Generally speaking, the faster the car goes, the more you’ll pay to insure it. Photo: NRMA Driver’s Seat
How much is car insurance going to cost you? It’s not an easy question to answer. The quote you receive could be painfully high or comfortably low based on a number of different factors. But for what it’s worth, the average amount spent to insure a car in the U.S. was $815 a year in 2012, according to the National Association of Insurance Commissioners.
However, as anyone who pays much less — or more — than $815 a year can tell you, there are a lot of variables that affect your car insurance rates.
Some factors, including where you live and what kind of car you drive, can be tough to change. Others, such as your driving habits and the level of coverage you choose, are a bit easier to tweak. I’ll break down these factors and discuss what (if anything) you can do to save a dime on your car insurance.
Before we get started, it’s important to mention one thing you can always do to save some money: Shop around. It’s easiest to start online. Our quote generator below can help you do that quickly, eliminating the hassle of calling individual insurers and repeating the same information. Just enter your ZIP code and you’re on your way:
Cost Factor No. 1: Basic Demographics
Your age, sex, marital status, and location all weigh heavily on how much you car insurance costs. That’s because your insurance company has an enormous amount of data that tells them how each of these things makes you more or less of a risk for filing claims.
For instance, if you’re younger (typically, age 25 or below), unmarried, and male, you’ll pay more than an older, married female, who is statistically less likely to file a claim.
Location also has a huge impact on your car insurance rates. State laws that regulate car insurance can have a big effect. Michigan, the most expensive state for car insurance premiums according to Insure.com, tops the list because residents get unlimited lifetime personal injury protection for medical expenses resulting from crashes. Montana comes in second, in part because crash fatality rates are very high, and insurers think driver safety laws are too lax.
You’ll also almost always pay more in densely populated areas, where you’re at more risk for an accident. This is likely why Washington, D.C., Connecticut, Rhode Island, and New Jersey are all among the top 10 most expensive states. Areas prone to natural disasters can mean car insurance costs a premium, too, which is why Louisiana is fourth on the list.
How to save: Unfortunately, this is the toughest category for eking out some savings. You’re unlikely to move or get married just to save on how much car insurance costs.
Still, it’s worth at least keeping in mind how big an impact where you live can have on what you pay. According to CarInsurance.com, even ZIP codes that aren’t terribly far from one another can vary dramatically on average costs. For more details on how costs vary from state to state, keep reading.
How much is car insurance? A state-by-state breakdown
Below, you’ll see how the cost of car insurance varies by state, according to two measures. The first number is the average expenditure per state, drawn from 2012 data from the National Association of Insurance Commissioners. This figure is the total amount collected in each state for liability, comprehensive, and collision premiums, divided by the total number of insured vehicles.
The second number compares the average premium for similar coverage across every state and Washington, D.C., according to a 2015 study by Insure.com. The study averaged quotes for a full-coverage policy for the same customer driving 20 of the best-selling cars in 10 ZIP codes per state.
As you’ll see, just because a state has a high average expenditure doesn’t necessarily mean it has a high average premium (and vice versa). Remember that the first number takes into account how much customers actually choose to spend — they may opt out of pricier coverage options or choose lower coverage limits — whereas the second number is simply an average of quotes for a policy that includes everything.
