by Getting car insurance is an important part of owning and driving a vehicle. But how much should you expect to budget for car insurance each month? The cost of car insurance can vary quite a bit depending on your location, driving history, age, vehicle, and other factors. Here’s a detailed look at how much car insurance costs per month on average and what goes into determining your rate.
Introduction
Car insurance provides important financial protection in case you are involved in an accident. It covers injuries to yourself and passengers as well as repairs to your vehicle. It’s required in most states and is a worthwhile investment to protect your assets.
When getting a car insurance policy, one of the first things you’ll want to know is how much it will cost on a monthly basis. Car insurance rates can range quite a bit from person to person and situation to situation. The national average for full coverage car insurance is around $100-$250 per month, but your specific rate depends on where you live, your age and gender, the type of vehicle you drive, and other factors like your driving record and credit score.
Understanding what goes into determining your car insurance premium and learning ways to keep your monthly cost low can help you budget for this important expense. In this comprehensive guide, we’ll break down exactly how much car insurance costs per month on average, what factors impact your rate, and tips for getting the best deal.
What Impacts Your Monthly Car Insurance Cost
Car insurance rates are based on actuarial data and calculated according to your risk profile. Insurance companies look at various categories of risk factors to estimate how likely you are to file a claim. The higher the chance of you costing the insurer money, the more you will pay in premiums.
Here are some of the main factors that impact your car insurance rate:
Location – Your zip code and city have a major impact on your premium. Insurance rates are higher in areas with more accidents, thefts and claims. Urban areas also tend to have higher rates than rural areas.
Driving Record – Your driving history is a big factor in your rate calculation. Getting tickets, accidents and DUI’s on your record will increase your premium substantially. Keeping a clean driving record saves a lot of money.
Age – Young drivers under 25 are statistically more likely to get into accidents. As such, teens and young adults pay the highest car insurance rates. Premiums start decreasing around age 25 when drivers have more experience behind the wheel.
Credit Score – Statistics show a correlation between poor credit and filing insurance claims. Having good credit can lower your premiums substantially in most states.
Vehicle Type – Insuring a sports car, luxury vehicle or SUV costs more than insuring an economy sedan. Collision and comprehensive coverage are more expensive for new cars and vehicles with high repair costs.
Driving Habits – Things like your annual mileage and commute distance also factor into your rate calculation. The more you drive, the more exposure you have to accidents.
Gender – Statistically, male drivers – especially young ones – have more high-risk driving behaviors. Men pay more on average for car insurance than women.
Marital Status – Married people tend to have fewer accidents than single people, so your spouse can help lower your rate if you tie the knot.
Coverage Limits – Higher liability coverage limits cost more per month but also give you more protection. Likewise, adding comprehensive and collision raises your rate but reduces risk. Minimum state requirements are cheapest.
All of these different risk metrics are used by insurance companies to project your likelihood of a claim. By maintaining a positive risk profile, you can land discounts to reduce your monthly premium.
Average Cost of Car Insurance Per Month
According to 2020 stats from the National Association of Insurance Commissioners, the average annual expenditure on car insurance in the U.S. was $1,244 per vehicle. That comes out to about $104 per month.
However, that’s just a broad national average that doesn’t reflect differences across states, age groups and other individual factors. The amount that any given driver pays can vary quite a bit from the average based on their specific risk metrics.
For example, a married 35-year old with a good driving record will pay significantly less than a single 25-year old with speeding tickets. Here are some averages that give a clearer picture based on demographics:
- Average for minimum coverage: $68 per month
- Average for full coverage: $150 per month
- Average for drivers under 25: $239 per month
- Average for drivers over 60: $78 per month
According to insurance industry data, rates for full coverage average around $150 per month but can range from as low as $100 up to $300 depending on your risk profile and other factors.
Carrying just minimum liability insurance provides the lowest average rates at around $68 per month. But minimum coverage has its drawbacks, like having no protection for your own vehicle’s repairs.
