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If there’s something that everyone wants to know about car insurance, it’s how much it costs.
There isn’t a universal formula. The amount you’ll pay for car insurance is affected by a number of very different factors, from the type of coverage you want to your driving record to where you live. And every company has different parameters to determine how much you’ll pay for your auto policy.
With so many options available — and the potential to save money by comparison shopping and leveraging discounts — making any impulsive decisions on your auto policy can be expensive.
If your car insurance renewal is around the corner, or if you haven’t shopped for quotes in a year or more, use this time to look at what you should expect to pay. A good starting point to figure out whether you’re overpaying for auto insurance is to consider the average cost of car insurance.
Average Car Insurance Cost by Company
The average cost of minimum car insurance is $565 per year, while full coverage car insurance costs an average of $1,674 per year, according to the latest data from Bankrate.
To find the best car insurance company, get quotes from at least three or four insurance companies to compare prices, coverage options, and any additional perks. Below you can compare average annual rates across several insurance companies.
- USAA is the cheapest company for full coverage car insurance with an annual average rate of $1,225, followed by Erie Insurance and Travelers.
- MetLife is the most expensive company for full coverage auto insurance at $2,123 per year on average, followed by Farmers and Allstate.
- Auto-Owners is the cheapest car insurance company for the minimum required coverage, at an annual average car insurance rate of $382, followed by USAA and Amica.
- MetLife is the most expensive car insurance company for the minimum required coverage, at $821 per year on average, followed by Farmers and Allstate.
|Insurance Company||Full Coverage Premium||Minimum Coverage Premium|
Average Cost of Car Insurance by Coverage Type
The type of car insurance coverage you get and how much of it will determine the amount of your auto premium. Liability insurance is the bare minimum coverage you need to drive in most states, and it covers the property damage and injuries to others if the accident is your fault — up to your covered limit.
Then there are optional types of coverage that protect your vehicle, like comprehensive and collision, which aren’t required by law but most people have. Having a combination of liability, comprehensive, and collision insurance is usually referred to as “full coverage” insurance.
Below you’ll find the average annual premium for common types of car insurance coverage.
|Type of Coverage||Average Annual Cost Nationwide|
Average Car Insurance Cost by State
Your state and the local area you live in can have an effect on your auto insurance rate. Data from the National Association of Insurance Commissioners shows the average car insurance cost varies significantly across state lines; prices in the most expensive states are more than two times higher than those in the cheapest ones. Below you can compare average annual rates in every state.
- Maine is the cheapest state for full coverage car insurance with an annual average rate of $765.
- Louisiana is the most expensive state for full coverage auto insurance at $1,638 per year on average.
- North Dakota is the cheapest state for minimum coverage car insurance with an annual average rate of $304.
- Florida is the most expensive state for minimum coverage car insurance with an annual average rate of $964.
|State||Full Coverage Premium||Minimum Coverage Premium|
|District of Columbia||$1,466||$744|
Factors That Determine Your Car Insurance Premium
Your rate is determined by dozens of different factors, and those factors vary across insurance companies. It’s hard to pinpoint what exactly every insurance company is analyzing to determine your premium, but here are a few commonly known ones that influence the price you pay for car insurance, according to experts we spoke to and the Insurance Information Institute.
- Location: Your location plays a significant role in your auto premium. Every state has specific minimum requirements for auto insurance, so your state’s laws will influence how much coverage you need to buy in order to legally drive. Additionally, many insurance companies see drivers who live in urban areas as more susceptible to vandalism, theft, and accidents. That can lead to higher rates compared to those living in suburban or rural areas, according to III.
- Vehicle: The cost of your car affects the cost to insure it. A luxury car, for example, will be much more expensive to insure than a conventional sedan or SUV. The amount you drive your car also plays a role in your rate; the more miles you drive, the more chance for accidents. You’ll pay more as a result.
- Coverage Type and Amount: The type of coverage you choose and the limits and deductibles you pick will play a role in the cost of an insurance policy.
- Driving History: A good driving record can lower your auto insurance rate, and a bad driving record will do the opposite. New drivers also typically pay more because they’re less experienced and more likely to get into accidents.
- Credit History: If you’ve ever applied to open a line of credit or gotten a mortgage, you know that credit scores matter, a lot. That same principle applies to auto insurance, except it’s a credit-based insurance score (slightly different from a credit score). Insurance companies often use insurance scores — which are based on your credit history — to help determine your rate.
- Age: Data shows the more driving experience you have, the less likely you’ll get into an accident, and driving experience is usually correlated with age. Insurers usually see older, more experienced drivers as less of a risk on the road compared to teenagers or people under 25, and therefore will usually charge less.
- Gender: Auto insurers are allowed to set rates partially based on gender in nearly every state. According to III, women often pay less for coverage because men tend to get into more accidents.