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Average Car Insurance Costs in 2021

Cars represent freedom. But before you hit the open road, you need to make sure your car is covered in the event of accidents and road hazards.

According to a study from AAA, the national average car insurance cost was $1,202 for full coverage in 2020.1 But that’s the average for a lot of people. How do insurance companies figure out how much your car insurance costs?

Not to worry! We’re going to walk through the factors that affect your insurance rates, plus how you can save without giving up coverage you need.

Let’s shine our headlights on the world of car insurance.

How Much Is Car Insurance?

The national average car insurance cost is $1,202 for full coverage or $644 for liability.2,3 (That works out to about $100 for full coverage or $54 for liability car insurance per month, in case you were wondering.)

But remember, that’s just the average. Lots of factors can affect what you pay—like the type of coverage you buy, the car you drive and even where you live. Why is that?

Do you have the right auto insurance coverage? You could be saving hundreds!

Well, car insurance companies make money by charging you a monthly premium. When they have to pay for the costs of an accident, they lose money. So if auto insurers think you’re unlikely to file a claim, they’ll charge you lower premiums. If they think you’re likely to file a claim? You guessed it—higher premiums.

The good news is that if you know what the insurance company’s looking for, you can actually do things to get a lower rate.

What Determines the Cost of My Car Insurance?

Insurance companies look at a bunch of factors to decide how much to charge you. Some of these things you can change and some you can’t, but they all play a part. Here they are:

1. Age and Gender

Young drivers (ages 14–25) pay the most for car insurance, since they’re more likely to make a rookie mistake that gets them into an accident. Drivers aged 25–60 get cheaper rates, because they’re experienced, responsible and can respond to road hazards quickly. (Usually, that is!)

Drivers over 60 may see rate increases because they have a higher risk of impaired vision, hearing and reflexes, which could make them more likely to get in an accident. The good news is, you can offset these rising costs by switching to an insurer that offers senior discounts.

Most people think men pay more for car insurance, and that’s true between ages 14 and 25. But after that, women actually pay the highest rates according to a study from the Consumer Federation of America (CFA).4 (Sorry, ladies!)

And there doesn’t seem to be a clear reason for that: Some studies suggest women are safer drivers, and others show that men are better behind the wheel.

If you think using gender to set car insurance prices is unfair, you’re not alone! This practice is illegal in California, Hawaii, Massachusetts, Montana, North Carolina, Pennsylvania and Michigan.

Average Cost of Car Insurance by Age and Gender

 

Age 20

Age 40

Age 60

Women

$3,070

$1,648

$1,497

Men

$3,292

$1,587

$1,4425

Notice that these numbers are higher than the national average cost of insurance? That’s because the CFA studied drivers in major U.S. cities, using national insurance companies. Using a smaller company or living in a small town could get you a better rate (more on that in a minute).

2. Marital and Family Status

Unfortunately, single drivers pay more than married drivers for car insurance. Married people with no kids, grown kids or kids too young to drive will typically have the lowest rates. And parents of teen drivers—watch out! Your rates are about to go up.

Fortunately, there are plenty of ways to help your teen driver save on car insurance. You can even use this time to teach your kids about the financial responsibility of driving. Having them pay for some or all of their car insurance now (with you there to guide them) prepares them to find and buy the right insurance on their own later.

If you do decide to foot some or all of the bill, hang on. Your rates will go back down when your teen leaves the nest.

3. Location

Car insurance is priced right down to the zip code for two reasons: state laws and local risks.

Drivers pay higher premiums in the 12 states with no-fault car insurance laws.6 And in any state, it’s riskier to drive (or even park) your car in certain places. In big cities with crowded roads, you’re at higher risk for a wreck. And your car is more likely to be vandalized or stolen in a high-crime area.

But if you live in a small town or city with low crime, you’ll likely get cheaper insurance.

