How Much is Car Insurance?

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If you own or operate a vehicle in 49 of the 50 states (New Hampshire is the oddball), by law, you’re required to maintain a minimum level of car insurance coverage. If you’re a driver, gaps in car insurance coverage can leave you with a legal or financial headache, especially if you’re involved in an accident. But how much is car insurance overall?

And how much should you plan to spend on car insurance based on this? How can you make sure that you’re getting a rate that’s as affordable as possible? Use our guide to understand how much you can expect to pay for car insurance and how you can use quotes to help you make the right choice.

Average Cost of Car Insurance in America

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  • Car insurance rates are based on several factors:
    • Age, gender, driving record, insurance record, where you live, what kind of car you drive, your credit-based insurance score and more determine your rate.
  • Research reveals that the average American can expect to spend about $1,512 per year on car insurance. That’s about $126 a month. However, it’s difficult to say exactly how much you should expect to pay because there are so many factors that influence your premium.
  • This varies widely by person and car company
    • From location to vehicle type and age to (unfortunately) gender, every insurance company has its own individual formula it uses to calculate how much you’ll pay for your semi-annual or annual premium.

What Affects Car Insurance Rates?

Some of the many factors that influence the price you’ll pay for car insurance include:

Factor 1: Your Age

If you have a teen in your house, you know that teenagers can be reckless, impulsive and prone to poor decision-making. Combined with inexperience on the road and the fact that they’re still learning how to control a motor vehicle, you can expect to pay much, much more for your insurance if you’re looking to insure a teen driver.

Data from the Insurance Institute for Highway Safety has found that younger drivers tend to become more easily distracted when driving. They are significantly more likely to cause an accident and often make immature decisions behind the wheel, so many insurance companies charge very high premiums for young drivers.

However, there are a few states that forbid insurance companies from using age to determine rates, including Hawaii, Massachusetts, and California – though if you live in the Golden State, your insurer can rate you based on “number of years of driving experience,” so naturally, this will still extend a higher rate for teen drivers. You can expect your car insurance rates to drop when you hit age 25, especially if you’ve been driving without incident since your teen years.

It’s not just teen drivers that feel the sting of age-based premiums – senior drivers usually see higher rates than their young adult and middle-aged counterparts. According to data from the U.S. Center for Disease Control, the possibility of being severely injured or killed in a motor vehicle collision increases with age.

Statistics also show that senior drivers often have slower reflexes and vision or hearing difficulties that cause their crash rates to go up. You can usually expect your insurance premium to begin to rise once you turn 55 and increase annually from there.

Factor 2: Your Gender

Most states allow car insurance providers to offer different insurance premiums and deductibles based on gender because crash statistics vary depending on sex. Data from the Insurance Institute for Highway Safety confirms that young male drivers are the most likely to be involved in an accident. Some examples are that they are more likely to suffer from road rage, make impulsive decisions in traffic and engage in risky driving behaviors like texting while driving or driving while under the influence of drugs or alcohol.

Young female drivers can find cheap car insurance more easily than their male counterparts, but this benefit tapers off as drivers become older. Once you turn 30, the crash rates (and premiums) between male and female drivers are almost identical. However, as you reach old age, female drivers see their sex-based benefit return. North Carolina, Pennsylvania, Montana, Michigan, Massachusetts and Hawaii do not allow insurance providers to factor your gender into your premium calculation.

Factor 3: Your Location

Unsurprisingly, one of the first pieces of information that insurance providers will ask for when calculating your rate is your zip code. The city and state that you live in will significantly affect how much you can expect to pay for car insurance. Research shows major discrepancies in average insurance price between each one of the 50 states. Drivers in Ohio usually pay around $77 a month for their insurance premiums while drivers in Michigan pay a whopping $213 a month, almost twice the national average.

Your insurance rates can also vary depending on if you live in an urban or rural area. If you live in a heavily-populated area, traffic accidents, congestion, and acts of vandalism are more likely and you’ll be expected to pay a higher premium.

You’re less likely to encounter these issues in a rural setting, but you are also further away from police if your car is stolen, and you may have to deal with other risk factors including deer accidents. Remember to carefully read your insurance policy’s contract before you sign to make sure your policy doesn’t place excessive limits on your area’s unique hazards.

Factor 4: Your Credit History

Bad credit can do more than just make it difficult to secure a loan – it can also leave you paying more for your insurance. Drivers with low credit scores (usually defined as “sub-600”) are more likely to file a claim, and many insurance companies extend higher premiums to drivers with poor credit history.

If you have a very poor credit score (below 500), insurance companies may also require you to pay up to 12 months’ worth of premium charges before they will extend coverage. This is because data shows that drivers with low credit scores are more likely to miss a payment.

You are entitled to one free credit report from each of the three major credit reporting agencies once every 12 months. If even the best car insurance providers quote you rates significantly higher than your state’s average, you may want to pull your report and check for inaccuracies.

According to an investigation by the Federal Trade Commission, 21 percent of Americans in a representative group found at least one “confirmed material error” on one of their credit reports. These mistakes can hurt your credit report and by extension, your ability to secure a great rate, so it’s worth it to take a look and make sure your score is correct. 

