Although car insurance rates may seem mysterious, the ways that insurance providers come up with their prices are fairly straightforward — and in some cases, you actually have some amount of control over what your premium ends up being.
In this article, we’ll go over the average monthly and annual car insurance rates, how to save on your premium, and some insurers to consider if you’re looking for great coverage at a great price.
Whenever you shop for car insurance, we recommend getting quotes from multiple providers so you can compare coverage and rates. In addition to the insurance company you choose, factors such as your age, vehicle make and model, and driving history can affect your premium, so what’s best for your neighbor might not be best for you.
Use our tool below to start comparing personalized car insurance quotes.
In this article:
- What Are Average Car Insurance Rates?
- What Affects Car Insurance Rates?
- Discount And Rewards Programs
- Car Insurance Provider Rate Comparisons
- Which Providers Offer The Best Car Insurance Rates?
- How Often Should You Shop For Car Insurance?
- Final Tips On Comparing Car Insurance Rates
- FAQ About Car Insurance Rates
What Are Average Car Insurance Rates?
This is a deceptively simple question. While the average annual cost of car insurance in the United States is $1,470 or $122.50 per month according to TheZebra.com, it’s hard to really gain any valuable information from just this one figure. Indeed, car insurance rates can vary widely based on a driver’s age, their insurance provider, the extent of their coverage, their state, and even what vehicle they have.
The only way to truly get an idea of how much car insurance will cost you is to pick out a few insurance providers that you’re interested in, request some quotes, and compare them. That said, we’ve researched the average premiums from various auto insurance providers and compared them to each other to find out which providers have the highest and lowest prices. While your actual car insurance rates may not align with our findings, this can give you an idea of which companies generally charge more or less than others.
However, before we get into that, you’ll need to understand a bit more about the types of coverages that are available and what factors go into your premium to make sense of the prices.
What Affects Car Insurance Rates?
The primary factors that affect car insurance rates are:
- Coverage level
- Driving history
- Your vehicle
- Your state
Let’s look at each of this one by one.
A car insurance policy is not made up of one type of insurance. Instead, it’s a combination of a few different types of coverage that are packaged up into one product we refer to as an auto insurance policy. The six types of insurance you need to know about are:
|Liability insurance (BI/PI)||This covers you for damages and injuries to other people and their property. It also covers your legal fees, should you end up being at the wrong end of a lawsuit.|
|Collision insurance||This covers damage to your car that is incurred during a collision with another vehicle or an object, no matter who is at fault.|
|Comprehensive car insurance||This covers damage to your car that isn’t due to a collision, such as vandalism, theft, storm damage, etc.|
|Medical payments coverage (MedPay)||This covers any medical expenses due to an accident for anyone in your car at the time.|
|Personal injury protection (PIP)||This covers any personal medical expenses and sometimes lost wages that were caused by a car accident.|
|Uninsured/underinsured motorist protection (UM/UIM)||This covers you in case an uninsured motorist or underinsured driver causes damage or injury to your vehicle or yourself.|
Some insurance providers also offer additional car insurance coverage options such as:
- Rental car reimbursement: This covers the cost of a rental car should your car become undrivable after an accident.
- Gap insurance: This covers you in case your financed car or lease is totaled before the end of the term.
The amount of auto insurance coverage you decide on will affect the cost of your car insurance premium.
Full Coverage Vs Minimum Coverage
Types of coverage can be largely divided into two umbrella terms: full coverage and minimum coverage. When someone refers to a full coverage auto insurance policy, they mean a policy that has:
- Liability coverage
- Collision coverage
- Comprehensive coverage
On the other hand, a minimum coverage policy refers to an insurance policy that only meets the bare minimum legal requirements set out by the driver’s state. In most states, this amounts to just liability coverage. Some states require additional insurance, while others, like Virginia, don’t require insurance at all if the driver pays a fee to the state. Each state also sets minimum amounts that must be covered, for example, $30,000 in bodily injury liability insurance, or $5,000 in property damage liability insurance.