For high-risk drivers like teens and those with accidents or tickets, average rates are upwards of $200-300 per month. Safer drivers in their 50s and 60s enjoy the lowest average rates.
But these are just broad averages. Let’s look further at rate differences between states, cities and key demographics.
Factors That Increase Your Car Insurance Costs
On the flip side, there are a variety of factors that can increase your car insurance rates and monthly premiums. Being aware of these risk factors allows you to avoid them when possible to keep rates low.
Here are some key things that tend to raise your insurance costs:
- Young driver under 25 years old
- Poor credit score
- Lapse in auto insurance coverage
- Speeding tickets and other violations
- At-fault accidents
- High-risk vehicle like a sports car or SUV
- Aftermarket modifications to your vehicle
- Moving to a city with higher accident rates
- Low policy deductibles
- Poor driving habits like frequent hard braking
Teenage drivers unfortunately bear the brunt of the highest car insurance costs, with average monthly premiums over $200. A speeding ticket can hike your rates 25% or more for 3-5 years. At-fault accidents also bump up your premium for 3 years or longer.
The good news is that insurers reward safer driving habits over time. Insurance becomes much more affordable as you grow older and maintain a clean record. Plus, there are proactive steps you can take to offset risk factors and find discounts.
Discounts to Lower Your Monthly Premium
The best way to reduce your car insurance rates is to improve your overall risk profile. But in addition to being a safe driver, there are some common discounts you can take advantage of to lower your monthly premium:
- Good driver discount – For going 3 years with no accidents, DUIs or serious violations
- Defensive driver discount – For taking an approved safe driving course
- Good student discount – For teens/college students with a B average or higher
- Multi-policy discount – For bundling home and auto insurance together
- Anti-theft discount – For having a car alarm or other anti-theft tech
- Low mileage discount – Document low annual mileage to be charged less
- Advance shopper discount – For getting free quotes before your policy renews
Taking advantage of every discount possible is a quick way to save 10-20% or more each month. But maximum savings comes from having an overall positive risk profile.
How Deductibles Affect Monthly Cost
When getting quotes for car insurance, you’ll notice that rates are presented with different deductible amounts. The deductible is what you pay out-of-pocket when you file a covered claim before insurance picks up the rest of the tab.
Higher deductibles equal lower monthly premiums, and vice versa. However, you take on more financial risk with a high deductible.
Here’s an example of how deductibles impact monthly insurance rates for a 30 year old driver:
| Deductible | Monthly Premium |
|-|-|
| $500 | $210 |
| $1,000 | $185 |
| $2,000 | $159 |
As shown, raising the deductible from $500 to $2,000 saves about $50 per month. But it also means you’ll pay more out-of-pocket for repairs before insurance kicks in.
Choosing the right deductible amount involves trade-offs between savings and financial risk tolerance. Just know that higher deductibles translate to lower monthly costs.
Average Rates by Age and Gender
Two major factors that impact car insurance rates are your age and gender. Teen drivers pay exorbitantly more than experienced drivers in their 50s and 60s. And statistically, young males have more accidents which bumps up their premiums.
Here’s a look at how average monthly car insurance rates differ by age and gender, according to 2021 data compiled by NerdWallet:
Average Monthly Rates for Men
- 16-19 years old – $592
- 20-24 years old – $269
- 25-34 years old – $150
- 35-54 years old – $119
- 55-64 years old – $106
- 65+ years old – $98
Average Monthly Rates for Women
- 16-19 years old – $540
- 20-24 years old – $246
- 25-34 years old – $140
- 35-54 years old – $111
- 55-64 years old – $103
- 65+ years old – $95
As the data shows, teens pay exorbitant rates over $500 per month on average. But costs quickly decrease for both men and women drivers as they enter their 20s, 30s and beyond. Gender equality in rates is achieved around age 25.
So young drivers should expect sky-high premiums that will steadily decrease year after year as long as they maintain a clean driving record.
Average Rates by Location
Your location has a huge impact on car insurance rates since accident frequency, repair costs, and litigation rates vary enormously across states and cities. Drivers in relatively safe and stable regions enjoy lower premiums, while accident-prone metro areas cost more to insure.
