The Average Cost of Car Insurance in 2026

Did you know the national average cost of car insurance per household is $1,993?² (That works out to about $166 for your monthly car insurance bill.)

 Home and auto insurance aren’t just about low rates—they’re about the right coverage level. Talk to a trusted pro who can help you get both.

But remember, that’s the average. Car insurance costs vary a lot depending on a bunch of factors.

So, how do insurance companies figure out how much your car insurance costs? And more importantly—how do you figure out how much to budget for insurance?

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

 

How Much Is Car Insurance?

To understand the cost of car insurance, it helps to realize that people have many different kinds (and levels) of coverage needs—and those differences mean there’s a big range in how much people pay.

For example, if you’re only carrying the minimum coverage your state requires to drive legally, you’re going to be at the lower end of the cost spectrum. But those minimums are almost never enough to protect you financially.

And even if you only have liability coverage for the amount we recommend (which we’ll cover in a minute), you’ll pay more than the minimum-coverage crowd. On the other hand, you might actually need what’s called full coverage car insurance—and if so, you’ll pay more.

The key thing to see here is that when it comes to insurance, price isn’t everything. In fact, this is the wrong place to cheap out! If you have a serious accident without enough coverage, it can cost you far more than any premium (your monthly bill) will ever be.

So, how do car insurance companies figure out what to charge you? Car insurance companies make money by charging you a monthly premium. When they pay for the costs of an accident, your premium goes up because you’re now riskier to insure. But if you’ve never filed a claim, your premium stays low because you’re less risky to insure.

That’s the big picture. But there are lots of smaller details that go into it, like:

• Where you live
• How long you’ve been driving
• Your marital status
• Your age

All of those can affect how much car insurance companies charge—because they use those details to predict how risky you are to insure.

Here’s what it all boils down to: The less likely you are to file a claim, the lower your premium. And the more likely you are to file one—you guessed it—the higher your premium will be.

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

 

What Determines the Cost of My Car Insurance?

Now let’s take a closer look at each factor that affects your premium. Some things you can change and some you can’t, but they all play a part.

Location

Car insurance prices can differ depending on your zip code for two main reasons: state laws and local risks.

Drivers typically pay higher premiums in states with no-fault car insurance laws (that’s when your state requires you to carry insurance that covers your personal injuries no matter who’s at fault in the accident). And in any state, it can be risky to drive (or even park) your car in certain places.

For example, 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.

Depending on where you live, state or local governments may charge fees or surcharges on car insurance—another reason location matters.

Average Car Insurance Cost by State

Yes, the state you live in can have an impact on your auto insurance premiums. After all, some areas have better (or worse) driving conditions—not to mention drivers! Here’s a breakdown of how much drivers are paying on average for full coverage in all 50 states.

State	Average Cost for Full Coverage
Alabama	$1,836
Alaska	$2,217
Arizona	$2,257
Arkansas	$2,321
California	$2,848
Colorado	$2,315
Connecticut	$2,310
Delaware	$2,500
Florida	$3,536
Georgia	$2,410
Hawaii	$1,655
Idaho	$1,339
Illinois	$2,004
Indiana	$1,668
Iowa	$1,683
Kansas	$2,171
Kentucky	$2,807
Louisiana	$3,718
Maine	$1,408
Maryland	$2,290
Massachusetts	$1,777
Michigan	$2,859
Minnesota	$2,021
Mississippi	$2,008
Missouri	$2,326
Montana	$2,048
Nebraska	$1,839
Nevada	$2,535
New Hampshire	$1,480
New Jersey	$2,687
New Mexico	$1,921
New York	$2,898
North Carolina	$1,412
North Dakota	$1,825
Ohio	$1,422
Oklahoma	$2,576
Oregon	$1,857
Pennsylvania	$2,334
Rhode Island	$2,414
South Carolina	$2,407
South Dakota	$2,150
Tennessee	$1,787
Texas	$2,260
Utah	$2,002
Vermont	$1,237
Virginia	$1,776
Washington	$1,519
West Virginia	$2,135
Wisconsin	$1,750
Wyoming	$1,7203

 

Most and Least Expensive States for Car Insurance

Feel like bragging (or crying) about your state’s insurance rates? High rates won’t be the main reason someone moves, but low rates might be a nice bonus. Here are the five best and worst states for car insurance rates on average.

