based on 2021 sales to see how rates differ by vehicle. As illustrated below, the Camry isn’t the cheapest model; that title goes to the Subaru Outback, with an average annual car insurance cost of $1,336.
|Vehicle||Average annual insurance premium|
|Chevrolet Silverado 1500||$1,524|
|Jeep Grand Cherokee||$1,543|
|GMC Sierra 1500||$1,606|
|Dodge Ram 1500||$1,641|
|Tesla Model Y||$2,268|
As you move down the list, the average price between vehicles usually only changes by a few bucks per year. However, comparing the Outback and the Tesla Model Y reveals an average annual difference of $932 or about $78 per month.
7. Average Car Insurance Cost By Company
Car insurance companies determine rates using a multitude of factors, such as your driving history, location, vehicle type, and personal demographics. Essentially, they’re assessing the likelihood of you filing a claim and setting your price accordingly.
What’s interesting is that each insurer weighs these factors differently. For example, if you have poor credit, one insurer might increase your policy cost by 10%, while another might hike it up by 40%. A claim-free history could earn you a 20% discount with one company, but only a 5% discount with another.
This variability means that the car insurance company offering super-low rates to your friend might not necessarily be the cheapest option for you.
To give you an idea of average annual car insurance costs from some of the nation’s largest insurers, we’ve compiled data for both full and minimum coverage:
|Company||Full coverage||Minimum coverage|
*Note: USAA is available only to active-duty military members, veterans, and their families.
It’s important to consider that smaller insurers may offer cheaper rates than nationwide carriers. However, many regional insurers operate in just a few states. We’ve analyzed rates from large insurers to provide the most relevant information for all readers.
Keep in mind that Liberty Mutual, one of the country’s largest insurers, is not included in our analysis due to its lack of rate data.
Factors That Impact Car Insurance Costs
There are several factors that insurance companies consider when calculating your monthly premium. Here’s a breakdown of the most common factors:
- Age and Driving Experience: Younger and less experienced drivers typically face higher premiums due to their increased risk of accidents.
- Gender: Men, especially young males, are statistically more likely to be involved in accidents, resulting in higher premiums.
- Marital Status: Married individuals tend to have lower car insurance rates, as they are perceived as more stable and responsible drivers.
- Make and Model: Luxury and sports cars usually come with higher insurance costs due to their high repair costs and increased likelihood of theft.
- Vehicle Age: Older vehicles may have lower insurance costs, as their value decreases over time.
- Safety Features: Cars with advanced safety features and good safety ratings can help reduce insurance premiums.
Driving History Factors
- Accident History: Drivers with a history of accidents or claims may face higher insurance rates.
- Traffic Violations: Frequent traffic violations, like speeding tickets or DUIs, can significantly increase your premiums.
- Claims History: If you’ve filed multiple claims in the past, insurance companies may view you as high-risk and charge you more.
- State Regulations: Each state has its own insurance regulations, which can impact premium rates.
- Urban vs. Rural Areas: Drivers in urban areas typically pay more for car insurance due to higher traffic density and increased risk of accidents and theft.
- Neighborhood Crime Rates: If you live in an area with high crime rates, your insurance costs may be higher due to an increased risk of theft or vandalism.
Saving Money on Your Car Insurance
Don’t fret if your car insurance costs seem high—there are several ways to save on your monthly premiums:
- Shop Around: Compare quotes from multiple insurance providers to find the best deal.
- Bundle Policies: Combine your auto insurance with other policies, like renters or homeowners insurance, for a discount.
- Take Advantage of Discounts: Many insurance companies offer discounts for good drivers, good students, or even taking a defensive driving course.
- Raise Deductibles: Higher deductibles mean lower monthly premiums, but be prepared to pay more out of pocket in the event of a claim.
- Reduce Coverage on Older Vehicles: If you have an older car, consider dropping comprehensive and collision coverage to save money.
Frequently Asked Questions (FAQ)
In conclusion, car insurance rates can vary significantly based on numerous factors, including your vehicle’s make and model, driving history, credit score, age, and even gender. It’s essential to understand how these factors impact your insurance premiums and to shop around for the best rates to fit your needs.
Some vehicles, such as sports cars, luxury cars, and electric vehicles, may come with higher insurance costs due to their unique features and risks. Additionally, young drivers, drivers with poor credit, or those with a history of accidents or DUIs can expect to pay more for insurance.
To find the best insurance rates, it’s important to shop around, compare quotes from multiple insurers, and consider your personal circumstances. By doing so, you can ensure that you’re getting the most affordable and suitable coverage for your specific needs. And remember, driving safely, maintaining a good credit score, and choosing the right vehicle can help lower your insurance costs in the long run.
Article Source: https://www.nerdwallet.com/article/insurance/how-much-is-car-insurance