Here are the average monthly car insurance rates by location according to 2021 data fromQuadrant Information Services:
State Averages
- Maine – $100
- New Hampshire – $105
- Ohio – $105
- Idaho – $107
- Iowa – $110
Most Expensive Cities
- Detroit, MI – $231
- New Orleans, LA – $204
- Los Angeles, CA – $187
- Miami, FL – $172
- San Francisco, CA – $166
Least Expensive Cities
- Winston-Salem, NC – $94
- Greensboro, NC – $96
- Buffalo, NY – $100
- Providence, RI – $100
- Virginia Beach, VA – $105
When comparing average rates by state, Maine has the lowest at around $100 per month while Louisiana has the highest at over $160. Among major metro areas, Detroit tops the list with an average monthly premium of $231 versus just $94 per month in Winston-Salem.
So even within the same state, costs can vary dramatically between rural and urban zones. Always compare quotes for your specific city and zip code.
How Much Does Minimum Coverage Cost?
Each state has minimum liability coverage requirements to legally operate a vehicle. Opting just for the minimum insurance saves money on premiums but leaves you exposed to high out-of-pocket costs.
Here are the average monthly rates for minimum coverage by age, according to 2021 data from NerdWallet:
- Teen drivers: $224
- 20-year-olds: $158
- 30-year-olds: $88
- 40-year-olds: $78
- 50-year-olds: $72
Minimum liability insurance covers just damage and injuries you cause to others, providing nothing for your own vehicle. While temps monthly premiums around $75, you’ll pay thousands out-of-pocket if your car is damaged.
Minimum state requirements should be considered a baseline that needs supplemental coverage for things like comprehensive and uninsured motorist.
Cost Differences Between Full and Minimum Coverage
Here’s a look at how average monthly rates compare for full coverage versus minimum coverage by age:
| Age | Minimum | Full Coverage |
|-|-|-|
| 16 | $225 | $808 |
| 20 | $158 | $378 |
| 30 | $88 | $140 |
| 40 | $78 | $119 |
| 50 | $72 | $110 |
Full coverage includes collision and comprehensive which covers damage to your own vehicle. Naturally, full coverage costs more per month across all age groups – about 2-3x as much as minimum liability.
But for most drivers, the extra peace of mind and financial protection of full coverage makes it well worth the additional premium cost. The difference narrows significantly for experienced drivers in their 30s and up.
How Violations Affect Your Insurance Rates
Driving violations like speeding tickets, DUIs and at-fault accidents result in insurance premium hikes that can endure for years. Here’s a look at how common violations impact monthly insurance rates according to 2021 data from NerdWallet:
- Speeding ticket – Hikes monthly premiums by 15% on average
- At-fault accident – Increases monthly premiums by 29%
- DUI – Doubles monthly premiums on average
- Talking on phone ticket – Raises rates 16% per month
So for example, a driver paying $100 per month would see their premium rise to $130 after a speeding ticket and up to $200 per month following a DUI.
In most cases, violations stay on your record for 3-5 years, prolonging their rate-increasing effects. Maintaining a clean driving history is the best way to ensure affordable rates.
How Insurance Rates Change Over Time
For new teen drivers, car insurance sticker shock is understandable given their high rates. But here’s some good news – those rates come down quickly as you gain experience and age.
According to 2021 data from NerdWallet, here’s how monthly premiums decline over your first 10 years of driving if you maintain a clean record:
- Age 16 – $592 per month
- Age 20 – $269 per month
- Age 25 – $150 per month
- Age 30 – $140 per month
For teens, each year brings a 10% drop in rates on average. So premiums get cut in half by your early 20s. The declines continue in your late 20s into 30s, just at a slower pace.
The moral of the story is enduring high rates as a new driver pays dividends down the road as your risk profile improves.
How to Get Your Lowest Car Insurance Rate
The cost of car insurance is determined by balancing all those risk metrics we discussed like your age, vehicle type, and driving record. The best rates go to those with the most positive risk profiles.
