Car insurance is required in the United States.
If you are a
driver in the USA, you have to have car insurance. This is because your state
government has decided that it's too risky for drivers to be at risk of car
accidents without enough coverage. For many people, a liability policy with
some coverage for property damage is enough, but this comes at a price — about
$500 per year. If you can't afford that, you should know the cost of car insurance.
- What is the cost of car insurance?
- What is the difference in the average cost of car insurance between men and women?
- What are the Car insurance premiums on average by age?
- What is the average cost of car insurance by the companies?
Comprehensive
coverage is a simple way to get around the mandatory requirement: it protects
your car and your personal property in case of an accident. Car insurance
companies cover paying off damage claims associated with car accidents. If you
have comprehensive coverage, you are basically insuring yourself against any
liability or damage claims.
But if you
choose to go with the cheaper liability policy instead of the comprehensive
one, it can still be a good idea to buy some sort of umbrella coverage — even
if it's just third-party fire or theft insurance. Liability insurance only
covers those who are injured or whose property is damaged by your car in an
accident. If you have comprehensive or fire insurance, you can also be
protected from major property damage if your car burns or gets stolen.
If you're a
young driver in the United States, auto insurance is far more expensive for you
than it is for older drivers. In most states, your premium will go down once
you reach a certain number of years without an accident or moving violation on
your driving record — usually at least five years of good driving. But that
doesn't mean that young people should avoid buying car insurance — just shop
around and compare rates between providers before making a decision.
The average
cost of car insurance in the US is about $2,000 per year. This means that most
people are spending more than $500 per year on auto insurance. This can be
quite a burden if you are trying to save money for other expenses like mortgage
payments or education costs. But by shopping around and comparing rates, you
can easily find cheap rates for car insurance or even go without coverage
altogether. You can always get your license suspended if you don't have
insurance at the time of your violation — this will save you hundreds of
dollars each time your license is suspended!
While it's
true that the average American spends a lot on car insurance, one study shows
that they might spend more than they think.
What is the cost of car insurance in my state?
Car
insurance is handled differently in each state. States govern their own car
insurance laws and policies, such as how much coverage is required, how much
insurance is responsible for covering, and what factors insurance companies can
use to determine rates.
Car
insurance is not even required in some states, such as New Hampshire. Car
insurance in Michigan is expensive due to a no-fault law that requires unlimited
coverage for personal injury protection. Regulations like these will have a
significant impact on the cost of your insurance.
Business
Insider compiled a list of average car insurance rates by state. These rates
are an average of those reported by NerdWallet, The Zebra, Value Penguin,
Bankrate, and the National Association of Insurance Commissioners. Here is a
breakdown of car insurance costs by state.
| State | Average Annual | Range |
|---|---|---|
| Alabama | $1,314 | $868 - $2,078 |
| Alaska | $1,393 | $1,028 - $1,502 |
| Arizona | $1,291 | $973 - $2,699 |
| Arkansas | $1,295 | $906 - $2,213 |
| California | $1,364 | $987 - $1,815 |
| Colorado | $1,355 | $982 - $3,164 |
| Connecticut | $1,541 | $1,151 - $2,619 |
| Delaware | $1,400 | $1,241 - $2,513 |
| District of Columbia | $1,406 | $1,331 - $2,793 |
| Florida | $1,341 | $1,257 - $3,370 |
| Georgia | $1,374 | $1,048 - $2,619 |
| Hawaii | $1,377 | $873 - $1,548 |
| Idaho | $1,280 | $680 - $1,777 |
| Illinois | $1,243 | $885 - $2,313 |
| Indiana | $1,203 | $755 - $1,489 |
| Iowa | $1,215 | $702 - $1,482 |
| Kansas | $1,215 | $863 - $2,190 |
| Kentucky | $1,313 | $939 - $3,418 |
| Louisiana | $1,308 | $1,405 - $3,525 |
| Maine | $1,421 | $704 - $2,340 |
| Maryland | $1,487 | $896 - $2,431 |
| Massachusetts | $1,539 | $1,129 - $1,866 |
| Michigan | $1,207 | $1,272 - $8,723 |
| Minnesota | $1,268 | $875 - $2,693 |
| Mississippi | $1,286 | $994 - $2,208 |
| Missouri | $1,193 | $872 - $2,584 |
| Montana | $1,261 | $864 - $2,525 |
| Nebraska | $1,220 | $831 - $2,038 |
| Nevada | $1,291 | $1,103 - $3,190 |
| New Hampshire | $1,534 | $819 - $2,004 |
| New Jersey | $1,553 | $1,104 - $3,013 |
| New Mexico | $1,243 | $938 - $2,194 |
| New York | $1,474 | $1,352 - $2,752 |
| North Carolina | $1,346 | $789 - $1,692 |
| North Dakota | $1,230 | $773 - $1,979 |
| Ohio | $1,195 | $789 - $1,688 |
| Oklahoma | $1,328 | $1,005 - $2,659 |
| Oregon | $1,304 | $905 - $2,205 |
| Pennsylvania | $1,452 | $971 - $2,018 |
| Rhode Island | $1,455 | $1,304 - $3,847 |
| South Carolina | $1,335 | $973 - $2,112 |
| South Dakota | $1,199 | $767 - $2,338 |
| Tennessee | $1,334 | $871 - $1,821 |
| Texas | $1,391 | $1,110 - $2,594 |
| Utah | $1,382 | $873 - $2,538 |
| Vermont | $1,450 | $764 - $1,769 |
| Virginia | $1,442 | $843 - $1,498 |
| Washington | $1,359 | $918 - $1,691 |
| West Virginia | $1,283 | $1,026 - $2,131 |
| Wisconsin | $1,219 | $737 - $1,590 |
| Wyoming | $1,301 | $847 - $2,118 |
Source: Nerdwallet, ValuePenguin, Bankrate, The Zebra, and
the National Association of Insurance Commissioners.
