What is the average cost of car insurance?

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Car insurance is an important ongoing expense because it keeps you financially safe if anything happens while you’re on the road. However, like any bill, you want to keep it low while still getting what you need. Get familiar with the average cost of car insurance, what factors influence your car insurance and what you might be able to do to save money.

The average cost of auto insurance

There are many factors that determine the average car insurance cost, one of which is which state you live.  

According to the Insurance Information Institute, the national average for comprehensive car insurance in 2017 was $1,004.58. At the state level, this number differs greatly. 

Louisiana, for example, is currently the most expensive state to drive with an average premium of $1,444, whereas the cheapest is North Dakota with $670 each year. 

Most expensive states for auto insurance

StateAverage annual premium
Louisiana $1,444
New Jersey$1,350
New York$1,350
Rhode Island$1,301

Least expensive states for auto insurance

StateAverage annual premium
North Dakota$660
South Dakota$693
North Carolina$706

What are the factors that impact my car insurance cost?

Typical insurance cost is influenced by the following factors: 

  • Credit score: A low credit score has been shown to be indicative of a higher level of risk when driving. Drivers with lower credit scores pay higher premiums. Working on your credit score by paying down debt and paying bills on time will help lower what you pay for auto insurance.
  • Car type: Some cars are indicative of driving behavior while others are safer to drive and score better in crash tests. Another variable within this factor is the cost to replace your car should it be totaled. If you want to pay less for auto insurance, consider purchasing a car that insurers consider safe and sound. 
  • Age: Young drivers between the ages of 16 and 24 pay more for insurance because they are more inexperienced, meaning they have more speeding tickets and accidents than other age ranges. If you’re between these ages, this is one variable you can’t do anything about.
  • ZIP code: Some areas have higher rates of accidents and theft, and insurance premiums must reflect this if companies are to remain profitable. While moving just to lower rates is likely impractical, this factor is one to consider if you’re moving for other reasons.
  • Marital status: Married couples pay lower premiums than people who are unmarried. If you recently got married, don’t forget to tell your insurance provider. It may give you a discount.
  • Driving record: Numerous speeding tickets, records of accidents or any type of reckless driving or DUI charge on your record affects what you will pay. Stay safe and drive the speed limit.
  • Gender: Depending on your age, you might pay more or less based on your gender. Women often pay more than men, but men under 25 have higher rates. 
  • How much you drive: Your yearly mileage affects your premium. The more often you drive, the more often you will be in a scenario where you might have to file a claim.
  • The amount of coverage: Liability coverage is cheaper than comprehensive. What policy you choose, therefore, affects how much you pay each month. However, you should always pay for as much insurance as you can comfortably afford so you have financial protection if anything happens. 
  • Past gaps in coverage: Drivers without coverage are considered riskier drivers than others. Even if you have insurance now, if a company sees you spent some time driving without it, you’ll have a higher premium than others. Always make sure you have an insurance provider.

Car insurance companies take each of the above factors into account to determine what drivers will pay for protection because all of them suggest a certain level of risk. Algorithms are kept secret within each provider, but drivers can lower their premiums by changing factors they have a reasonable amount of control over.

You can also take some active steps to make you look less risky, such as taking a driving safety course.

Remember the basics  

Certain factors are seen as riskier, which means providers will charge you more. Do what you can to lower your risk if you want to lower your premiums. 

What are the average costs for each coverage type?

How much does car insurance cost? That depends on what type of coverage you have. According to the Insurance Information Institute, the national average for each coverage type is:

  • Bodily injury with property damage liability: $611 
  • Personal injury protection: An extra $50-$150 a year
  • Uninsured/underinsured motorist: $6 a month
  • Comprehensive: $160 a year
  • Collision: $363 a year

Again, the numbers for your state will be different, and your individual factors will also change what these numbers will be for you.

Does filing a claim increase your premium?

Yes, filing a claim will increase your premium if the incident is your fault. Unfortunately, rate increase amounts aren’t public knowledge and are considered an industry secret, but expect the increase to be in proportion with the severity of the accident. 

Luckily the change isn’t permanent. Accidents where you are at fault only affect your premium for about three years.

Sometimes when no one is hurt, both parties are tempted to not report the incident because neither wants their premium to go up. This is unwise because should someone change their mind, your insurance provider will have a more difficult time representing you because they were never able to inspect the cars or ask any questions. 

Always speak to your insurance provider. Its job is to help you, and if you don’t communicate, it won’t be able to help.

The takeaway

Many things determine how much you pay for car insurance. Some things you have control over, while others you don’t. Drive safely and be smart when you’re on the road, and your premium will reflect your good behavior.

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