What is the cost of car insurance?

The cost of car insurance has increased significantly, with the average full coverage policy costing $2,458 per year in November 2024, according to Bankrate's analysis of Quadrant Information Services data. Meanwhile, minimum coverage policies cost $678 annually.

Although the national average is a benchmark, the variation between states can be almost $3,000. Additionally, your premiums will be influenced by factors such as age, gender, driving history, and credit history.

The cost of car insurance varies by state, and there are reasons for the high rates, along with tips on how to reduce yours.

How much is car insurance?

On average, a full coverage policy costs $2,458 annually across the country, while a minimum coverage policy costs $678 a year.

Individual premiums are impacted by a variety of factors, including:

• Age
• Gender
• Marital status
• Location
• Driving record
• Credit history
• Claims history
• Car make and model

Among our picks for the cheapest car insurance companies are Geico and Auto-Owners. Rates can vary by company.

Average cost of car insurance by state

The cost of car insurance fluctuates significantly throughout the United States, ranging from $340 per month in Florida to $155 per month in Idaho.

Why is car insurance so expensive?

Between 2023 and 2024, car insurance premiums increased by 25%. Several factors have contributed to this increase, as stated by the Insurance Information Institute.

1. The increase in the cost of repairing and replacing vehicles, as well as paying medical and legal bills, has outpaced inflation.
2. Car prices reached their highest point in 2021, at approximately $47,000, due to pandemic-related shortages. However, they are now gradually decreasing.
3. The cost of repairing or replacing a car has increased due to the advancement in car technology.
4. The increase in accidents, caused by more distracted driving and higher speed limits, has led to larger payouts from insurers, resulting in higher premiums for customers.

How to lower car insurance rates

Several ways exist to reduce the expense of auto insurance.

Look for discounts

Discounts are available from many insurers for students, military members, and homeowners. Finding the right insurer for your situation could help you save money.

Pay your premium in full

Paying your six-month or annual premium in full can help you avoid installment fees and may also result in a discount from some insurers.

Bundle your coverage

You can save over 20% on your renters or homeowners insurance by purchasing it from the same provider as your car insurance.

Don't buy more insurance than you need

You may already have coverage for add-ons like roadside assistance and rental car reimbursement through your credit card, AAA membership, or other sources.

Think about dropping coverage

If your car is worth less than 10 times your premium, you may opt for just liability-only insurance.

Improve your credit score

Your credit history influences insurers' assessment of your likelihood to file a claim, and in many states, your credit score impacts your premiums. As a result, having a higher credit score can lower your car insurance cost. By paying bills on time and reviewing your credit report for errors, you may be able to reduce the amount you pay.

Raise your deductible

The Insurance Information Institute suggests that increasing a $200 deductible to $500 could reduce collision and comprehensive coverage costs by as much as 30%. If you raise it to $1,000, you could save more than 40%. However, make sure you can afford the extra out-of-pocket expense.

Shop around

Obtaining three to five car insurance quotes with the same coverage and deductible can help you secure the best possible price.

Why trust CNBC Select?

Our goal at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to our readers, enabling them to make well-informed decisions when it comes to their finances. Each insurance review we publish is the result of thorough reporting by our team of expert writers and editors, who possess extensive knowledge of insurance products. At CNBC Select, we are committed to maintaining our journalistic standards and ethics, even though we earn a commission from our affiliate partners on many offers and links.

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