Annual Report
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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AVERAGE ANNUAL PREMIUM
$2,014for full coverage insurance
PERCENT OF INCOME SPENT
2.93%on full coverage insurance
HIGHEST TRUE COST
New Yorkhighest percentage of income spent on car insurance
LOWEST TRUE COST
Mainelowest percentage of income spent on car insurance
Highlights
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.
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How much do Americans pay for auto insurance?
Average annual premium
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Percent of income spent
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Change of percentage of income spent vs 2022
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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.
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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.
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.
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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.
About this report
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Meet the author
Meet the editor
Maggie Kempken
Senior Editor, Insurance
Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand.
Methodology
Bankrate utilizes Quadrant Information Services to analyze 2023 rates for ZIP codes and carriers in all 50 states and Washington, D.C. Rates are estimates and weighted based on the population density in each geographic region. 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
Our base profile drivers own a 2021 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
ZIP codes: Premiums for each state and metro were calculated by evaluating rates across a representative list of ZIP codes for each metro statistical area and state. ZIP codes used vary from year to year to account for population density changes.
Credit-based insurance scores: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” For ‘credit score decreased,’ rates were assessed when the drivers’ score went from ‘good’ to ‘poor.’ Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit or restrict the use of credit-based insurance scores as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts, and Michigan. In Michigan, insurers are allowed to use information that contributes to your credit score but not the score itself.
Incidents: Rates were calculated by evaluating our base profile with the following incidents applied: clean record (base), at-fault accident, single speeding ticket, single DUI conviction and lapse in coverage.
Model: To determine cost by vehicle type, we evaluated our base profile with the following vehicles applied: BMW 330i, Ford F-150, Honda Odyssey, Toyota Prius and Toyota Camry (base).
Gender: The following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, North Carolina, Pennsylvania.
Teens: Rates were determined by adding a 16-year-old teen to a 40-year-old married couple’s policy. Age is not a contributing rating factor in Hawaii and Massachusetts due to state regulations, although Massachusetts allows insurers to use a driver’s years of driving experience.
Income data: Average annual income data was calculated using 2021 data, the most recent available, provided by the U.S. Census Bureau.