Car insurance cost in the USA?


If you're buying a new car or shopping for auto insurance, you'll likely need to understand the common types of coverage available on a car insurance policy. The various types of car insurance coverage are available to help protect you, your passengers and your vehicle if you're involved in a car accident.

Six common car insurance coverage options are: auto liability coverage, uninsured and underinsured motorist coverage, comprehensive coverage, collision coverage, medical payments coverage and personal injury protection. Depending on where you live, some of these coverages are mandatory and some are optional. Understanding what's required in your state and what each helps cover can help you choose the right coverage for your situation.

  1. Liability Coverage

Auto liability coverage is mandatory in most states. Drivers are legally required to purchase at least the minimum amount of liability coverage set by state law. Liability coverage has two components:

Bodily injury liability may help pay for costs related to another person's injuries if you cause an accident.
Property damage liability may help pay for damage you cause to another person's property while driving.

Learn more: What Is Auto Liability Insurance?

  1. Uninsured and Underinsured Motorist Coverage

If you're hit by a driver who doesn't have insurance, uninsured motorist coverage may help pay for your medical bills or, in some states, repairs to your vehicle. If you're hit by an underinsured driver, that means they have car insurance but their liability limits aren't enough to cover your resulting medical bills. That's where underinsured motorist coverage may help.

Uninsured and underinsured motorist coverage is required in some states and optional in other states.

Learn more: What Is Uninsured Motorist Coverage?

  1. Comprehensive Coverage

Comprehensive may help cover damage to your car from things like theft, fire, hail or vandalism. If your car is damaged by a covered peril, comprehensive coverage may help pay to repair or replace your vehicle (up to the vehicle's actual cash value). This coverage has a deductible, which is the amount you'll pay out of pocket before your insurer reimburses you for a covered claim.

Comprehensive is typically an optional coverage — but your lender may require it if you're leasing or paying off your vehicle.

Learn more: What Is Comprehensive Auto Insurance?

  1. Collision Coverage

If you're involved in an accident with another vehicle, or if you hit an object such as a fence, collision coverage may help pay to repair or replace your car (up to its actual cash value and minus your deductible).

Collision coverage is typically optional. It may be required, however, by your vehicle's leaseholder or lender.

Learn more: What is Collision Insurance?

  1. Medical Payments Coverage

If you, your passengers or family members who are driving the insured vehicle are injured in an accident, medical payments coverage may help pay for costs associated with the injuries. Covered costs may include hospital visits, surgery, X-rays and more.

Medical payments coverage is required in some states and optional in others.

Learn more: What Is Medical Payments Coverage?

  1. Personal Injury Protection

Personal injury protection, or PIP, is only available in some states. Like medical payments coverage, PIP may help pay for your medical expenses after an accident. In addition, PIP may also help cover other expenses incurred because of your injuries — for example, child care expenses or lost income.

Personal injury protection is required in some states and optional in other states where it's available.

Learn more: What Is No-Fault Insurance (Aka Personal Injury Protection Or PIP Insurance)?
Other Types Of Auto Insurance Coverage

You may be able to add the following optional coverages to your car insurance policy, depending on your situation. Your insurance agent can help you understand what each helps cover, so you can put together a policy that's right for you.

Rental reimbursement coverage/transportation expense coverage
Gap coverage
New car replacement coverage
Towing and labor cost coverage
Ride-sharing coverage
Sound system coverage
Classic car insurance

The different components of an auto insurance policy are available to help protect you and your vehicle. Need help understanding which coverages are required and optional in your state? Talk to a local agent.

Who Has the Cheapest Car Insurance?

USAA is the cheapest car insurance. However, not everyone qualifies for USAA. Did you know that there are several other affordable car insurance companies? Even if you do qualify for USAA, you should still shop around, and our analysis will show you how. You can also compare car insurance quotes now.

We did a thorough analysis of car insurance rates for drivers across the country to find the companies that offer the lowest rates in each state. Please be aware that the rates shown here are a simple average taken from representative driver profiles, so your rates may differ.

USAA is the cheapest car insurance company, and it offers the lowest car insurance rates in the country, according to our analysis. Our study shows an average rate of just $875 per year, which is a savings of about $225, or about 20%, compared to the next cheapest insurance company in our study. USAA has the lowest premiums for nearly every driver demographic we analyzed, and even when it wasn't the absolute cheapest, it wasn't much more expensive than its cheaper rival. That being said, USAA is only open to military members and individuals with a connection to the military, so not everyone can access these cheap rates.