Here are some top ways you can actively reduce your insurance premium:
- Shop around – Compare quotes from at least 3 insurance providers
- Ask for discounts – Inquire about every available discount like multi-policy and good student
- Take a defensive driving course – Can make you eligible for a significant discount
- Raise deductibles – Opt for higher deductibles like $1000 to lower monthly costs
- Improve credit – Having good credit saves you 10% or more in many states
- Insure all vehicles together – multi-vehicle policies get discounts
- Reduce mileage – Choosing lower annual mileage lowers some rate factors
- Drop unnecessary coverage – If your car is paid off, consider dropping collision
Finding the best deal takes some effort, but can easily save you $50+ per month compared to just automatically renewing coverage. The savings add up quickly, making a lowered rate well worth your time.
How to Choose the Right Car Insurance Coverage
Beyond finding an affordable monthly premium, it’s important choose adequate coverage limits and optional add-ons to protect yourself from unexpected losses.
Here are some tips for choosing the right insurance coverage:
- Match liability limits to your net worth – 100/300/100 minimum
- Get guaranteed replacement cost coverage for your vehicle
- Add gap coverage if your car is new and/or financed
- Include rideshare coverage if you drive for Uber/Lyft
- Pick small collision/comprehensive deductibles you can afford
- Get rental reimbursement and roadside assistance
- Consider an umbrella policy for extra liability coverage
Choosing the right amount of coverage involves balancing premium costs with your level of risk tolerance. Going above state minimums provides better protection and peace of mind.
How to Lower Rates for Teen Drivers
Insuring a teenager is painfully expensive, easily costing $200+ per month. But there are a few discounts to help lower costs:
- Put your teen on your policy – Family plans cost less
- Pick the safest vehicle for your teen to drive
- Ask about good student discounts for B averages
- Have your teen take driver’s ed and defensive driving
- Start them with 100% minimum liability coverage
- Shop aggressively since teen rates vary greatly by insurer
- Consider usage-based policies with teen monitoring programs
Having your teenager share your family policy can save hundreds of dollars over the course of their first few years driving. Minimizing risks also keeps their costs as low as possible.
Why Car Insurance Rates Go Down as You Age
Premiums drop as you enter your 20s, 30s and beyond because you become a lower statistical risk for accidents and claims. Here’s why insurers reward experience:
- Develop better driving skills and habits
- Tend to purchase safer vehicles
- Have fewer tickets and claims on record
- Earn access to low-mileage and long-term customer discounts
- Attain higher financial stability
- Cost less to repair and insure their vehicles
- Less likely to engage in drunk or distracted driving
- Overall more cautious and risk-averse behind the wheel
Maturing as a driver pays dividends in the form of lower and lower car insurance costs year after year. Maintaining a perfect driving record expedites those declining rates.
Tips for Lowering Car Insurance Costs
Here are some additional tips for saving money on your car insurance.
Conclusion
Car insurance is a significant expense for most drivers, but the monthly costs can vary greatly depending on your personal risk profile. While the national average is around $100-$150 per month, rates for individuals can range from as low as $50 up to $300+ based on factors like age, driving record, and location.
Teen drivers face painfully high rates over $200 per month on average, but premiums quickly decrease annually into your 20s and beyond if you maintain a clean driving record. Statistically, women and married drivers also enjoy lower average premiums. Certain violations like at-fault accidents and DUIs can nearly double your monthly rates for 3-5 years.
Shopping around, improving your credit, raising deductibles, and qualifying for discounts are great ways to lower your car insurance costs. But the very best rates go to safe drivers with accident-free records. Building up years of clean driving saves you thousands in insurance over time. While rates seem unfairly high for new teen drivers, being a cautious and responsible motorist pays off over the long run through significant savings.
Overall, understanding all the variables that go into determining premiums allows you to minimize those risk factors and make smart choices about coverage. Comparing quotes and policies takes a bit of effort, but can save you hundreds of dollars per year on your car insurance.