| State | Average spent on car insurance (rank) | Average premium for a complete policy (rank) |
| Alabama | $659 (37) | $1,320 (22) |
| Alaska | $873 (13) | $1,410 (18) |
| Arizona | $781 (18) | $1,103 (37) |
| Arkansas | $679 (35) | $1,239 (27) |
| California | $749 (22) | $1,643 (9) |
| Colorado | $737 (25) | $1,245 (26) |
| Connecticut | $986 (9) | $1,690 (7) |
| Delaware | $1,065 (6) | $1,542 (13) |
| District of Columbia | $1,154 (2) | $1,799 (3) |
| Florida | $1,127 (4) | $1,742 (5) |
| Georgia | $768 (20) | $1,519 (14) |
| Hawaii | $735 (27) | $1,114 (34) |
| Idaho | $534 (51) | $877 (49) |
| Illinois | $731 (28) | $1,079 (39) |
| Indiana | $637 (40) | $1,033 (41) |
| Iowa | $561 (49) | $886 (48) |
| Kansas | $632 (42) | $1,147 (33) |
| Kentucky | $759 (21) | $1,341 (21) |
| Louisiana | $1,112 (5) | $1,774 (4) |
| Maine | $582 (47) | $805 (51) |
| Maryland | $966 (11) | $1,590 (11) |
| Massachusetts | $976 (10) | $1,460 (16) |
| Michigan | $1,048 (7) | $2,476 (1) |
| Minnesota | $718 (29) | $1,222 (29) |
| Mississippi | $748 (23) | $1,584 (12) |
| Missouri | $683 (34) | $1,112 (35) |
| Montana | $658 (38) | $1,866 (2) |
| Nebraska | $616 (44) | $1,086 (38) |
| Nevada | $906 (12) | $1,248 (25) |
| New Hampshire | $716 (30) | $905 (47) |
| New Jersey | $1,129 (1) | $1,595 (10) |
| New Mexico | $695 (32) | $1,237 (28) |
| New York | $1,152 (3) | $1,013 (42) |
| North Carolina | $611 (45) | $986 (44) |
| North Dakota | $576 (48) | $1,377 (19) |
| Ohio | $634 (41) | $843 (50) |
| Oklahoma | $737 (26) | $1,496 (15) |
| Oregon | $741 (24) | $1,211 (30) |
| Pennsylvania | $827 (16) | $1,304 (23) |
| Rhode Island | $1,034 (8) | $1,656 (8) |
| South Carolina | $772 (19) | $1,210 (31) |
| South Dakota | $556 (50) | $1,180 (32) |
| Tennessee | $673 (36) | $1,263 (24) |
| Texas | $858 (14) | $1,449 (17) |
| Utah | $713 (31) | $1,059 (40) |
| Vermont | $642 (39) | $957 (45) |
| Virginia | $691 (33) | $1,008 (43) |
| Washington | $809 (17) | $1,110 (36) |
| West Virginia | $846 (15) | $1,716 (6) |
| Wisconsin | $598 (46) | $930 (46) |
| Wyoming | $618 (43) | $1,371 (20) |
| National average | $815 | $1,311 |
Cost Factor No. 2: The Car You Drive
You probably didn’t think about how your car would affect your insurance rates when you bought it, and you probably won’t trade it in just because of your rate. However, just as your insurance company assumes you’re a bigger or smaller risk based on your own demographics, it assigns risk based on the car you drive, too.
How to save: When it’s time to shop for a car, keep this rule of thumb in mind: The faster the car can go, the bigger the risk of a crash, and the more you’ll pay.
If you drive a sensible family car such as a minivan, sedan, or SUV, you probably won’t pay nearly as much as someone who drives a pricey, high-performance sports car. In a recent analysis, the Nissan GT-R Nismo, Mercedes-Benz SL65 AMG Convertible, Dodge SRT Viper, Porsche 911 Carrera S Cabriolet, and Audi R8 5.2 Spyder Quattro were the most expensive to insure. On the flip side, the Jeep Wrangler Sport, Jeep Patriot Sport, Honda CR-V, Dodge Grand Caravan, and Honda Odyssey were easiest on the wallet.
You can also save a bit of money by considering a used car, which will almost always be cheaper to insure than a new one. Anti-theft devices such as alarms, anti-lock brakes, and other safety-focused equipment can also save you some cash.
Cost Factor No. 3: Your Driving History
This one is probably the most obvious factor affecting your car insurance, and it may seem like the fairest one. The more tickets and violations you have, the higher your rates are going to climb. Some tickets will be worse than others: For instance, if you’re cited for DUI or reckless driving, your insurance premium could nearly double, according to Bankrate.
Speeding or running a red light will still raise your rates, but much less. In fact, your insurer may not raise your rates after one speeding ticket. The increase you see may also partially depend on how fast you were going. The average bump is 21% if you were caught going up to 15 mph over the speed limit, but that rises to 30% if you were flooring it at 31 mph or more over the limit.
How to save: You can’t rewrite the past, but you can be a safer driver going forward. If your insurer offers one, you can even consider installing a tracker that records data on driving habits such as mileage, sudden acceleration or deceleration, excessive speed, rough turns, and whether you drive a lot at night. Typically, you won’t be penalized for bad driving, but you could be rewarded for good driving. You may also be able to save by taking a defensive driving course.
Cost Factor No. 4: Your Credit Score
If you’re wondering what your credit score has to do with how much you pay for car insurance, it’s a good question. Insurers cite an abundance of data showing the higher your credit score, the less likely you are to file a claim. The reverse is also true: If your credit score is poor, you’re at a greater risk for filing a claim. This controversial practice is actually illegal in a few states (California, Hawaii, and Massachusetts), but otherwise, it’s fair game.