Average Car Insurance Rates by State

State

Liability

Full Coverage

Alabama

$511

$1,067

Alaska

$576

$1,111

Arizona

$647

$1,181

Arkansas

$487

$1,097

California

$617

$1,195

Colorado

$687

$1,290

Connecticut

$785

$1,326

Delaware

$900

$1,394

District of Columbia

$809

$1,574

Florida

$1,010

$1,521

Georgia

$798

$1,383

Hawaii

$479

$945

Idaho

$426

$828

Illinois

$516

$996

Indiana

$443

$865

Iowa

$349

$816

Kansas

$422

$985

Kentucky

$612

$1,089

Louisiana

$1,015

$1,751

Maine

$375

$783

Maryland

$738

$1,327

Massachusetts

$658

$1,246

Michigan

$952

$1,590

Minnesota

$499

$972

Mississippi

$538

$1,150

Missouri

$520

$1,053

Montana

$436

$1,025

Nebraska

$429

$963

Nevada

$900

$1,386

New Hampshire

$437

$883

New Jersey

$956

$1,501

New Mexico

$577

$1,102

New York

$920

$1,559

North Carolina

$391

$871

North Dakota

$308

$844

Ohio

$449

$882

Oklahoma

$509

$1,124

Oregon

$690

$1,077

Pennsylvania

$555

$1,101

Rhode Island

$885

$1,500

South Carolina

$702

$1,228

South Dakota

$333

$905

Tennessee

$477

$996

Texas

$659

$1,372

Utah

$602

$1,039

Vermont

$377

$854

Virginia

$493

$957

Washington

$689

$1,120

West Virginia

$522

$1,097

Wisconsin

$422

$830

Wyoming

$356

$9717

4. Driving Record

You can’t control whether other people drive safely—but you can control yourself! That’s why many insurers offer good driver discounts. They’ll lower your rate if you go a certain number of months without filing a claim, because you’ve shown that you’re a safe driver.

Unfortunately, traffic violations, tickets or at-fault collisions will raise your car insurance rate, because you’re not following the rules of the road as carefully. (How much they affect your rate depends on what happened, how many times it’s happened and who your insurer is.) 

5. How Much You Drive

This one isn’t rocket science. The more you drive, the more there’s a chance that your car could get damaged, break down or be involved in a traffic incident.

So if you drive your car every day, use busy roads, or make long commutes, you’ll pay higher premiums than someone whose car sits in the garage most of the time.

6. Type of Car

This one’s simple math: The more your car is worth, the more it costs to replace after a wreck. Expensive cars—like sports cars or luxury sedans—cost more to insure than cheaper ones.

Here are some other ways your car impacts your insurance:

  • Age. Love that new-car smell? So do we, but we don’t love the price of insuring it! Used cars cost less to insure because they’re cheaper to repair or replace. So save your money and get a new-car air freshener for your old ride.
  • Package. Package refers to the set of features that came with your car, like leather seats or a sunroof. Luxury, sport or special edition packages can make your car insurance go up, while cars with a basic package tend to be cheaper to insure.
  • Repair Costs. Vehicles that are expensive to repair—like diesel trucks or hybrids—can be costly to insure.
  • Safety or “Green” Features. Anything that makes your car safer or more eco-friendly could help lower your insurance rates. Talk about a win-win!
  • Modifications. Turbocharged engines, lift kits and other custom parts can all raise your rates because they change the car’s value and its performance on the road.
  • Risk Factor. Picking a sports car as your daily driver? Yep, higher rates. Sports cars, convertibles and motorcycles are all at higher risk to cause an accident or be seriously damaged in one.
  • Color. Bright colors get more police attention—meaning you’re more likely to get traffic tickets that up your rates.

