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The true cost of auto insurance in 2023

The true cost of car insurance is the percentage of average household income spent on an annual full coverage car insurance policy. Nationally, full coverage car insurance costs an average of $2,014 per year. The national average annual income is $68,852, according to data from the U.S. Census Bureau. This means that, nationally, drivers spend an average of 2.93 percent of their income on car insurance in 2023. This is up from 2.57 percent in 2022, which is no surprise, given the rapid inflation the country experienced last year.

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New York




Nationally, drivers spend nearly 3 percent of their annual income insuring their cars on average. Drivers in New York, which has the highest true cost of auto insurance in the country according to our study, spend even more, doling out more than 5 percent of their annual income to insure their cars. Maine drivers, who enjoy the lowest true cost of car insurance in 2023, spend just over 1 percent of their income on car insurance.
Number 1

How much do Americans pay for auto insurance?

Explore the true cost of auto insurance in all 50 states and the top 25 metro statistical areas (MSAs). True cost rankings are determined by the average total percentage of income spent on car insurance and not average premiums. The higher the ranking, the higher the true cost of car insurance.
The interactive map above and the table below can help you explore average car insurance rates across the country, as well as the proportion of income drivers spend on auto insurance in each state and metro area. Bankrate’s insurance editorial team, which includes three licensed insurance agents, assigned a True Cost ranking to each state and the top 25 metros in the country based on the varying average car insurance rates and income levels in each area. The higher the ranking, the higher the percentage of average income spent on a full coverage car insurance policy. This information may help you understand if your car insurance rate is competitive for your area.

The true cost of auto insurance in 2023 by state

State True Cost ranking Average annual premium Premium change vs. 2022
Alabama 31 $1,843 $83
Alaska 46 $1,946 $260
Arizona 15 $1,810 $67
Arkansas 23 $1,907 $101
California 32 $2,291 $101
Colorado 37 $2,121 $102
Connecticut 5 $1,553 $20
Delaware 42 $2,103 $140
Florida 49 $3,183 $421
Georgia 24 $2,085 $100
Hawaii 10 $1,275 $69
Idaho 4 $1,133 $68
Illinois 34 $1,806 $258
Indiana 8 $1,295 $53
Iowa 9 $1,315 $61
Kansas 41 $1,878 $76
Kentucky 47 $2,124 $170
Louisiana 48 $2,909 $45
Maine 1 $941 $65
Maryland 17 $1,971 $40
Massachusetts 11 $1,262 $-34
Michigan 44 $2,691 $346
Minnesota 45 $1,760 $68
Mississippi 33 $1,771 $70
Missouri 40 $1,943 $82
Montana 36 $1,889 $94
Nebraska 26 $1,624 $86
Nevada 43 $2,779 $353
New Hampshire 3 $1,262 $80
New Jersey 38 $1,754 $-137
New Mexico 12 $1,591 $102
New York 50 $3,139 $143
North Carolina 19 $1,446 $54
North Dakota 14 $1,302 $77
Ohio 20 $1,266 $66
Oklahoma 35 $1,998 $96
Oregon 13 $1,415 $44
Pennsylvania 29 $2,040 $38
Rhode Island 39 $1,886 $39
South Carolina 25 $1,532 $68
South Dakota 28 $1,553 $11
Tennessee 16 $1,429 $46
Texas 27 $2,019 $151
Utah 18 $1,510 $61
Vermont 2 $1,061 $61
Virginia 6 $1,439 $99
Washington 30 $1,410 $97
West Virginia 22 $1,580 $53
Wisconsin 7 $1,292 $43
Wyoming 21 $1,582 $72
New York has the highest True Cost ranking, with an average of 5.05 percent of drivers’ income spent on car insurance, while Maine has the lowest ranking, with drivers only spending 1.03 percent of their income on car insurance. New York’s average annual premium, $3,139, is well above the national average of $2,014, likely due in part to the crowded roads in the state. More vehicles on the road increases the risk of accidents, and thus the risk to insurers, which charge a higher rate to compensate. Maine, which is a far less densely populated state, has an average full coverage premium of $941, which is 53 percent lower than the national average.
Of the MSAs that we analyzed — the 25 largest in the country by population — Detroit drivers pay the highest percentage of income toward car insurance at 7.62 percent. Seattle drivers pay the lowest percentage at 1.41 percent. Drivers in Seattle benefit from a fairly high average income as well as a below-average full coverage car insurance rate. Conversely, Detroit has a much higher-than-average rate combined with an average income slightly below the national average.
While your location plays a large role in your car insurance rate, it isn’t the only factor that affects your premium. Life events — including adding a teen driver, getting a speeding ticket or experiencing a drop in your credit score — can also change how much you pay for insurance.

