Understanding Car Insurance Rates

Kara Copple
Kara Copple

The average car insurance costs in the U.S. in 2020 are $1,348 per year, according to S&P Global Market Intelligence. As this is a national average, you may be wondering how much is car insurance for me? Many factors affect the price you end up paying, including where you live in and which car insurance companies operate in your area. On top of that, the car you drive, the number of years you have been driving, whether you’re married and how old you are all affect the price.

Then there’s the level of coverage to take into account. Some policies will cover the minimum, while others will provide full coverage and liability. All of these things affect the cost and should be factored into your research as you shop for auto insurance.

How Much is Car Insurance in your State? 

Different states can have wildly different average car insurance prices, so that’s the first thing to look at. Some of the cheapest states for car insurance include Vermont, Iowa and Maine, according to Coverage.com. The full coverage annual average price for these states are $1,123, $1,122 and $831 respectively. Compare that to the most expensive states, Florida, New York and Louisiana which have average prices of $2,587, $2,498 and $2,351 respectively. 

This is a huge difference in average price, and it’s the same with the state minimum insurance as well. In fact, as you can see from the table below, the state minimum in Florida is $948 which is still more expensive than the full coverage average in Maine.

Top 3 Cheapest States for Minimum Coverage

StateFull coverageMinimum liability only

Top 3 Most Expensive States for Auto Insurance

StateFull coverageMinimum liability only
New York$2,498$1,295

Average Car Insurance Rate by Provider 

The next thing to look at when asking yourself how much is car insurance per year is to look at the individual providers themselves. While the average cost per state may be high, that doesn’t mean you can’t get it cheaper and make some savings by shopping around.

Each company will have its own prices and criteria for its rates. Coverage.com reports that some of the most expensive providers include The Hanover, MetLife and AAA. Their yearly premiums are an average rate of $2,492, $1,923 and $1,948, respectively. Some of the cheapest companies by average include Erie (yearly premium of $1,141), American Family ($1,218) and Auto Owners ($1,308).

Are Average Car Insurance Rates Different for Men and Women?

Overall, the difference in rates between men and women isn’t huge, but it exists. As you can see from the table below, the differences are no more than a few dollars. On average, it’s cheaper for women than men to purchase full coverage insurance, but it’s cheaper for men to purchase the minimum liability.

However, given that the difference between men and women’s prices for full coverage with a clean record is just $7, it would definitely be worth purchasing the full coverage even if you are a man and can get minimum liability cheaper. The value of full coverage will likely be far greater than any savings you would make. 

Full CoverageMinimum Liability
Clean recordFemale: $1,551
Male: $1,558
Female: $551
Male: $540
Speeding ticketFemale: $1,863
Male: $1,871
Female: $680
Male: $667
AccidentFemale: $2,125
Male: $2,133
Female: $810
Male: $795

Average Car Insurance Costs After a Speeding Ticket

Another thing that can have a big effect on your car insurance price is your driving history. If you have speeding tickets, insurance providers will treat you as higher risk and apply higher insurance premiums to you. 

In general, there is a 20% difference in auto insurance costs if the driver has a speeding ticket on their record. The annual premium for those with a clean record is an average of $1,555. With a speeding ticket, Coverage.com’s data show that the cost shoots up to $1,867, which is a huge $312 difference. 

However, if you can maintain a clean driving record for an extended period of time after getting a speeding ticket, you may be able to get those lower premiums again. This is entirely down to the insurance provider’s decision though. 

Cheapest states for car insurance after a speeding ticket

Average premium with clean recordAverage premium with speeding ticketDifference

How Much Will Your Car Insurance Cost After an Accident? 

Having an accident at some point during your driving history can also affect the cost of car insurance. This is particularly the case if the accident is your fault, as it makes you a higher-risk driver. Insurance providers may be more lenient if a long time has passed since the accident, but it’s up to their decision.  