The
following is the average cost of car insurance based on coverage type:
As a general
rule, the more coverage a policy provides, the higher the cost of car
insurance.
Quotes with
numbers and slashes are common — a 50/100/50 policy would cover up to $50,000
in injury protection for each person involved in an accident, $100,000 in
injuries per incident, and $50,000 in property damages per incident.
Your premium
will rise as these coverage limits increase. Because each state has a different
minimum requirement, auto insurance coverage is more expensive in some states
than others.
Some
policies go above and beyond a state's minimum coverage requirements, providing
additional protection. Collision coverage can assist in the repair of your
vehicle if it is damaged in an accident, and comprehensive policies can protect
it in events such as storms and natural disasters. These additional coverage
types, however, will raise your costs. According to NerdWallet, adding
additional coverage could raise your annual premium by about $1,000.
What is the difference in the average cost of car insurance between men and women?
Gender has
an impact on car insurance, at least in states where insurers are allowed to
consider it. According to Business Insider data, car insurance companies charge
women more.
Business
Insider obtained basic coverage quotes from Allstate and State Farm in Austin,
Texas for male and female drivers with identical profiles. When only the gender
was changed, the male profile was quoted $1,069 for coverage per year, while
the female profile was quoted $1,124 for coverage per year, costing the female
driver 5% more. This was also true in other cities and states across the
country, such as Seattle, Miami, Chicago, and Columbus, Ohio. Women's profiles
were quoted $172 higher on average.
However,
there is a link between age and gender. According to The Zebra, young men pay
approximately 14% more for coverage. As young men approach their mid-20s, the
cost disparity for coverage narrows.
Six states,
however, do not allow gender to be a factor in premium pricing: California,
Hawaii, Massachusetts, Pennsylvania, North Carolina, and Montana.
The gender
marker indicated on a driver's license is generally used to calculate auto
insurance pricing for transgender and nonbinary individuals. Insurers are still
figuring out how to calculate costs in states where X is a gender option on
driver's licenses, such as Oregon, California, Maine, and, soon, New York.
Car insurance premiums on average by age:
The number
of years you've been driving will influence the cost of your insurance. While
the average 18-year-insurance old's costs $2,667.89 per year, the average
30-year-insurance old's costs $1,883.93.
Car
insurance costs tend to decrease as you get older. However, insuring a teen
driver is prohibitively expensive. However, it's also important to remember
that it varies from person to person, regardless of age, and is determined by
other factors such as your driving history.
According to
Savvy data, here is a breakdown of the average car insurance cost by age group.
| Age | Typical Insurance Costs |
|---|---|
| 18 | $2,667.89 |
| 19 | $2,692.89 |
| 20 | $2,732.06 |
| 21 | $2,546.33 |
| 22 | $2,365.29 |
| 23 | $2,198.17 |
| 24 | $2,114.49 |
| 25 | $2,001.98 |
| 30 | $1,883.93 |
| 35 | $1,787.98 |
| 40 | $1,864.52 |
| 45 | $1,780.05 |
| 50 | $1,770.83 |
| 55 | $1,542.06 |
| 60 | $1,493.07 |
| 65 | $1,267.34 |
The following is the average cost of car insurance by company:
The data
presented below is based on 49,928 policyholders who share a similar driver
profile. Savvy provided this information to Business Insider.
| Insurer | Average Monthly Premium |
|---|---|
| Root | $130 |
| State Farm | $149 |
| GEICO | $156 |
| Progressive | $162 |
| Nationwide | $164 |
| Mercury | $168 |
| Allstate | $176 |
| Travelers | $176 |
| USAA | $177 |
| Farmers | $178 |
| Safeco | $179 |
| esurance | $180 |
| Liberty Mututal | $180 |
How auto insurance rates differ based on a driver's profile and history
You're
probably starting to see how much information goes into a car insurance quote
by this point. Many other factors are also taken into account:
Younger (or
more recent) drivers pay more. According to quotes obtained from the California
Department of Insurance, new drivers are 73 percent more expensive than drivers
with 16 or more years of driving experience.
Married
drivers pay a higher rate. According to California Department of Insurance
quotes, auto insurance costs 42 percent more when you're married.
Drivers with
a prior accident on their record pay a higher rate. According to Insurance.com
and Insure.com reporting based on Quadrant Information Services data, premiums
increase by 30% after an accident.
Drivers with
a DUI on their record pay a higher fine. According to Insurance.com and
Insure.com, if you have a DUI on your record, your insurance will cost 63
percent more.
Drivers with
bad credit have to pay more. Consumer Reports gathered rate pricing data from
car insurance companies in every state and discovered that credit scores were
one of the most important factors in premium costs.
A driver
with poor credit will pay about $2,470 more per year than someone with
excellent credit in Michigan, as well as $444 more in Ohio, $1,512 more in
Texas, and $251 more in North Carolina. Credit scores are not allowed to be
factored into car insurance prices in three states (California, Hawaii, and
Massachusetts).
Drivers who live in more densely populated areas pay more. Car insurance is less expensive in more rural zip codes, and the same is true at the state level. According to Insure.com data, Iowa, Idaho, Wisconsin, and Maine have the cheapest car insurance of any state, owing to their rural locations.