2022 vs. 2023

Alaskan drivers saw the biggest increase in percent of income spent on car insurance between 2022 and 2023. Drivers in Alaska spent an average of 2.17 percent of their income on car insurance in 2022 and 3.66 percent in 2023, an increase of 1.49 percentage points. Arkansas drivers had the largest decrease in income spent, dropping from 3.40 percent in 2022 to 2.40 percent in 2023.
However, when looking at pure full coverage premium changes, Illinois had the largest increase, going from $1,548 in 2022 to $1,806 in 2023, a change of 16.67 percent. Alaska’s premium increase was close behind, increasing 15.42 percent from $1,686 to $1,946. New Jersey drivers saw average rates decrease by 7.24 percent, from $1,891 to $1,754. Massachusetts drivers had the second-most-impactful average rate decrease, with rates dropping 2.62 percent, from $1,296 to $1,262.
Number 2

Factors that impact the cost of your car insurance

Car insurance in the United States costs an average of $2,014 per year. Coupled with an average income of $68,852, this means that the average American spends 2.93 percent of their income on a full coverage car insurance policy. That percentage is increasing, too. In 2022, the average premium was $1,771, which means car insurance rates increased 13.72 percent between 2022 and 2023.
The rate you pay for car insurance varies based on your personal rating factors, though, and is likely to differ from the national, state and metro averages. Your city, state, and ZIP code; driving record; credit score; the ages of the drivers on your policy and your vehicle type may also affect how much you pay for coverage in most states.
Auto Car Guides
Your driving record
Driving incident Average annual premium % of income spent
Clean driving record $2,014 2.93%
Lapse in coverage $2,213 3.21%
Speeding $2,427 3.52%
At-fault accident $3.901 4.15%
DUI $3,421 5.67%
*Premium listed for full coverage policies

Your location

Your state and city play an important role in determining your car insurance rates, and in most places, even your location within your city affects your premium. Different areas of the country have different risks that affect insurance rates. For example, the risk of a vehicle being stolen may be higher in an urban area, which could increase how much you pay for comprehensive coverage on your policy. Rural areas tend to have fewer vehicles on the road, decreasing the risk of crashes, which might reduce the cost of several coverage types within an insurance policy. 
Moving within your state can cause serious swings in your car insurance premium. Drivers in San Francisco, CA spend an average of 2.10 percent of their income on full coverage car insurance, while drivers in Los Angeles spend 3.33 percent of their income on the same coverage. While most people aren’t likely to choose a location based on average insurance rates, understanding how your location impacts your premium might help you prepare your budget if you relocate.

Your driving record

One of the biggest factors to affect your car insurance rate is your driving record. A history of lapses in coverage, speeding ticket or other moving violation convictions, at-fault accidents or a DUI conviction may flag you as a high-risk driver. For example, nationally, an at-fault accident increases full coverage car insurance by $840 per year.
Standout statistics:
  • Hawaii drivers have the smallest surcharge in premium after a speeding ticket conviction, only paying an average of $126 more per year.
  • Drivers in California pay the highest added cost after a single at-fault accident, with the average full coverage rate increasing $1,498 per year to an average of $3,798.
  • After a DUI conviction, Michigan drivers see an average premium increase of 173 percent, the highest in the nation, with full coverage rates jumping from $2,691 to $7,337 per year.