For full coverage insurance, the difference between having a clean driving history and having at least one at-fault accident is a steep 34% on average. That’s over a third extra than if you would have had a clean driving license. The premium difference is even greater with minimum coverage policies, which is 44% extra on average. 

Coverage typeAverage annual premium with clean driving historyAverage annual premium with one at-fault accidentDifference
Full Coverage$1,555$2,09034%
Minimum Coverage$545$78444%

Understanding Car Insurance Premiums

Car insurance premiums will be calculated by taking a number of different factors into account. The factors that affect your premium include things like state of residence, the provider you use and your driving history. 

Some of these things you will be able to change, and some you will have little control over. For example, shopping around for the cheapest insurance provider is a way to reduce your costs, but there’s little you can do about your state of residence or age.

Car Insurance Premiums Factors

  • Driving history: When insurance providers calculate premiums, they look at driving history to deem whether you are a risky driver for them to insure or not.
  • Coverage Level: The amount of coverage you choose will also have an effect, as there will be big price differences between minimum and full coverage.
  • Location: The state and city you reside in will affect premiums, as the average rate per state can differ greatly. 
  • Credit Score: Your credit score helps insurance companies check whether you are likely to make insurance payments on time.
  • Age & Gender: Premiums can also differ depending on your age and gender. Women often pay more than men, and younger drivers usually pay more as well.
  • Marital Status: Married couples often pay lower premiums than unmarried people, as providers see married couples as less of a risk of accidents.
  • Vehicle: Some cars may be deemed safer or more resilient than others, while more expensive cars are likely to have higher premiums to cover repairs or replacement.
  • Mileage: Generally, the more often you drive, the more likely you may have to make a claim one day.
  • Safety features: Those who have safety features on their car may be able to qualify for lower rates of insurance because the provider won’t have to pay out as much after an accident.

Car Insurance Shopping Tips

  • Use the same coverage levels for every quote: When comparing insurance premiums across different companies, the best way to get an accurate comparison is to compare the same product with the same details entered. 
  • Look out for discounts: Aside from the premiums, some insurance companies will offer special discounts for certain scenarios, like being a good driver.
  • Be Honest: While it’s tempting to leave out certain pieces of information, this  can affect your premiums and can even make them more expensive than they should be.

Tips for lowering Car Insurance rates

  • Discount options: Some insurance companies will offer discounts, for example, for new customers, students or those in the military. Another way to get a cheaper premium is to contact the company by phone to see if there’s any possibility to reduce the premium.
  • Deductibles: The deductibles you are willing to put on your insurance will also have a big effect on the insurance premiums you’re offered. If you can afford to have a high deductible amount, this can reduce your monthly or annual costs.
  • Bundling: For homeowners, a great way to reduce your car insurance and home insurance costs is to bundle the two policies at one company. Many companies will offer 10-20% discounts for bundled policies.

How to Lower Your Car Insurance Costs After an Accident

  • Always be honest about accidents: If you get into a small accident, you may be tempted to not contact your insurer. However, if the other person ends up suing you and you didn’t tell your provider, they may refuse to honor the policy at all.
  • Increase your deductibles: One way to keep the costs down is to increase your deductible after you’ve been in an accident. This can help you mitigate any price hike in your insurance.
  • Take a driving class: If the accident was your fault, it may be time to swallow your pride and take a driving class. Having a recent driving class under your belt may help insurers see that you have rectified the mistakes that led to the accident.
  • Look for providers with an accident forgiveness clause: Some insurance providers will have a clause that forgives any accidents if a certain amount of time has passed. This requires you to be accident-free for a few years though.

Car Insurance Costs FAQs

About the Authors

Kara is a freelance writer for Reviews.com. For the past few years, she has covered a wide range of personal finance topics such as home insurance, mortgages and personal loans for a variety of websites. She has been featured in The Simple Dollar, Bankrate.com and Interest.com among others. She holds a bachelor's degree in Creative Writing from LJMU in the UK. Kara's favorite review on Reviews.com is The Best International Travel Insurance Companies.