It’s generally recommended that drivers get full coverage insurance despite the higher price tag. Unfortunately, if the worst comes to pass, you likely won’t be able to cover all your expenses with just the minimum required insurance. This can leave you with huge bills and can lead to financial ruin for some.
Young drivers are a major risk for insurance companies. Besides the data from the Insurance Information Institute showing that drivers under 25 are more likely to get into accidents than their older counterparts, young drivers also don’t have a long track record that they can rely on to prove they can drive safely.
While a 40-year-old with a clean driving record who’s been driving since she was 18 has 22 years of experience to rest on, a 20-year-old has a measly two years. That driver could be a very safe one or a very reckless one, but the insurance company has no way to know, so the company will raise its insurance rates to adjust for the heightened risk and uncertainty.
Generally, car insurance rates experience a sharp decline after age 25, stay level from 30 to 65, and then begin to increase as drivers enter their senior years.
According to The Zebra’s State of Auto Insurance report, these are the average auto insurance rates based on policies with 50/100/50 liability limits and a $500 deductible for comprehensive and collision coverage.
Average Yearly Premium
While driving history sometimes goes hand in hand with age, it doesn’t always — a longer driving history isn’t always a better one.
If you’ve had a clean driving record without any accidents or traffic violations, then you’ll get a reduced rate on your car insurance. Unfortunately, accidents of any type, whether they’re your fault or not, can steeply raise your auto insurance premium. In fact, a single at-fault collision will raise your yearly premium by $617 on average, according to The Zebra.
Some cars are more expensive to insure than others. For example, an insurance provider is going to need to pay much more to fulfill a claim from a driver who totaled their Ferrari than it would for a claim from a driver that did the same to their Ford Fiesta.
Insurance companies will take the value of your car into account when making a quote for you as well as the safety features of your car. If your car has active safety features that make it less likely you’ll get into a collision or anti-theft devices that reduce the likelihood of your car getting stolen, you should see a decrease in your premium.
Each state has its own risks associated with driving. For example, Pennsylvanians need to learn how to pass Amish buggies on the road. Doing so improperly or without enough practice can cause accidents, making Pennsylvania a slightly more risky state to drive in compared to some others, and consequently a state that will gain a higher average premium.
Additionally, each state sets its own minimum insurance requirements. States that have more requirements will necessarily have a higher starting premium, as every resident will need to take out a higher level of coverage.
Below are the average car insurance rates for the ten most and least expensive states for car insurance, according to the Insurance Information Institute:
Most Expensive States
Average Yearly Premium
Least Expensive States
Average Yearly Premium
|New York||$1,349.72||South Dakota||$693.42|
Discount and Reward Programs
To entice drivers to sign on, some providers offer car insurance discounts and rewards programs for motorists that meet certain criteria. Common examples include:
|Federal employee|| |
|Low mileage|| |
|New car|| |
Paid in full
Depending on their provider, drivers may receive discounts on their entire premium or just one portion of their policy, like their liability coverage, for example. However, in the end, this still ends up meaning more money in your pocket at the end of the month or year.
Car Insurance Provider Rate Comparisons
Here are a few sample average premiums from some of our recommended insurance providers.
|Best For||Financial Strength||Customer Service||Coverage||Cost|
|Geico Auto Insurance|| |
Students and Military
|State Farm Auto Insurance|| |
Students and Teens
|Progressive Car Insurance||Military||A+|| |
|USAA Car Insurance|| |
|Farmers Auto Insurance|| |
These ratings are based on our team's research, as well as the AM Best Financial Strength Rating.
Which Providers Offer The Best Car Insurance Rates?