Insurance Rate by Type of Car

Vehicle

Full Coverage Insurance

Small sedan

$1,342

Medium sedan

$1,245

Large sedan

$1,264

Small SUV

$1,087

Medium SUV With 4-Wheel Drive

$1,118

Minivan

$1,096

Half-Ton / Crew Cab Truck With 4-Wheel Drive

$1,242

Hybrid Car

$1,212

Electric Car

$1,2278

7. Type of Policy

There are three main types of car insurance: liability, collision and comprehensive. Having all three types of insurance, aka full coverage, costs more than liability alone, so some people skip collision and comprehensive coverage. But carrying only liability coverage isn’t always the smartest move.

(Don’t worry—we’ll cover how to save money and get the right coverage in a minute!) 

Additional coverages like Guaranteed Auto Protection (GAP), windshield coverage or Personal Injury Protection (PIP) will also increase your premium. In some states, PIP is mandatory—but you can drop the others.

8. Policy Limits and Deductibles

Car insurance always has a policy limit (aka coverage limit), which is the maximum amount the insurance company will pay for each type of coverage.

If you set low policy limits, your premium will be lower too. Just don’t aim too low—you don’t want to face legal or medical costs totaling hundreds of thousands of dollars when your policy only covers half of that.  

Your deductible is the amount you pay before the insurance company starts chipping in. If your policy’s deductible is low (say $500), then your premium will be high. That’s because you’re asking the insurance company to cover more costs for you.

But if you choose a high deductible, you’ll pay lower premiums because you’re lowering the insurance company’s risk of losing money. It’s totally a you-scratch-their-back, they’ll-scratch-yours situation.

How to Save Money on Car Insurance

Now that you know what goes into calculating your car insurance premium, it’s time to look at ways to save money on insurance. Here are some of our favorites:

1. Raise your deductible.

We recommend raising your deductible to $1,000 and saving a $1,000 emergency fund to cover that cost if an accident does happen.

2. Look for discounts.

Did you know you can get discounts for joining a professional group, taking driving classes or paying your insurance twice a year instead of monthly? Ask your insurance agent what discounts you qualify for!

3. Buy a used car.

Brand new cars are expensive to insure. Instead, save up and buy a reliable, great-looking used car with help from our free Ramsey Car Guide.

4. Bundle your coverages.

Bundling your car insurance with your homeowner’s insurance, other cars or spouse’s policy can lower your rates.

5. Shop around for coverage.

You may be able to get the same coverage for less from a different insurer. Look around on your own, or work with an independent insurance agent who can get quotes from different companies and help you pick the right one.

6. Get only the essential coverages.

Let’s get something straight: Having the right car insurance is way more important than having the cheapest car insurance!

You need at least $500,000 in liability insurance to pay for the other driver’s costs after an accident (and to protect you from lawsuits). But comprehensive and collision coverage depend on your car and your financial situation.

You need comprehensive and collision if your car is less than 10 years old and:

  • You owe money on it.
  • You don’t have enough savings to pay cash for a vehicle of similar value.

You don’t need comprehensive and collision if:

  • You have enough cash to repair or replace your car.
  • Your car is over 10 years old. (Most insurance companies don’t sell these coverages for older cars, because the car isn’t worth the risk of insuring it.)

Get the Right Car Insurance at the Right Price

We get it. It’s tempting to look for the cheapest car insurance or to just carry the minimum—but that cheap-o stuff may not give you enough coverage to truly protect your car (or your finances).

Now here’s the good part: You can have the best of both worlds. Our trusted team of independent agents will help you get the right car insurance so that you’re actually covered, and they’ll help you get the best rates. Plus, they live and work all over the country—so you can partner with someone who knows how to get the best deals on car insurance in your area.

Connect with an auto insurance agent today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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Who Has the Best Car Insurance? 

Who Has the Best Car Insurance? 

Big-name companies love to say theirs is the best.
Want an honest answer? Ask an independent agent.
Find Better Rates

Who Has the Best Car Insurance? 

Big-name companies love to say theirs is the best.
Want an honest answer? Ask an independent agent.
Find Better Rates