What is the Average Car Insurance Cost? The Ultimate Guide

Getting a new car is an exciting process, but your new wheels will come with some strings attached. Keeping insurance on your car can get expensive, and it can be difficult to know how much you should expect to pay. How do you know if you can afford your new car if you don’t know how much the insurance will cost? 

The overall average car insurance cost in America is $1,190 a year, but there are a lot of factors that can change that number. Read on to discover how much you can expect to pay for car insurance.

Most Expensive States

One of the first things that can impact how much you pay in car insurance is where you live. Certain states are more expensive for car insurance than others, depending on how many wrecks there are on average in a given state. Some state laws can also impact how much you pay for car insurance in your area.

Louisiana has the highest average car insurance cost in the country, coming in at $1,751 per year. Michigan isn’t far behind, at $1,590, and DC follows at $1,574. New York and Florida round out the top five most expensive states for car insurance, with costs reaching $1,558 and $1,520 per year, respectively.

Cheapest States 

Luckily, there are also some states that are much more affordable for car insurance. These states tend to have lower rates of accidents, which allows insurance companies to keep their rates down. These states also tend to have lower population densities, which improves a few of the other factors that can impact car insurance prices.

Maine wins the prize for the lowest car insurance cost, with residents paying an average of just $782 per year. Iowa’s rates tend to be around $816 each year, and Idaho residents pay about $828 annually. Wisconsin averages hover around $830 a year, and North Dakota rounds out the cheapest five at $844 on average per year.

Coverage Type

Outside of where you live, the next major factor impacting your car insurance costs is which type of coverage you choose. Not all coverage is created equal, and certain policies will cover more or provide you with lower deductibles than others. For instance, liability insurance covers only repairs and medical bills for other people after an accident, while comprehensive car insurance covers all damage to your car, including from vandalism or a natural disaster.

Of course, the less coverage you have, the less you can expect to pay in monthly premiums, and vice versa. But keep in mind that the money you save on premiums may not do you any good if you have to pay out of pocket to repair or replace your car. You may also be required to get better coverage if you have a loan on your car.

Driver Demographics

Another major factor that can change how much you pay for insurance is who you are as a person. We’re not talking about your Myers-Briggs type here – car insurance companies look at demographic data when determining car insurance rates. They’ve assessed the behavior of different demographics and determined which age groups and genders are most likely to file claims.

Young drivers pay far and away the highest rates for car insurance thanks to their lack of experience and relatively poor judgment. People who are married and/or own homes may find that their rates are lower than unmarried renters. Middle-aged adults tend to have the lowest insurance rates, while older adults may find that their rates start to rise after they turn 60.

Vehicle Type 

It should come as no surprise that the make of vehicle you drive will also have a large impact on how much you pay to insure it. It’s going to cost much more to replace a Ferrari than a Ford, and insurance companies don’t want to eat that cost. But did you know the type of car you drive can also change how much you’ll pay for insurance? 

Sedans actually tend to be the most expensive type of car to insure, followed by pickup trucks. Electric vehicles are also relatively expensive to insure right now, as are hybrids. SUVs and minivans tend to be the cheapest vehicles to insure thanks to the extra protection they offer in the event of a crash.

Impact of an Accident

If you’ve ever gotten in a car accident, you’ll know that your premiums are going to go up after you file a claim. Insurance companies demand more from drivers they know have caused accidents in the past. The silver lining is that many companies also offer safe driving discounts for customers who go a long time without an accident.

However, you may be surprised to learn that you could see an increase in your insurance rates even for an accident you didn’t cause. A study by the Consumer Federation of America found that drivers in Queens, New York, saw their annual rates rise more than $400 after a no-fault accident. Drivers in Baltimore saw a $258 hike, and Minneapolis customers experienced a $213 increase after accidents they did not cause.

Various Company Rates

Finally, you won’t be surprised to learn that car insurance costs can vary hugely depending on which company you work with. Which company you choose may depend on a number of factors, including what’s available where you live and what other policies you have. You may be able to get a bundle discount if you have other insurance policies with the same company. 

Liberty Mutual and Farmers both have the highest average rates, with annual premiums coming in over $1,000. Allstate isn’t far behind, and Progressive and Nationwide fall in the middle of the pack. State Farm, USAA, and Geico are on the lower end of the scale, with Geico averaging just $445 for annual premiums.

Learn More About Average Car Insurance Cost

Car insurance is a necessary expense, but there are a number of things that may impact how much you pay. Everything from your age to your state could change your rates, as can the type of car you drive and your driving record. Shop different company rates to find the best deal for you in your area. 

If you’d like to learn more about average car insurance costs, check out the rest of our site at Quote Lab. We can help you beat your insurance rates by finding you the lowest rates in Kentucky. Check out our site today and get rates from Allstate, 21st Century, General, Esurance, and more.