How to save: There’s no quick fix for bad credit, but raising your credit score is still enormously worthwhile because it affects far more than what you pay for car insurance. Paying your bills on time for an extended period is one of the best things to do for your credit score. Reducing large balances and being judicious about opening new credit accounts can also help. For more on what your credit score affects and how to raise it, check out our article, What is a Good Credit Score?
Cost Factor No. 5: Your Driving Habits
Your driving habits make up your daily driving routine. Do you commute daily via car, and for how long? Do you ever use your car for business purposes? Does your car gather dust until the weekend because you use public transportation during the week? Do you park on the street, in a shared lot, or in your own private garage?
All of these things add up to paint a picture of your risk of getting into a crash. Accordingly, they can affect your car insurance premium.
How to save: It sounds obvious, but the less you drive, the less of a risk you are for your insurance company. Moving closer to work to reduce your mileage, taking public transportation, or carpooling are a few tactics that can save you a lot of money — just be sure to report any such chances to your insurer so that you can reap the benefits.
Cost Factor No. 6: The Amount of Coverage You Choose
When you’re shopping for car insurance, there are a couple of numbers that will weigh heavily on what you pay. The first is your limits — that is, the maximum amount your insurance company will pay in the event of a claim. Limits are usually written like this: $50,000/$100,000. That means your insurer will pay up to $50,000 per person and $100,000 per accident.
The second number to know is your deductible. That’s how much you’ll pay out of your own pocket when you make a claim. A common deductible is $500, but they can go as low as around $100 and as high as $1,000 to $2,000.
How to save: You don’t want to overpay for coverage you don’t need, but you also don’t want to skimp and leave yourself on the hook for thousands after an accident.
You’ll be required to have a certain minimum limit depending on where you live. For instance, as a Tennessee resident, I’m required to have at least $25,000 per person and $50,000 per accident in bodily injury liability coverage as well as $15,000 in property damage liability coverage.
However, just because you are only legally required to have a certain amount of coverage doesn’t mean it’s a good idea to carry only the minimum, even if that will save you money. That’s because you could lose your assets, such as your savings or even your house, if someone’s medical or property damage bills exceed your ability to pay when you’re at fault.
That means if you have significant assets, you’ll want to protect them with more coverage. Experts often recommend $100,000 per person and $300,000 per accident as a minimum.
Your deductible can be a better place to save. Agreeing to pay $1,000 instead of $100 in the event of a claim can save you a lot of money — but it’s a tactic you should only use if you have that $1,000 stashed away in your emergency fund, ready to pay that bill should you need it.
Cost Factor No. 7: The Type of Coverage You Choose
The types of coverage I discussed above — bodily injury liability and property damage liability — are required when you buy car insurance. There are some other types of coverage that you may be able to skip, however.
How to save: Instead of blindly paying for every kind of coverage, carefully evaluate whether they make sense for your individual situation.
For instance, personal injury protection (PIP) isn’t required in all states. It helps pay for your or your family’s medical bills after a crash. However, it’s probably not necessary if you and your family have adequate health insurance. It also doesn’t make sense to pay for roadside assistance if you’re already a member of AAA.
Comprehensive and collision coverage will be required if you’re financing or leasing your car, but are optional if that’s not the case. Comprehensive covers damage to your vehicle from car theft, vandalism, and other calamities that don’t involve actual crashes. Collision coverage is similar to comprehensive coverage, but covers actual crash-related damage to your vehicle.
If you’re not required to have comprehensive or collision, it might make sense to drop this pricey coverage if you drive very infrequently or if your car’s value is very low.
How Much Does Car Insurance Cost? A Lot — If You Don’t Shop Around
Remember that one of the best things you can do to save on car insurance has nothing to do with who you are, where you live, the coverage you select, or how you drive. Instead, it’s simple comparison shopping: You should always look around to make sure you get the best deal, since each company places a slightly different emphasis on the factors I outlined above.
One other critical reason to shop around is that different insurers offer different discounts. Some will offer you a break for being a good student, a member of certain organizations, active-duty military, or for bundling other policies such as home insurance with the same company. That’s on top of common price breaks for driving less, driving a low-risk car, or having a good credit score, among the other factors I discussed in this article.
Online quote tools can be particularly helpful as you start your search. However, remember that the quicker the quote, the more information you’ll have to provide further down the line. Given how many variables affect how much car insurance costs, you’ll eventually have to provide a fair amount of personal information to get the most accurate price. Good luck!
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