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What are the Average Car Insurance Rates? 10 Factors That Determine Yours

Last updated 12/20/2018 by

Jessica Walrack
Are you in need of car insurance and wondering how much you should expect to pay? According to the most recent National Association of Insurance Commissioners (NAIC) report on auto insurance (source), the average amount spent on car insurance in the U.S. was $866. However, this average can fluctuate greatly depending on several factors such as the where you live and your driving record.
Here’s a look at what will influence the car insurance rate you can get and tips on how you can find the best deal.

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Factors that affect your car insurance rate

1. Where you live

While the national average is $866, you may find your state average is significantly higher or lower than that, as you can see in this Average Expenditures For Auto Insurance by State report from the Insurance Information Institute (III).
Why do rates vary? One reason is that the coverage required differs by state. You’ll find that most states require:
  • Bodily injury (BI) insurance which provides coverage when you are legally at fault for an accident and people get hurt. It pays for the costs associated with injuries as well as a legal defense when needed.
  • Property damage liability (PD Liab) insurance provides coverage when you are legally at fault for an accident, and the other person’s property gets damaged. It covers the costs for repairs or replacement.

Minimum Coverage Combos

However, there are some variables in which one or both of the above coverage types aren’t required, and one or more of the following are:
  • Personal injury protection (PIP) provides coverage for medical costs if you are injured in an accident.
  • Uninsured motorist (UM) provides coverage for you if you are in an accident caused by a driver that does not have insurance.
  • Underinsured motorist (UIM) provides coverage if you are in an accident caused by a driver who has insurance but not enough coverage to pay for the damages.
  • Financial responsibility (FR) coverage requires you to prove you have the money available to pay for damages if you cause a car accident.
In addition to the coverage requirements, minimum liability limits also vary by state. For example, according to the Insurance Information Institute, Alabama and Arkansas both require bodily injury and property damage liability coverage. However, Alabama requires a minimum of $25,000 bodily injury coverage per person, $50,000 bodily injury coverage per accident and $25,000 for property damage liability, while Arkansas requires a minimum of $50,000 bodily injury coverage per person, $100,000 bodily injury coverage per accident and $25,000 for property damage liability.
Furthermore, your car insurance rate can change just by moving ZIP Codes. Factors in an area such as the rate of accidents and property crimes, the presence of wildlife and the weather can increase risk causing higher rates, insurance provider Esurance says. Typically, when you are applying, car insurance providers will ask where you live up front so they can provide you with the rates and requirements applicable to you.

2. Coverage you choose

If you want more coverage than your state requires, such as comprehensive and collision insurance (also known as full coverage), your costs will go up.
Often, full coverage is needed if you are leasing or financing your vehicle. It covers your property (vehicle) and medical expenses in the case that an accident is your fault, as well as if your vehicle is damaged due to a cause that is not your fault; such as from a fire or tree branch falling.
In addition to the type of coverage you choose, the limits you choose will also affect your rate. The higher the limits, the more expensive your premium will be.

3. Your deductible

Another factor that plays into the cost of your insurance rate is the deductible you select. Many insurance providers have different tiers of deductibles you can choose from. The higher your deductible, the lower your premium. However, before you sign up for a $1,000 deductible instead of a $200 one, determine if you will be able to afford it if the time comes when you need to file a claim.
It’s good to consider the deductible/premium options and weigh the pros and cons. Figure out whether the higher deductible will likely save you money in the long run. Maybe you are only insuring yourself, and you are a good driver. In this case, it wouldn’t be too risky to choose the higher deductible and set aside money for it in an emergency fund. On the other hand, if you are insuring your teenager who just turned 16, the lower deductible will probably make more sense.

4. Demographics

Your gender and age will affect the rate you pay, according to the Insurance Information Institute (III). The younger a driver is, the less experience they have and the more likely they are to have an accident. Men have also been found to have more accidents than women.

5. Your credit

Next is credit which has been found to be a statistically significant factor in how likely a person is to file a car insurance claim, according to the Insurance Information Institute. As a result, companies will often pull your credit report and factor it into their decision on how much your rate should be. This is yet another reason to work on building your credit.

6. Your car

Your car will be a factor, of course. There are many considerations car insurers have to look at, including how much it will cost to repair your car, how safe it is, how much damage it can inflict on another car and how likely it is to get stolen. Allstate, for example, offers discounts if your car has airbags, anti-lock brakes, an engine cut-off system and an anti-theft system. You can sometimes get discounts for hybrid vehicles, those that run on alternative fuel, and new cars.

7. How much you drive

The more you drive, the more risk you present to an insurer and the higher your cost will be. Therefore, if you work from home and just use your car to run errands, you will pay less than the person spending three hours commuting each day.

8. Driving history

Your driving record will also be considered, as it is among the best predictors of how well you will drive in the future. If you have a clear driving record, you will surely save more on your rate than someone who has accidents and tickets because you present less risk.

9. Bundling your insurance

It’s worth looking at the other types of insurance you have as you may be able to qualify for a discount if you get more than one type of insurance through the same provider. Beyond that, you may get a discount for putting multiple vehicles on one policy.

Other discounts

Along with discounts for bundling your insurance and having a car with safety features, many insurance providers offer other discounts as well. Most common among these are discounts for teens who take driver safety courses or students that have good grades (which typically means Bs or better). Other examples include discounts for being a member of certain professional groups, being a member of an auto club or having a low-risk occupation.

10. The company you choose

Lastly, the car insurance rate you can get will vary from one provider to the next, so it is very important to shop around. Here is a full guide to getting the best auto insurance rate that can help you with the process.
You will want to look for a company that gives you the highest value for the lowest cost. You also want to look into the satisfaction of a company’s past customers, how long it has been in business, how much it has in assets, and its auto insurance ratings, discount programs, and loyalty programs.
SuperMoney has reviewed dozens of insurance providers and these three come highly recommended.
Allstate is a leading insurance provider in the industry with good reviews, a variety of insurance products and high levels of customer satisfaction. It offers discounts for retirees, students, drivers with clean records and clients with multiple policies.
Liberty Mutual is a well-respected company with a wide range of insurance offerings, competitive rates and a variety of discounts.
Esurance is a company backed by Allstate which was one of the first to sell auto insurance online. It offers a range of insurance products in addition to auto insurance and is a trusted brand with a good reputation.

Find your best auto insurance rate

Ready to shop for the best auto insurance rate? Head over to our auto insurance review page for a list of providers, their offerings and customer ratings on their service. Get quotes, compare offers and find your best rate.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids. Learn more

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Jessica Walrack

Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar,, Commonbond, Bankrate, NextAdvisor, Guardian, and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.

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