Car insurance rates rose more than 25% in February 2024, according to data from Bankrate. Premiums for full coverage auto insurance averaged $2,543, a 26% increase from the same time in 2023.
Nationwide, drivers spent an average of 3.41% of their income on car insurance premiums. In some states, though, it was a lot more: Insurance at up 4.91% in Nevada, 5.01% in Michigan and 5.69% in Florida,
Louisiana motorists with full coverage spent 6.53% of their paycheck on insurance, the largest chunk of any state.
Unsurprisingly, consumers. are looking for ways to save: Nearly half (49%) of drivers are actively shopping for a new plan, according to a J.D. Power survey from April.
How much is car insurance?
The average cost of a full-coverage car insurance policy hit $2,543 in February 2024, or $212 per month. A minimum coverage policy averaged $740 per year, or about $62 per month.
By October 2024, full coverage had tapered off to $2,388 per year (a little less than $600 a month) and minimum coverage was $664 (about $55 a month).
Why is car insurance so expensive?
Premiums increased throughout 2023 and 2024 for several reasons, according to the Insurance Information Institute.
- Inflation: The cost of repairing and replacing vehicles — and paying medical and legal bills — has risen even faster than inflation, according to the Institute.
- Cars are more expensive to repair: As car technology has increased, it's made repairing or replacing a car more costly.
- Accidents are on the rise: The number and severity of collisions have gone up, according to the Insurance Institute for Highway Safety, including fatal crashes. That means larger payouts from insurers, who then charge customers higher premiums.
How your rates are calculated
Many different factors play a role in your premiums:
- Your credit history: In most states, insurance providers consider your credit when deciding rates. For that reason, improving your credit score can lower your car insurance.
- Your driving record: Speeding, accidents and other high-risk driving will lead to higher rates.
- Your vehicle: Some models are more expensive to insure. Even the color of your car can impact the price you pay for insurance
- Your insurance history: Filing a lot of claims or lapses in coverage will lead an insurer to charge you more.
- Your demographics: In most states, an insurer can consider your gender, age, marital status and other personal factors when calculating your rates.
How to lower car insurance rates
There are several ways to cut down on car insurance:
- Shop around: Insurance companies calculate rates differently. If you think your provider is too expensive, get rate quotes from at least three other insurers. (Check our picks for cheap car insurance for options.)
- Increase your deductible: Your deductible is the amount you'll pay out of pocket before your insurance kicks in. Typically, the higher your deductible the lower your premium. However, you'll want to be sure you can afford your premium, as you could need to cover it if you're in an accident.
- Don't buy more than you need: Some add-ons might sound like a great idea, but you may already be covered for them with your credit card, AAA membership or elsewhere — like roadside assistance or rental car reimbursement.
- Drop comprehensive and collision coverage: Full coverage is usually the smarter choice, but if your car is worth less than 10 times your premium, you might be better off with just liability-only insurance
- Improve your credit score: In most states, insurers can consider your credit history when pricing your policy. Generally, the higher your score, the lower your premiums — so paying your bills on time (and in full), not spending up to your credit limit and checking your credit report for errors can save you money
- Take advantage of discounts: Most insurance companies will give you a rate reduction if you bundle auto insurance with life insurance. Nationwide has a robust 20% discount and it's available in 49 states and the District of Columbia.
Nationwide Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Nationwide offers near-nationwide availability and personalized services, such as On Your Side® Review, a free annual insurance evaluation to ensure you are adequately protected and are taking advantage of any discounts available to you.
Terms apply.
What car insurance is the cheapest?
By October 2024, the national average for full coverage car insurance had leveled off to $2,388 per year, according to Bankrate, or a little less than $600 a month.
Auto-Owners
Auto-Owners had the cheapest average annual rates for full coverage, at $1756 a year for a driver with a clean record and good credit. That's about 25% less than the industry average.
- Accident forgiveness is an add-on
- High customer satisfaction scores from J.D. Power
- Covers modified cars and vehicles converted for the disabled
- Only available in 26 states
- Quotes must be obtained through an agent
- Claims must be filed with an agent
USAA
USAA was the second cheapest at $1,921 a year. USAA is available to active-duty and retired service members, with generous discounts for parking your vehicle on base or storing it if you're deployed.
- Cheapest insurer for liability policies
- Stellar customer satisfaction scores
- Available in all 50 states
- Limited to military families and veterans
- No physical branches
- Customer service not available 24/7
- Safe-driver discount not available in every state
Geico
At $2,023 a year, Geico had the third-lowest rates. Geico is available nationwide and includes optional add-ons like accident forgiveness, roadside assistance and coverage for mechanical issues after the manufacturer's warranty expires.
- 16 discounts are available to lower premiums
- Easily purchase and manage policy online
- Policy add-ons can include roadside assistance and mechanical breakdown insurance
- No gap insurance
- Few branches for in-person services
- Ranks below average for customer service and claims on J.D. Power surveys
Amica
In fourth was Amica, at $2,925 a year for full coverage. Since Amica pays dividends for auto policies in some states, customers can get a portion of their premiums back.
Amica Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Amica offers full and minimum coverage auto insurance, with add-ons accident forgiveness and new car replacement. The Platinum Choice® Auto plan includes new car replacement, credit monitoring and rental coverage with no daily limit.
Terms apply.
Read our Amica auto insurance review
Pros
- High customer satisfaction ratings from J.D. Power
- Bundling home and auto can save you up to 30%
- Drivers in some states are eligible for dividends
Cons
- More higher-than-average rates for most driver types
- Switching from 12-month policies to 6-month
State Farm
State Farm rounded out the bottom five, with annual premiums averaging $2,743. Policyholders enjoy big discounts with State Farm, including a safe driving discount worth up to 30%, up to 25% off for bundling and up to 20% off for having more than one car insured with State Farm.
State Farm Auto Insurance
Policy highlights
The largest auto insurer in the U.S., State Farm has an excellent reputation for customer satisfaction and affordable rates, even for teens.
Discounts
More than a dozen discounts, including for safe driving, bundling and good students. Drive Safe & Save program offers up to 30% off for lower mileage and safe driving habits.
Availability
State Farm liability car insurance is available nationwide except for Massachusetts and Rhode Island.
Terms apply.
Read our State Farm auto insurance review.
Pros
- High customer satisfaction ratings
- Available in most states
- Affordable rates for teen drivers
Cons
- Doesn’t offer gap insurance
- Accident forgiveness requires 9 years accident-free
- Have to work with an agent to buy a policy..
How much car insurance do I need?
If you have a lease or car loan you probably need to get full coverage, which combines:
- Liability insurance: Pays for damages to other vehicles or individuals if you're held responsible for an accident.
- Collision insurance: Pays to repair or replace your vehicle after an accident.
- Comprehensive insurance: Pays for damages or losses not caused by a collision, including from theft, vandalism, weather damage or hitting an animal.
Even if you are not financing your car, nearly every state requires drivers to at least have liability insurance.
FAQs
What does full coverage car insurance cover?
Full coverage car insurance combines liability insurance (pays for damages to other cars and drivers), collision coverage (pays for damage to your vehicle) and comprehensive coverage (pays for damage caused by vandalism, animal encounters or other non-collision events).
Is it normal for car insurance to increase every year?
It's not uncommon for your rates to go up annually, even if you haven't filed a claim. This can be caused by inflation, an increase in claims in your area or other reasons.
Does your credit score affect car insurance rates?
In most states, auto insurance companies use a credit-based insurance score to determine your premiums. While it's not the same as your FICO score, it's calculated using much of the same information.
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