Lowest Average Car Insurance Rates
State	Average Annual Cost
Vermont	$1,237
Idaho	$1,339
Maine	$1,408
North Carolina	$1,412
Ohio	$1,422
Highest Average Car Insurance Rates
Louisiana	$3,718
Florida	$3,536
New York	$2,898
Michigan	$2,859
California	$2,8484

Age

Since young drivers (ages 14–25) are more likely to make a rookie mistake that gets them into an accident, they’re considered high risk. And that means paying the most for car insurance. Drivers ages 25–60 get cheaper rates because they’re (usually) more experienced, responsible and able to respond to road hazards quickly.

Drivers older than 60 may also see rate increases because they’re more likely to have impairments of vision, hearing and reflexes, which can make them more likely to get into an accident. You can offset these rising costs by switching to an insurer that offers senior discounts.

Average Monthly Car Insurance Rates by Age

We already told you the nationwide average monthly premium is around $166. That will also vary somewhat based on your age. Here’s a breakdown.

Age	Average Monthly Premium
16–19	$300
20–29	$230
30–39	$200
40–49	$189
50–59	$167
60–69	$142
70–79	$145
80+	$1555

Marital and Family Status

Married drivers pay less for car insurance than single drivers. And married people with grown kids, kids too young to drive, or no kids will typically have the lowest rates.

But if you have teen drivers, watch out—their rates can get pricey! Fortunately, you’ve got options to help your teen driver save on car insurance. You can even use this time to teach your kids about the financial responsibilities of driving. Having them pay for some or all of their car insurance now (with you there to guide them) helps them understand how insurance works. It also teaches them how to plan for and buy the right insurance on their own later.

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 you’re a safe driver.

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

 

Credit History

Your credit history also has an impact on your car insurance rates. But don’t sweat this one too much since credit scores are really just “I love debt” scores. And the more debt you pay off and money you save, the less you’ll need to worry about your car insurance rates.

How Much You Drive

There’s a simple reason why insurance companies ask how much you drive. Think about it—the more you drive, the higher your odds of being involved in a traffic incident or having your car damaged.

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

Type of Car

This one’s simple math: The more your car is worth, the more it costs to replace or repair it 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 insurance on new cars. Used cars typically 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 come with your car, like leather seats or a sunroof. Luxury, sport or special-edition packages can send your premiums up, while cars with a basic package tend to be cheaper to insure. 
• Repair costs: Vehicles that are expensive to repair—like diesel trucks, electric cars or hybrids—can cost more 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 regular ride? Yep, that’ll mean higher rates. Sports cars and convertibles are at higher risk of causing accidents or getting damaged in one. 
• Color: Bright colors get more police attention—meaning you’re more likely to get traffic tickets that up your rates.

Insurance Rates by Car Type

Car Type	Annual Cost of Full Coverage Insurance
Small sedan	$1,510
Medium sedan	$1,583
Subcompact SUV	$1,684
Compact SUV (FWD)	$1,723
Medium SUV (4WD)	$1,831
Midsize pickup	$1,527
Half-ton/crew cab pickup	$1,764
Hybrid vehicle	$1,643
Electric vehicle	$2,0596

Type of Policy

There are three main types of car insurance: liability, collision and comprehensive.

In most states, liability coverage is the only must-have to drive legally (New Hampshire is the exception). Whether the other two types are worth it depends on your situation. Having all three—often called full coverage—costs more than liability alone, so some people skip collision and comprehensive coverage.

Here’s the thing: 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!)

 

Policy Limits and Deductibles

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

If your policy limits are low, your car insurance cost will be lower too. Just don’t aim too low—you don’t want to face paying huge legal or medical bills out of pocket because your policy only covered half of what you needed.

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 higher. That’s because you’re asking the insurance company to cover more costs for you.

But if you choose a higher deductible ($1,000, for example), you’ll pay lower premiums since you’re lowering the insurance company’s risk of losing money. It’s totally one of those “you scratch their back, they’ll scratch yours” situations.

