The average cost of car insurance in 2023 is $1,771 per year, but individual costs may vary based on a number of factors that influence auto insurance rates.
It is illegal in all 50 states to drive a vehicle without proof of your financial responsibility for any damages or liability you may incur due to an accident. That necessary proof comes in the form of car insurance in most states. Due to this legal requirement, understanding the current average cost of car insurance is a smart choice for identifying the right auto insurance company for your needs.
When calculating the cost for a car insurance policy, insurance companies review a variety of factors to come up with each person’s rate. Those factors typically include age, location, driving history, type of vehicle, previous claims history, and credit score. The way these factors are weighed against one another also varies based on the insurance company. So two different individuals may receive drastically different car insurance quotes from the same company based on their unique data points.
With the impact of recent inflation and increasing traffic fatality rates, car insurance rates are projected to rise in 2023. To get a handle on where average rates stand now, we’ve examined the cost of full coverage insurance policies across multiple demographics. Keep in mind that all of the rates listed below offer a general idea of what you can anticipate but may not reflect the amount you actually pay for your own car insurance policy.
The average cost of car insurance in the U.S. is $1,771 per year or $147.58 per month.
18-year-old drivers face high premiums of $5,320, over three times the amount the average 40-year-old pays.
Maine offers the lowest average car insurance rate in the country, at $876 for full coverage.
New York has the highest average annual premium at $2,996.
USAA and Geico are the insurance companies with the lowest national car insurance costs.
The national average annual cost of auto insurance comes in at $1,771 in 2023, equal to a $147.58 monthly premium. This estimate is based on a full coverage policy for a 40-year-old adult with a clean driving record and a good credit history.
Since licensed drivers across the United States come in all shapes, sizes, and backgrounds, no two auto policies are the same due to the unique factors measured by insurance companies. Each company has its own weighted system of measuring key aspects of a driver’s profile to determine the best rate they have to offer each person.
Full coverage policies consist of several forms of insurance coverage that offer the most all-in-one protection for drivers. The three types of coverage include:
Liability insurance covers the costs when you are responsible for an accident.
Collision insurance covers the damages resulting from incidents occurring while your vehicle is in motion.
Comprehensive insurance covers the cost of damages to your car that are not due to an accident.
Car Insurance Rates by Age
A driver’s age is a big consideration when estimating an insurance premium, with young drivers being the most expensive to insure.
Considering car crashes are the leading cause of death for American teens, it is understandable why insurance rates for the most inexperienced drivers are higher than any other age range. As shown in the car insurance rates by age chart below, an 18-year-old good driver faces a high annual premium of $5,320. That’s over three times the amount paid by a 40-year-old, who’s only charged $1,771 each year.
In the United States, the age of 25 holds significance for some drivers as they are allowed to legally operate a rental car. This leaves many people asking, “Does car insurance go down at 25?” The answer is yes. Aging five years brings the 20-year-old’s premium down by over $1,600 to an annual total of $2,176.
Average Cost of Car Insurance by Age
Avg. Annual Car Insurance Cost
Car Insurance Average Rates by State
Where you live is an important factor when calculating car insurance rates. Insurers look at your location and consider the potential impact of crime in your area or natural weather events. Rates may shift based on your state, city, and even your ZIP code. States also have varying regulations regarding the minimum insurance coverage requirements, causing rates to fluctuate across state lines.
When examining U.S. car insurance rates by state, Northeastern states have some of the lowest annual premiums. Maine ranks number one in the country, with a rate of $876 for full coverage. The nearby states of Vermont and New Hampshire also offer reasonable car insurance rates of $1,000 and $1,182, respectively.
On the flip side, New York drivers face the highest average annual rate of $2,996. Presumably, the high crime rate in New York plays a major role in the higher prices. Louisiana and Florida come in at numbers two and three, respectively, potentially due to their vulnerability to natural weather disasters.
Average Cost of Car Insurance by State
Avg. Annual Car Insurance Cost
Which Companies Offer the Cheapest Car Insurance?
There are many car insurance companies to choose from, creating opportunities for consumers to compare and contrast quotes from multiple companies. Based on our data, USAA offers the lowest average rates in the industry at $1,172. But it’s important to note that their products and services are only available to active and former military service members and their families.
Geico came in as the second lowest option with premiums of $1,318, making it the best-priced option for anyone not eligible for USAA. Comparatively, Allstate ranks as the most expensive company to consider, with an average rate of $2,243.
For additional options, refer to our list of the best cheap car insurance providers of 2023.
Average Cost of Car Insurance by Company
Car Insurance Company
Avg. Annual Car Insurance Cost
Other Factors That Affect Car Insurance Rates
Some additional factors car insurance companies take into account are the type of vehicle and the gender of the insured driver. Let’s look at how these two pieces play into the whole process.
Type of Car You Drive
Insurers consider the type of car you drive as another important element in their calculations for your premium. Certain styles of cars are considered more expensive to insure:
Luxury and sports cars are prone to costly repairs due to expensive replacement parts. Drivers of these vehicles are also prone to higher speed maximums, which increases the likelihood of at-fault accidents.
Larger vehicles may carry heavier loads and more passengers than smaller cars, leading to more potential damage if an accident occurs.
Popular economy cars may cost less to purchase initially, but they are at greater risk of theft and vandalism due to fewer security measures.
On average, women pay less for car insurance than men. This is because, statistically, men are more likely to engage in risky driving behaviors than women, and therefore present a higher risk to insurers.
Age is often measured alongside gender in these calculations. As people age, the difference in cost between the genders narrows, equalizing around the age of 35. Then the prices slowly begin to differentiate again, resulting in mature males paying slightly higher prices than their female counterparts.
Car insurance calculations and projections may hold some mystique because companies are secretive about their exact methodology. That’s why asking the right questions allows consumers to make an informed decision when selecting their car insurance.
How To Lower Your Car Insurance Costs
There are some simple steps you can take to help save money when you’re on the hunt for car insurance.
Take the time to secure at least three quotes from different car insurance vendors to ensure you have found the best deal.
Inquire About Potential Discounts
Get on the phone with any potential insurer and ask about possible discounts you may be eligible for. Savings may include a percentage off based on bundling policies, good driving records, low mileage, student status, and more.
Increase Your Deductible
Opting for a higher deductible allows you to decrease your monthly insurance costs quickly. But be mindful of the larger amount you will be responsible for if anything goes awry with your car. It’s best to have money set aside to help cover the high deductible in case of an emergency.
Maintain a Good Credit Score
Pay your bills on time and be mindful of your credit card usage to improve and/or sustain a quality credit score. Those same factors are utilized in creating your insurance score and can have a big impact on your annual car insurance costs.
We’ve researched the average cost of car insurance to help with your hunt for the best insurance company for your specific needs. Use the data and tips here to optimize your auto insurance spending. That way, if a car accident happens, you and your bank account will know what to expect from your insurer.
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