Factor 5: What You Drive

Every make and model of vehicle has different features, safety hazards and costs to repair. The type of vehicle you drive will affect how much you’ll pay for car insurance. The purchase price, theft rate, number of add-ons, safety ratings and even the color of your vehicle affect your premium. Additionally, if you drive your car for work, you can also expect to pay more for insurance because commercial vehicles typically spend more time on the road.

What Are Insurance Quotes And Why Do I Need Them?

It’s impossible to say exactly how much you’ll pay for insurance before you get a quote. A quote is an estimation of the premium for a certain level of coverage from liability to deductible to additional endorsements; most insurance companies provide free quotes and many even have online calculation tools that offer you a quote in minutes.

When you are shopping for car insurance, don’t be afraid to call a number of insurance providers before making a decision and remember to keep quotes separate from one another when doing your research.  Some insurance providers use all of these factors listed above, some use only a few, and others use different considerations (like your annual mileage, your marital status, and even your previous claims history) to determine your quote.

It’s possible to get the exact same level of coverage from ten different insurance providers at ten completely different price points, so seek a number of quotes from competing insurance providers to make sure you’re getting the best possible rate.

Compare Car Insurance Rates

Compare Quotes securely through Allstate’s website
SR-22 Insurance
Yes
N/A
1 Minute Review

Allstate is one of the largest insurance companies in the country, and it’s been around for 90 years. That means it’s secure and able to pay your car insurance claims. That doesn’t mean it’s stodgy, though. It has introduced innovations like Drivewise, which allows you to save on your insurance based on your driving habits, and Milewise, which is pay-per-mile insurance. 

You can purchase insurance online or through an Allstate agent. Allstate offers several options for discounts that can bring down your policy costs significantly. It also offers several types of insurance so you can have all or most of your policies with 1 insurer. 

Overall, Allstate is a good choice and worth comparing with other insurers to see if it’s right for you. It’s available in all 50 states and has an A+ rating from AM Best. 

Best For
  • Personalized service
  • Pay-per-mile insurance from an established company
  • Buying multiple types of insurance
Pros
  • Extensive agent network
  • Easy sign-up process
  • Many customer service options
Cons
  • Drivewise and Milewise aren’t available in all states
Get a Quote securely through The AARP Auto Insurance Program from The Hartford’s website
SR-22 Insurance
Yes
N/A
1 Minute Review

The AARP Auto Insurance Program from The Hartford is designed exclusively for AARP members who are at least 50 years old. Some of the unique features of the program can help you save money on your policy over time, especially if you have and maintain a clean driving record.

Other stand-out features include new car replacement (rather than the depreciated value), reimbursements for expenses incurred if you get injured in an accident and lifetime repairs guarantees. 

The AARP Auto Insurance from The Hartford is rated #1 by J.D. Power and Associates for customer satisfaction in handling auto insurance claims.

Best For
  • Safe drivers who are looking to save money
  • AARP members at least 50 years old
Pros
  • Offers unique coverages and benefits that can be added to a standard auto insurance policy
  • Allows drivers to save for safe driving
  • Rated #1 by J.D. Power for customer satisfaction in auto claims handling
Cons
  • Only available for AARP members
  • Must be at least 50 years old to qualify
SR-22 Insurance
Yes
N/A
1 Minute Review

Progressive auto insurance is among the first of the larger insurers to actively embrace usage-based insurance via electronic monitoring of driving habits. Often a refuge for younger drivers and drivers who have been refused insurance elsewhere, progressive markets and supports its insurance products through its website and a network of independent agents.

Best For
  • Young and less-experienced drivers
  • Drivers with consistently good driving habits
  • Rates for good drivers
  • RV drivers
Pros
  • More welcoming to less-experienced drivers
  • Great website and mobile app functionality
  • Driving based discounts can be generous
Cons
  • Relatively smaller agent network may leave some without a local agent
  • Rates can increase at renewal based on driving data from Progressive’s Snapshot.
compare quotes securely through AAA’s website
Best For
Roadside assistance
N/A
1 Minute Review

The American Automobile Association (AAA) is a federation of auto clubs, and it offers a wide range of insurance options, including car insurance. It is the most trusted and familiar name in auto-related services. The company has come a long way since its founding, but the mission remains the same. 

Safe and efficient transportation is exactly what AAA commits to per the company’s core statement. AAA is probably best known for its roadside assistance, but the company offers a variety of insurance coverage and memberships as well. AAA strives to make your life easier with its insurance coverage for you and your family. Your safety and security is AAA’s priority.

 

Best For
  • AAA Members
  • Roadside Assistance
  • Extra insurance perks
  • Anyone looking for unique insurance carriers
Pros
  • Serves all states
  • Mobile app
  • Emergency roadside assistance
Cons
  • Have to be an AAA member
  • Policies not available in every area

Final Thoughts

Even if you’re currently satisfied with your insurance policy, it doesn’t hurt to look for outside quotes from competitors every so often to leverage a lower rate with your current insurance provider, as many of the factors that contribute to insurance price are transformative. Whether you’ve recently raised your credit score or you’ve just blown out the candles on your 30th birthday cake, you might be entitled to a lower rate than you’ve been paying.