How Much is Car Insurance? These Are the Average Costs

How Much is Car Insurance? These Are the Average Costs

Driving and owning a vehicle is a lot of fun. Whether enjoying a ride or washing and waxing, the pride of ownership is a largely gratifying experience.

But, like many of life's joys, it comes with a cost.

To keep your car in good running condition, you're required to use the correct grade of fuel and perform all scheduled maintenance. Monitoring wear and regularly rotating your tires ensures optimum handling through all road conditions. 

Then there are the mandatory administrative tasks needed to legally and safely drive anywhere you please, like registering your vehicle, paying applicable taxes, and taking out an auto insurance policy. 

But how much does car insurance cost? The cost of car insurance depends on many factors, some of which you control and others determined by specific regulations. 

Let's look at the average car insurance expense and find out what you can expect to pay.

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What is car insurance?

Auto insurance policies financially protect drivers when they're in a car accident or other incident. They cover both vehicle damage and bodily harm for the policyholder and, should they be at fault, liability coverage for any other parties involved. 

Not all auto insurance policies are alike, with different levels of coverage depending on the driver's background, individual plan choice, and locality all coming into play.

No matter where you live in the U.S., you're more than likely required to have an insurance policy for your vehicle. The exceptions are Florida, Massachusetts, New Hampshire, New Jersey, Texas, and Virginia, where differing regulations allow motorists additional options.

Drivers purchase policies with different auto insurance companies and pay either monthly or annually to maintain coverage. This expense is commonly known as an insurance premium. 

Once a driver obtains an auto insurance policy, they're issued an insurance card indicating its specific terms, customarily kept inside the vehicle in case of an accident. Though traditionally, a card shows proof of insurance, some companies offer electronic versions as of late. 

With all of the hazards and unknowns of everyday driving, it's essential to own a quality vehicle that keeps you safe. And when you're shopping for a used car, how can you know you're buying one in excellent condition? Every vehicle sold by Shift passes a 150-point inspection by certified mechanics and comes with a free Carfax report for ultimate transparency. And with best-in-industry service contracts, Shift keeps your vehicle running strong year after year.

What's the average car insurance cost?

As of 2021, the national average car insurance cost for full coverage is $1,592 per year or about $133 per month. For minimum levels of insurance coverage, the average car insurance cost is $565, or around $47 per month. 

However, these numbers are simply a reference. They probably won't be what you pay because insurance providers consider over a dozen different elements, like driving record, credit rating, age, gender, and location.

Average car insurance cost by driver

The most significant factor in determining auto insurance rates depends on the driver applying for coverage and their individual attributes. 

When determining the specific cost, car insurance companies look at an applicant's age, driving history, and credit rating. 

Older drivers pay significantly less for full coverage auto insurance, with a 60-year-old male driver owing an average of $1,552 per year versus an 18-year-old male driver, who pays $5,646 for the same period.

People with a clean driving record save money on their premiums because insurance carriers consider them less risky on the road. For example, when a motorist's at fault in an accident, their average insurance rate rises nearly $1,000 to an annual premium of $2,439 per year. The percentage increase varies from state to state, averaging 30-60 percent. However, if you live in Massachusetts, California, or North Carolina, expect to see a price hike of more than 70 percent.

However, this isn't always the case, as certain carriers offer accident forgiveness, or you might be eligible for insurance discounts. 

Credit score also plays a significant role in the average cost of auto insurance. Poor credit drivers with a clean driving record pay more than $1,000 more than the yearly average for good credit drivers, owing $2,812 for full coverage.

When you're looking for the best rate on auto insurance, it helps to shop around. Premiums differ significantly from company to company, as each weights certain factors using its own formula.

Once you've selected your insurance carrier and coverage, what about financing your purchase? Paying for your vehicle over the long term offers several benefits, like having extra money around for monthly expenses. Shift works with a network of trusted lenders, so you get the best rate on financing. It's easy to apply for financing with Shift, and there's no cost or obligation.

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Car insurance cost by vehicle

Different makes and models have unique driving performance, features, and styling, but they also differ in their car insurance costs.

When insurers view a make and model as safe and less likely to be in an accident, rates go down. 

With its excellent safety ratings and sure-footed all-wheel-drive traction, the Subaru Outback tops the list of insurer-friendly vehicles, with an average annual car insurance cost of $1,392.

However, some vehicles present additional risks and potential costs to insurers, like sports, luxury, and electric cars. 

With their excellent acceleration and handling, sports cars tend to be driven faster and are more likely to be involved in an accident. 

Luxury cars use expensive replacement parts, increasing the cost to insurers in case of repairs after an accident.

Electric cars use high-tech batteries that cost a significant amount to replace.

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Car insurance cost by state

Where you live plays an essential role in the average car insurance cost due to differing state regulations. In some states, average car insurance rates are as twice as costly as they are in others.

The state with the most expensive insurance rates is Louisiana, where drivers pay an average of $2,762 per year. But if you live in Maine, your average full coverage car insurance cost is less than half that, at $963.

When you're seeking minimum coverage, Michigan charges the highest amount, at an average of $1,128 per year. But Iowa charges less than a quarter of that, at $255 per year. 

The bottom line? You need auto insurance in case of an accident. But what about insurance against having second thoughts when you buy a used car? With our seven-day return policy, Shift offers you just that. When you buy a used vehicle from Shift, if you're unsatisfied for any reason, you can return it for a full refund within seven days, no questions asked.

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Average car insurance in summary

Remember, average car insurance rates vary widely due to multiple factors like driver attributes, state, vehicle, and more. 

But different insurers use specific formulas when tabulating car insurance premiums, so it can pay to shop around and see which one suits you best before you decide on an insurance provider and policy.

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Author
Shift Editorial Team