7 Factors That Impact the Average Cost of Car Insurance in America

Man Signing Car Insurance Form

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The average annual cost of car insurance in America is just over $1,300, according to a study commissioned by Quadrant Information Services. But knowing that number on its own isn’t a great indication of how much you will be paying. Rates vary significantly. Michigan leads the nation with an average rate over $2,000. Maine, Ohio, and Idaho are all averaging under $950 annually.

Calculating Average Annual Car Insurance Cost

There are a lot of factors, both changeable and unchangeable, that go into determining your car insurance rate. Here are some key factors that impact the average cost of car insurance in America:


Sorry, gentlemen. If you are a man, you are pretty much universally seen as a riskier driver, and your insurance rates will be slightly higher as a result.

Your Age

If you’re very young (under 25) or very old, you are considered a riskier driver. This can make your premiums more expensive.

Your Marital Status

Marriage means thinking for two people—and signals to insurers that you’re less risky than you were in your single days.

Your Location

If you drive around Manhattan, you are a lot more likely to get in an accident than you are if you’re usually sticking to the back country roads of rural Kentucky.

But something less obvious is also at play: if your state mandates certain standards for car insurance that are stricter than others, you’re likely to pay more money. Michigan, for example, requires residents to have unlimited lifetime personal injury protection (PIP) for accident-related medical expenses as a part of their car insurance. It makes premiums in Michigan more expensive than in other states.

If you live in an area where natural disasters are common, this can also cause your rates to rise.

Your Job

If you are using your car as an actual taxi or driving for a rideshare service, you will have to pay more for insurance and might need to pay for a different type of insurance altogether. Talk to your company and your insurance agent about how your job can affect your rate.

If you’re committed to paying less for car insurance, there are several things that you can work on. These things aren’t easy to change in the short-term, but with hard work and persistence, they are not impossible feats.

Credit Score

Your terms for pretty much any financial transaction will be greatly improved if you improve your credit score. A higher credit score means you’re less of a financial risk, but it also makes insurers trust that you’re more responsible in general.

To improve your credit score, you should pay your bills on time, every time, avoid too many checks on your credit score, and use less than 30 percent of your available revolving credit.

Driving History and Driving Habits

This one should be pretty obvious: if you are prone to racking up tickets, you are a riskier driver to insure. Of course, something like a ticket for going 15 miles over the speed limit on the highway is going to impact your rates a lot less than something like driving while intoxicated would—one is, while risky, understandable, and the other makes you a menace to society—and your rates will respond appropriately.

If you have been fined for a speeding ticket, you’ll feel the impact on your premiums. But if you’ve been caught while driving under the influence, you can expect to pay almost double what the average person in your area would pay. Taking a defensive driving course or installing tracking software on your vehicle could help lower your premiums; talk to your insurance agent.

The length of your commute, how often you use your car and for what purpose, and where you park all impact your premiums. If you have a longer commute, you are exposed to the risks of the road for longer, and more frequently, so your premiums will be higher. Carpooling, telecommuting, and taking the train could all save you money in premiums.

How to Save on Average Car Insurance Costs

Thankfully, there are also easier ways to save money on premiums:

Choose a Cheaper Policy

Comprehensive coverage with all the extra perks will cost you more in premiums than simple minimum liability coverage will. But keep in mind that you often get what you pay for; if you’re in an accident, you’ll probably be glad you didn’t choose this as an area to scrimp and save on.

Choose a Less Sexy Vehicle 

That super sleek sportscar? It’s not just going to cost you up front and at the pump: driving a hot-rod makes you riskier to insure. If you’re looking to save on insurance, buy a minivan, a sensible sedan, or an SUV. You should also consider buying a used car and installing anti-theft devices.

It’s important to note, though, that sexy to you and sexy to criminals can mean different things—and will both impact your premiums. The humble Honda Accord is super desirable for criminals and one of the most frequently stolen vehicles out there.

Shop Around 

It’s pretty much a golden rule that you should never go with the first offer. Not when you’re negotiating your salary, not when you’re negotiating the price of your vehicle, and certainly not when you’re comparison shopping for car insurance.

You already know that not all coverage levels are created equal, but until you go out and see what’s available, you will never know whether or not you’re getting the best deal for the amount of coverage you want.

Ask About Discounts

Are you a straight-A student? Active duty in the military? An AAA member? You might be eligible for a discount on your insurance premium. But here’s the catch: different companies offer different sorts of incentives, so you’ll want to shop around and ask the insurance agents about these discounts.

Consider Bundling

If you use the same insurance provider for auto and different types of insurance, you’ll often get a discount.