To help you make sense of the complex auto insurance landscape, we’ve researched and ranked the best car insurance providers in the United States. Here’s a closer look at the 12 that came out at the top of our list in 2021:
|Best Car Insurance of 2021||Superlatives||Motor1 Rating||Customer Service Grade||Coverage Rating||Cost|
|#1 USAA Car Insurance||Best for Military||5.0||A+||4.5||Low|
|#2 Geico Car Insurance||Best Overall||4.5||A-||4.0||Average|
|#3 State Farm Auto Insurance||Best for Students||4.5||B+||4.0||Average|
|#4 Progressive Car Insurance||Best for High-Risk Drivers||4.5||B+||4.0||Average|
|#5 AAA Car Insurance||Best for AAA Members||4.0||A||4.0||Average|
|Best for Teens||4.0||B+||4.5||Average|
|Best Local Service||4.0||B+||4.0||High|
|#8 The Hartford Auto Insurance||Best for AARP Members||4.0||B+||4.5||Average|
|#9 Nationwide Car Insurance||Best for Seniors||4.0||B+||4.5||Average|
|#10 Farmers Auto Insurance||4.0||B+||4.0||High|
|#11 Travelers Auto Insurance||4.0||B+||4.5||Average|
|#12 Root Auto Insurance||Best Usage-Based Insurance||4.0||A-||3.5||Average|
1. USAA Insurance: 5.0 Stars
We’ve rated USAA highest out of all the insurance companies we’ve reviewed for its low prices, financial strength, discounts, and great service. If you are looking for the best auto insurance for veterans, military members, or families, USAA offers outstanding coverage for a very affordable price. Unfortunately, it is only available to military personnel, veterans, and family members, so most people will not be able to benefit from a policy with this provider.
Read our USAA insurance review to learn more.
2. Geico Insurance: 4.5 Stars
Geico is a financially strong insurance company with a good track record of customer satisfaction. Its focus on tech coupled with its low car insurance rates will provide a good experience for most motorists. Geico isn’t the cheapest option available, but it is much more reasonably priced than many of the providers we evaluated.
Learn more about coverage in our full Geico review.
3. State Farm Insurance: 4.5 Stars
State Farm is a high-quality insurance provider that offers good coverage at a competitive price. It is one of the cheapest providers we’ve found, and there are several discounts drivers can take advantage of to further lower their price.
Unfortunately, there is no accident forgiveness program, so drivers who get into an accident may see all the money they were saving by going with State Farm evaporate into thin air once their car insurance rate is raised in the next billing cycle.
Read more about the provider in our complete State Farm insurance review.
How Often Should You Shop For Car Insurance?
Car insurance rates change every year. According to a survey by J.D. Power, car insurance rates increased by 2-3% on average from 2016-2017. That means that if you shopped around for the best deal in 2020, you might no longer have it in 2021.
However, in addition to changing car insurance rates on the provider side, your finances also change from year to year, and you may be able to get a discount from a different provider that you weren’t eligible for the year before.
For this reason, many experts recommend comparing your insurance premium to other premiums every 6-12 months depending on how often your premium renews.
Final Tips On Comparing Car Insurance Rates
While you can’t control what your auto insurance premium will be, you can engage in good habits that will keep your car insurance rate as low as possible. Make sure to drive safely, take a defensive driving course, maintain a good credit score, shop around yearly for better deals, and avoid accidents and traffic violations.
We also put together a comprehensive guide on how car insurance works that you may find very helpful. We talk about how car insurance works in general, how to find a provider, what types of car insurance you need, etc.
Use our tool below or call (844) 246-8209 to start comparing auto insurance quotes:
In an effort to provide accurate and unbiased information to consumers, our expert review team collects data from dozens of auto insurance providers to formulate rankings of the best insurers. Companies receive a score in each of the following categories, as well as an overall weighted score out of 5.0 stars.
- Industry Standing: Insurers with strong financial ratings and customer-first business practices receive the highest scores in this category.
- Availability: We consider availability by state as well as exclusions for specific groups of drivers.
- Coverage: This rating is based on types of insurance available, maximum coverage limits, and add-on policies.
- Cost and Discounts: Our research team reviews sample quotes for a variety of drivers in every state. Companies with lower prices and many car insurance discount opportunities receive the best scores.
- Customer Service: We comb through customer reviews and consumer feedback studies from experts like J.D. Power.
- Technology: Auto insurers with mobile apps, advanced online services and telematics are more likely to meet consumer needs.
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