Your credit score

In most states, your credit score impacts your rates. Drivers with lower credit scores are statistically more likely to file claims, which leads to higher rates. Nationally, drivers with excellent credit pay about 49 percent less than drivers with poor credit. However, California, Hawaii and Massachusetts prohibit credit as a rating factor. In these states, your credit score should not affect your premium. Michigan bars the use of credit scores themselves, but it does allow insurers to use information that illustrates an individual's creditworthiness. 
Standout statistics:
  • Wisconsin drivers have the highest premium increase when facing a drop from good credit to poor credit, with a premium hike of $4,339 more per year.
  • New York drivers with poor credit pay an average premium of $7,186, the highest in the nation.
  • Washington drivers only pay an average of $58 more per year when their credit drops from good to poor. However, this low number is likely due to Washington previously having a temporary ban on credit as a rating factor that was overturned in 2022.

Adding a teen driver

Teen drivers don’t have much experience behind the wheel, which means they are more likely than any other age group to get into accidents. This increased risk generally comes with an increase in premium. Nationally, full coverage costs $4,392 per year for a policy with two adult drivers and one 16-year-old, all with clean driving records. This means that getting married and adding a teen driver results in an average increase of $2,378 over the national average of $2,014. However, Hawaii and Massachusetts prohibit the use of age as a rating factor. Massachusetts does allow insurers to use a driver’s years of driving experience as a rating factor, though. Because teens generally have fewer years of experience than older drivers, Massachusetts’ rates still vary for young drivers. 
Standout statistics:
  • New York has both the highest average premium after getting married and adding a teen driver ($6,808) and the highest average increase ($3,669 increase versus the state average).
  • Among the states where age is allowed as an auto insurance rating factor, drivers in South Dakota see the smallest full coverage premium jump when adding a teen driver to their married parents' policy. Parents pay an average of $1,135 per year to insure a teen driver. 

What vehicle you choose

Finally, the make and model of the vehicle you drive significantly impacts your premium. However, the ways in which your vehicle choice impacts your rate are complex.
Typically, vehicles that cost more to repair or replace will cost more to insure. Luxury vehicles, sports vehicles and vehicles with higher-end finishes are likely to cost more to insure than more standard vehicle types. A BMW330i has an average annual premium that is $780 more than that of a Honda Odyssey, for example.
However, some features may make a vehicle more expensive but could lower the cost of certain coverage types. For example, advanced safety technology like automatic braking may add to the cost to repair or replace a vehicle but could also make collisions much less likely. In this scenario, you may notice that you pay less for your liability coverage — which pays for the damages you cause to others — but more for your comprehensive and collision coverage. This setup may reflect the fact that you could be less likely to get into an accident, but your vehicle would be more costly to repair if you were.
Number 3

The current and future state of auto insurance

The auto insurance industry is evolving rapidly. Inflation, the rise of electric vehicles and shifting car insurance laws are all changing how policies are rated and how coverage functions.
Rates will likely keep rising in 2023

Inflation was a hot topic in 2022, and with good reason. Most households felt the effects of rising costs and the fear of an impending recession. Recessions can affect car insurance, as well, so understanding how the economy impacts insurance may help you prepare if we do slip into an economic downturn.
Assistant Vice President of State Affairs for National Association of Mutual Insurance Companies (NAMIC) Jon Schnautz told Bankrate that “inflation is manifesting in the cost of repair parts, labor and medical care. These inflationary pressures are further exacerbated by the increased frequency and severity of crashes, accompanied by record levels of personal injury judgments and vehicle thefts.”
These factors combined cause claims costs to rise, which means insurance companies are raising rates to help ensure they can pay those claims. But car insurance rate increases are reactionary, meaning they are a bit delayed when compared to other rising costs. When claim prices rise, an insurer must submit new rates to the department of insurance in each state where it operates and wait for approval before increasing prices. This means that, even though inflation is starting to cool, rates likely won’t go back down in 2023.

Correction: A previous version of the 2023 True Cost of Auto Insurance report listed different average annual premiums for Detroit, Philadelphia, Phoenix, Riverside/San Bernardino and Boston. The premiums for these metro statistical areas have been updated to address data anomalies.