 

How Much Is Car Insurance for New Drivers?

Another factor that impacts how much car insurance costs is whether you’re a new driver. When you’re brand-new to driving, no matter your age, you can typically expect to pay more. Some of that is because new drivers don’t have a driving history for the insurance company to look back on.

And because most new drivers are teenagers, rates often run even higher. The fatal crash rate per-mile-driven for people aged 16-19 is nearly three times the rate of drivers 10 and over. So insurers see teen drivers as a higher risk.⁷

So, how do the insurance companies define new versus experienced? They generally consider anyone who’s been driving for less than three years a new driver. That means rookies might have to wait a little while to see those premiums go down.

That said, prices for new drivers vary depending on:

• Your age
• How much insurance you need
• What kind of vehicle you drive

For instance, if you’re a new driver and your car is a brand-new Corvette, you’ll pay more. But no matter your situation, it’s always good to shop around for the best rate. And that’s a great reason to connect with a RamseyTrusted^® insurance pro—they can steer you right with an eye on coverage and cost. That’s how one of our Ramsey Baby Steps Facebook Community members, Gabriel P., found just the right car insurance at a great price.

“Our experience with our RamseyTrusted insurance agent, Sarah Hulme, was outstanding,” Gabriel wrote. “She provided clear guidance and personalized recommendations, and made the entire first-time auto insurance process both simple and stress-free. Her expertise and dedication gave us confidence every step of the way, and we couldn’t be happier with the service we received! It also helped that she quoted below any of the other well-known insurers by a lot while setting us up with one of the best insurers in the U.S.!”

We love to hear that, Gabriel!

 

How Can I Save Money on Car Insurance?

We’ve seen what goes into calculating your car insurance premium. Now let’s look at ways to save money on car insurance. Here are some of our favorites:

Raise your deductible.

We recommend saving up a fully funded emergency fund first and then raising your deductible to $1,000, an amount you can cover if you do get into an accident. Just remember that keeping your deductible lower is the best strategy while you’re paying off debt and only have a starter emergency fund. (If you’re unclear about the best plan for clearing debt and building wealth, read more about the Baby Steps.)

Look for discounts.

Did you know you can get discounts? Here are a few moves that could lead to savings:

• Joining certain academic or professional groups (think honor societies, alumni clubs, or professional or trade associations)
• Taking driving classes
• Paying your premium twice a year instead of monthly
• Maintaining good grades for high school and college students

Ask your RamseyTrusted insurance agent what discounts you qualify for. 

Buy a used car.

Insuring a used car is usually cheaper than insuring a new car. We recommend saving up and buying a reliable, great-looking used car with cash. But watch out for salvage title and rebuilt title used cars—those can actually be more expensive to insure. Take a look at our free Ramsey Car Guide for some help finding the perfect used car for you.

Bundle your coverages.

Bundling your car insurance with your homeowners insurance, renters insurance, policies for other cars, or your spouse’s policy can lower your rates.

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 advisor who can get quotes from different companies and help you pick the right one.

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). Just be sure that's correctly spread across both bodily injury coverage and property damage coverage. If your policy is what we call a split coverage policy, it will typically show three numbers for the coverage limits. Here’s the way we recommend you set those up:

• The first number is your bodily injury per person limit, which should be $250,000.
• The second number is your bodily injury per accident limit, which might be about $500,000 (but this part is not as important as making sure you have that first number set at $250,000).
• The third number is your property damage per accident limit, which again should be $250,000.

Make sure the first and third numbers add up to $500,000, and you’ll be well prepared for liability coverage.

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)

Be smart. Use our suggestions above to estimate your car insurance cost before you buy a car.

 

How to Get Cheap Car Insurance

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

That’s where RamseyTrusted pros come in. They’ll help you get the right car insurance so you’re actually covered—and they’ll compare auto insurance rates to make sure you’re getting a great deal. We’ve vetted each pro personally, so you’ll be working with someone who won’t just help you save money on car insurance—they'll help you understand your coverage too.

Connect with a RamseyTrusted auto insurance pro today!