Geico is the second-cheapest car insurance company, according to our analysis, with an annual rate of $1,100. That's quite a bit more expensive than USAA’s rate, but it's still around 17% cheaper than the national average ($1,321) in our analysis. Geico offers some of the lowest rates for nearly every driver demographic in our study, particularly when it comes to younger drivers. 

State Farm is the third-cheapest car insurance company in our study. With an annual rate of $1,169, State Farm is about 12% cheaper than the national average. According to our analysis, this insurer is a great option for people with less-than-stellar driving records. State Farm’s study rates are well below the national average for drivers with a speeding ticket or an accident, and was the cheapest in our study for drivers with a DUI.

Travelers is the fourth-cheapest car insurance company in our ranking of the cheapest insurers, with an average premium of $1,251. That’s a savings of about 5% compared to the national average. Of the drivers analyzed in our study, our analysis shows that rates from Travelers tend to be slightly below average, though there are a few exceptions to that rule.

Nationwide is the fifth-cheapest car insurance company in our study, with an annual rate of $1,284. It’s the last company in our cheapest car insurance rankings with an average rate that is less than the national average, though the savings are only about 3%. Nationwide comes in below or near the average for most drivers in the study, though it’s one of the more expensive options for drivers with a DUI.

Progressive is the sixth-cheapest car insurance company in our rankings. With a study rate of $1,334, it’s about 1% more expensive than the nationwide average. For most of the driver profiles in our study, Progressive’s rates are pretty close to average. However, Progressive is notably above average for 25-year-old drivers and drivers with one accident, and, on the flip side, is one of the cheapest companies in our study for drivers with a DUI.

American Family comes in seventh in our ranking of the cheapest car insurance companies for 2021. American Family’s average rate is $1,451, according to our analysis. That’s a considerable jump from Progressive’s rate, and it’s about 10% more than the national average. With this company, rates are higher than average for every demographic group we studied, with two notable exceptions: drivers with one accident and drivers with a DUI should consider American Family, because rates for these groups are below average.

Farmers is the eighth-cheapest car insurance company in our rankings. Its annual average rate of $1,635 is about 24% more than the national average, according to our analysis. For every driver demographic and archetype in our study, Farmers comes in above the national average, often by several hundred dollars or more.

Allstate is the most expensive car insurance company in our annual rankings, with an average annual rate of $1,788. That’s 35% higher than the national average determined by our study. Allstate is among the most expensive insurance companies for every driver archetype we studied, and is particularly expensive for 25-year-old drivers.

It's important to note that our data may not include all states in which each of these companies operate, and that your insurance premiums can vary by state. Even within the same state, you might find that rates change in different ZIP codes.
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How Much Is Car Insurance?

According to our study, the national average representative rate among nine of the largest car insurance companies in the country is $1,320. That being said, it's not possible to say exactly what it will cost you since insurers set rates using a wide range of personalized data.

To demonstrate how much car insurance rates can fluctuate, we'll look at how age or gender can affect the premiums in our study. Twenty-five-year-old men have the highest average rate in our study, at $1,554, followed closely by 25-year-old women, with an average of $1,487. The rates for 35-year-olds came in at $1,273 for women and $1,277 for men. The lowest nationwide average rates are for 60-year-old women, at $1,149, and 60-year-old men, at $1,182.

Your driving record is also a significant factor in your car insurance rates. The lowest average rate in our study is for drivers with a clean record, at $1,320. From there, there are significant increases in the average rate depending on the severity of the infraction. Our analysis determines that a single speeding ticket raises the average rate to $1,603, a single accident raises the average rate to $1,872, and a DUI raises the average rate to $2,111.

Credit score is another major factor in the cost of your car insurance. First, we took a look at the cost of car insurance for drivers with a good credit history, who have a national average of $1,310 across the major auto insurance companies in our study. With a fair credit score, the average study rate increases to $1,569, or an increase of about 20% over the driver with a good credit score. The average rate in our study for a driver with a poor credit score is $2,227, which represents a whopping 70% increase over the average for a driver with a good credit score. These numbers show that it’s clear that maintaining a good credit history is a key factor in finding the cheapest car insurance.

