Understanding car insurance rates

1

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

If you drive a car in the United States, you need car insurance. Car insurance protects you, your vehicle and others in case of a collision. Without proper coverage, you could face huge medical and automotive repair bills after an accident. Every state has its own guidelines for the minimum amount of insurance each driver must carry—but that might not be enough to give you the full protection that you need. With so many insurance carriers in the country, it can seem difficult to find the right car insurance quotes that fit your budget.

Don’t just settle on the lowest car insurance quote or on the first offer you receive. In order to find the most coverage at an affordable price, you should compare rates from different providers. Shopping around can save you hundreds of dollars per year. When you begin your car insurance research, consider how these factors can impact your pricing and use these tips to find the best car insurance companies.

Factors that determine car insurance rates

Car insurance companies will readily give you a quote, often on their website, but it’s rarely clear what factors they use to determine your specific rate. Quotes can range by hundreds of dollars from one company to the next.

Two main factors that determine your insurance rate are your driving record and the make and model of your vehicle. But there are plenty of other considerations that go into the final calculation.

While carriers weigh the factors that determine the quotes they provide in different ways, these are some of the elements that generally have the most influence, according to the Insurance Information Institute:

Driving record

Individuals who have driving records with fewer accidents and traffic violations get lower premiums. If you get in trouble with the law or cause an at-fault accident, you’ll likely see your premiums increase. Here’s a glance at the impact various types of infractions may have on your insurance costs.

Average annual premiums based on driving record

Average full coverage
Clean record $1,738
DUI conviction $2,877
Accident $2,299
Speeding ticket $1,869
Looking to save money on auto insurance?
Looking to save money on auto insurance?

Looking to save money on auto insurance?

Compare rates & save

Location

Where you live plays a large part in the rate you receive. Those who often drive in urban areas pay higher rates than those in rural areas. And whether you park your car on the street or in a garage plays a big part as well. Parking where your car is more protected may help lower premiums.

Drivers in some states tend to pay more than others for auto insurance due to location-specific driving conditions, local laws and other risks. Here’s an overview of how vastly premiums can differ between states.

Average annual premiums based on location

State Full coverage premium Minimum coverage premium
Alabama $1,623 $469
Alaska $1,559 $373
Arizona $1,547 $555
Arkansas $1,914 $470
California $2,065 $733
Colorado $2,016 $518
Connecticut $1,845 $794
Delaware $1,775 $787
District of Columbia $1,855 $704
Florida $2,364 $1,101
Georgia $1,982 $756
Hawaii $1,127 $345
Idaho $1,045 $307
Illinois $1,485 $442
Indiana $1,254 $367
Iowa $1,260 $252
Kansas $1,698 $410
Kentucky $2,128 $748
Louisiana $2,724 $975
Maine $965 $294
Maryland $1,877 $767
Massachusetts $1,223 $510
Michigan $2,309 $948
Minnesota $1,643 $537
Mississippi $1,782 $492
Missouri $1,661 $468
Montana $1,737 $342
Nebraska $1,531 $335
Nevada $2,246 $860
New Hampshire $1,275 $389
New Jersey $1,757 $847
New Mexico $1,419 $385
New York $2,321 $1,062
North Carolina $1,325 $413
North Dakota $1,264 $285
Ohio $1,032 $328
Oklahoma $1,873 $423
Oregon $1,346 $610
Pennsylvania $1,476 $427
Rhode Island $2,018 $749
South Carolina $1,512 $558
South Dakota $1,642 $275
Tennessee $1,338 $371
Texas $1,823 $524
Utah $1,306 $528
Vermont $1,207 $292
Virginia $1,304 $441
Washington $1,176 $463
West Virginia $1,499 $458
Wisconsin $1,186 $332
Wyoming $1,495 $271

Miles driven

The more you use your vehicle, the more you’ll likely pay. Driving fewer miles may lower insurance expenses.

Age

Your age is a huge factor when it comes to your auto insurance premiums. Younger drivers, especially teenagers, tend to pay more due to less experience behind the wheel and a statistically higher chance of getting in an accident. As you get older, your premiums should generally decrease assuming you maintain a clean driving record and other factors remain the same. Here’s the average drop in rate drivers see from the age of 16 to 60.

Average annual premiums based on age

Average full coverage Average minimum coverage
16-year-old* $7,371 $2,770
18-year-old $5,243 $1,652
25-year-old $2,108 $666
30-year-old $1,850 $582
40-year-old $1,757 $525
60-year-old $1,405 $494

Credit score

Insurers use your credit score to determine how likely you are to file a claim. Drivers with higher credit scores have been shown to file fewer claims and therefore pay lower premiums on average. As you’ll see below, a driver with poor credit might get a quote for double what someone with excellent credit would pay based on national averages.