Note that some states do not allow insurance companies to use credit history as a factor in determining auto insurance rates, so data from California, Hawaii, and Massachusetts is not included in this section of our analysis.

The kind or amount of car insurance coverage you choose affects your rates, as well, so we took a look at how prices vary for different tiers of car insurance coverage. Drivers with a low level of coverage has an average study rate of $1,247. With medium coverage, that average rate goes up to $1,320, and with high coverage, it increases to $1,396.

While it may be tempting to save some money on your car insurance premiums by opting for lower coverage, not having enough coverage for your situation can be a costly mistake if you have to reach out to customer service to make a claim. The study rates for low and high coverage in our example show that more protection only costs about $12.50 more per month, which may be worth it for the additional peace of mind even if you don’t need to file a claim.

Read How Much Car Insurance Do I Need to find the right level of car insurance coverage for your situation.

Low coverage: The state minimum liability limits

Medium coverage

$50,000/$100,000 of coverage for:

Bodily injury liability

Uninsured motorist bodily injury liability 

Underinsured motorist bodily injury liability

$50,000 of coverage for:

Property damage liability

Uninsured motorist property damage liability

Underinsured motorist property damage liability

High coverage

$100,000/$300,000 of coverage for:

Bodily injury liability

Uninsured motorist bodily injury liability

Underinsured motorist bodily injury liability

$100,000 of coverage for:

Property damage liability

Uninsured motorist property damage liability

Underinsured motorist property damage liability

For more information, read What Is Uninsured Motorist Car Insurance? »
Cheapest Car Insurance For Good Drivers

The cheapest car insurance company for drivers with a clean record is USAA, at just $875 per year. However, USAA, which considers its customers members, is available only to people with a military affiliation. That means Geico, with its average study rate of $1,099, is the second-cheapest option for good drivers of the companies in our study, but may be the cheapest available to most consumers. You may read this and think that these rates sound a lot like the overall average rates mentioned above, and you would be correct. That is because we used good drivers as our baseline to get the average representative rates. This makes it possible to see how the study premiums change as we add a speeding ticket or accident, or give the profile a lower credit score.

Being a safe, experienced driver, and maintaining a driving record with no accidents or citations, is the best way to get cheap car insurance. Safe drivers are the kinds of clients car insurance providers want to have on their books because safe drivers are less likely to make a car insurance claim. As a result, they get charged lower rates than drivers with speeding tickets or accidents in their recent past.

Clean record

After a speeding ticket, you’ll likely see an increase in your car insurance rates.
Based on our study data, the average rate for drivers with a single speeding ticket is $1,603, an increase of about 21% compared to drivers with a clean record.

While all of the insurers in our analysis show increased rates for drivers with a speeding ticket, some companies raise rates much more than others. USAA is still the cheapest option for drivers with a speeding ticket, at $1,048, but State Farm raises rates the least (with an increase of $131, or 11% over State Farm’s rate for drivers with a clean record).

According to our study data, drivers with a speeding ticket will pay the highest rates with Farmers, at $2,047, and Allstate, at $2,034. However, Travelers and Progressive raised the rates the most, increasing premiums by 33% and 32%, respectively, over their average rates for drivers with a clean record.

$1,048.76
To find these average rates, we created driver profiles with one speeding violation. These driving record representative profiles were based on 25-, 35-, and 60-year-old men and women with 12,000 miles of driving per year, a medium level of insurance coverage, and a good credit score. Vehicles used in the analysis were the 2015 Honda Civic, 2015 Toyota RAV4, and 2015 Ford F-150.
How Does an Accident Impact Car Insurance Rates?

A car crash is also likely to cause an increase in your car insurance premiums.
Our study shows that the average rate amongst the major auto insurance companies in our study is $1,872, which is about 42% higher for drivers with one accident compared to drivers with a clean record.

For drivers with one accident, USAA is once again the cheapest option, at $1,219, according to our study. State Farm is the next cheapest option. State Farm’s rate for drivers with one accident is 20% more than State Farm’s rate for drivers with a clean record, which is one of the smallest such increases for this driver demographic.

At the high end, Allstate is the most expensive auto insurance company in our study for drivers with one accident, coming in at $2,514, or 41% more than Allstate’s average rate for a driver with a clean record. However, Progressive has the highest increase in rates for drivers with an accident, skyrocketing to $2,236, an increase of about 68% compared to a Progressive customer with a clean record. In fact, Progressive is one of the two companies in our study, along with Farmers, that penalize drivers more for an accident than for a DUI.

Getting a DUI is just about the worst thing you can do if you want to keep your auto insurance premiums low.
Our analysis found an average rate of $2,111 across the companies in our study, which represents an average increase of about 60% for drivers with a DUI over drivers with a clean record.

For drivers with a DUI, our study shows that State Farm comes in as the cheapest option, at $1,568. This is a rare scenario in which USAA isn’t the cheapest, though it isn't far behind, with a rate of $1,661. However, that rate represents an increase of 90% over USAA’s rate for a clean record, so though it’s one of the cheapest options, it helps illustrate how much a driver can be penalized. American Family has the smallest increase in rates for a driver with a DUI in our study, charging about 18% more than the rate for a driver with a clean record, coming to $1,715.

Geico is the most expensive of all for this driver demographic, according to the study, with a premium of $2,836. This is a penalty of 158% over Geico’s average rate for drivers with a clean record. Allstate and Nationwide also have high rates for this group, at $2,624 and $2,559, respectively. That comes to increases of 47% and 99% compared to Allstate and Nationwide’s rates in our study for drivers with a clean record.

$1,661.42
To find these average rates, we created driver profiles with one driving under the influence (DUI) conviction. These driving record representative profiles were based on 25-, 35-, and 60-year-old men and women with 12,000 miles of driving per year, a medium level of insurance coverage, and a good credit score. Vehicles used in the analysis were the 2015 Honda Civic, 2015 Toyota RAV4, and 2015 Ford F-150.
How Does a Bad Credit Score Impact Car Insurance Rates?

Our analysis shows that a bad credit score impacts car insurance rates almost as much as getting a DUI.
In our study, drivers with a poor credit score have average premiums of $2,227. That’s an average of 70% more than rates for drivers with good credit, which have an average rate of $1,310.

USAA is the cheapest car insurance company in our study for drivers with a bad credit history, with an average rate of $1,602. However, it should be noted that this is an increase of 86% compared to USAA’s rate for drivers with a good credit score, and that’s one of the highest penalties for poor credit among all the companies we studied. Other good choices for drivers with poor credit are Geico and Nationwide, coming in at $1,718 and $1,776, respectively. These rates also represent some of the lowest penalties in our study for having a poor credit rating, 56% and 41% over Geico and Nationwide’s average rates for good credit.

Our study shows that drivers with poor credit should avoid State Farm and Allstate. State Farm is the most expensive of the companies in our analysis, coming in with an average of $2,802. That’s a whopping 141% increase over State Farm’s study rate for drivers with good credit. Allstate has the second-highest rate for this driver demographic, $2,773, though since Allstate’s rates are pretty high across the board, that’s only about 54% higher than the company’s rate for drivers with good credit in our analysis.

Note that insurers do not consider credit score in factoring rates in California, Hawaii, and Massachusetts, so that data was omitted from this part of our study analysis.

$1,602.45
To find these average rates, we created driver profiles with poor credit. We used men and women aged 25 years, 35 years, and 60 years. The profiles have a clean driving record, a medium level of insurance coverage, and 12,000 miles of annual driving. The 2015 Honda Civic, 2015 Toyota RAV4, and 2015 Ford F-150 are the vehicles used in our analysis.
Why Does Car Insurance Cost So Much?

Car insurance is expensive because car crashes are expensive. The National Highway Traffic Safety Administration reports that in 2010, the most recent year with available data, motor vehicle crashes in the U.S. cost the economy $242 billion in lost productivity, health care costs, emergency services, legal costs, and property damages. A good chunk of those costs is paid for by insurance companies. To stay in business, insurers need to take in more in premiums than they pay out in claims. That’s how car insurance works.

Car insurance companies set their rates based on a number of factors that evaluate whether a customer or potential customer is likely to make a claim. The ideal customer for a car insurance company is an experienced, safe driver who lives in an area with little congestion, crime, or risk of natural disaster, who drives a car that’s inexpensive to fix, and who doesn’t drive all that much. That customer is likely to pay premiums for years without ever having an expensive claim, and the insurance company will make a profit.

Because where you live can affect your risk of an accident, it’s another factor car insurance companies consider when calculating your rates. If you live in an area with a lot of crime and traffic, you can expect to pay more for insurance. Also, different states have different requirements for car insurance, which can drive up costs.



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