However, it is worth noting that your credit score does not hold the same weight with every insurance company. Some may not consider your credit at all (although most do).

Average annual premiums based on credit score

Poor Average Good Excellent
National average $3,873 $1,865 $1,674 $1,487

Vehicle

Some cars can be more costly to insure than others. The cost of your car, cost of repairs, safety record, engine size and how likely it is to get stolen all factor in to the final cost.

Coverages needed

Nearly every state requires drivers to carry basic auto insurance, but you may need more than just the bare-bones coverage. Liability insurance covers damage to someone else or their property in a collision you cause while bodily injury insurance only covers for injury or death to another person. You can upgrade to add personal injury protection (PIP) insurance, which covers any harm to your health in a collision. While comprehensive insurance covers damages to your car caused by a collision or the weather or car theft, full coverage insurance includes comprehensive, liability and bodily protection. The more coverage you need, the higher your car insurance premium will be.

Deductible size

Raising your deductible can lower your insurance costs. By increasing your deductible from $200 to $500, you could lower that part of your insurance costs by 15 to 30 percent.

Gender

Women typically get better auto insurance quotes than men. That’s because they statistically get in fewer accidents than men. However, the difference becomes less notable as age increases. Below is a comparison of the disparity in rates between men and women at various life stages.

Average annual premiums based on age and gender

Man (full coverage) Woman (full coverage) Difference
18-year-old $5,646 $4,839 $807
25-year-old $2,181 $2,036 $145
40-year-old $1,765 $1,749 $16
60-year-old $1,552 $1,537 $15

What is not considered in your car insurance rate

Insurance companies ask for many different types of information when you request a quote, but a few details are off the table. Generally speaking, insurers are legally prohibited from setting rates that could be considered discriminatory. This means that your race and religion can never be used as a factor for insurance premiums.

Depending on where you live, there may also be state-specific regulations that prohibit insurers from considering information widely used in other parts of the country. Credit-based insurance premiums are either illegal or heavily restricted in California, Hawaii, Maryland and Massachusetts. In early 2021, New Jersey became the latest state to ban insurers from looking at credit scores – in addition to education level and occupation.

How to collect car insurance rates

It’s possible to find quality insurance that’s inexpensive, but it takes some shopping around. Take time to pull quotes from multiple insurers for the coverage you need. While there might be some variation in the specific information required, most insurance companies will request the following information that will directly impact your auto insurance quotes:

  • Driving record
  • Location where car will be parked
  • Driver information: age, gender, occupation, driver’s license and state of issuance
  • Credit score
  • Vehicle information: make, model, age and VIN
  • Coverages needed
  • Deductible

For more information, refer to our guide on comparing car insurance quotes.

Looking to save money on auto insurance?
Looking to save money on auto insurance?

Looking to save money on auto insurance?

Compare rates & save

Frequently asked questions

What is the difference between liability and full coverage car insurance?

Liability insurance covers damage to property and will compensate others for damages you or someone driving your car causes. Liability coverage also pays for bills associated with death or injury to another person caused by you or someone driving your car. Full coverage car insurance, on the other hand, covers liability, damage to your car in a collision, bodily injury coverage and even pays for damage caused to your vehicle by weather, vandalism or a falling tree branch.

How do I get the best car insurance rates?

Shopping around and comparing car insurance rates from different companies will help you find the best rate. Look at both large and small companies and make sure to have your personal information, car type, credit score and driving record on hand to receive the most accurate quote.

How can I make my car insurance cheaper?

Being a safe and cautious driver with no recent accidents or tickets on your record can help lower your insurance and keep it low. Another way to make your car insurance cheaper would be to drop some of your coverage or raise your deductible, but make sure you know your state minimum requirements and the implications if you have basic insurance and cause a collision.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.

To determine alternate rates, our base profile has been adjusted for the following scenarios:

  • Credit scores: rates were calculated based on the following credit tiers assigned to our base profile drivers: “poor, average, good (base), and excellent.” Insurance tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining auto insurance rates: CA, HI, MA.
  • Driving history: rates were calculated by evaluating our base profile with the following incidents applied: clean record (base), at-fault accident, single speeding ticket, and single DUI conviction.
  • Age: rates were calculated by evaluating our base profile with the ages 18-60 (base: 40 years) applied. For teen drivers, rates were determined by adding a 16- or 17-year-old teen to a 40-year-old married couple’s policy. The rates displayed reflect the added cost to the parents’ policy.
  • Gender: the following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, Pennsylvania.

These are sample rates and should only be used for comparative purposes.