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RMIIA
Auto Insurance Quick Links
Your car insurance is really six separate policies—some are required, others optional—carefully weigh your risks when buying protection for you and your family.
Carole Walker, RMIIA

Cost of Auto Insurance

How does my auto insurance company decide what it charges me? That's probably the most asked, least understood question about motor vehicle insurance coverage. Each insurer has thousands of auto insurance rates in every state it does business—rates for each type of car, each driver and every geographical area in the state. Each company also has its own surcharges and discounts available that impact these rates.

Most insurers have three basic goals in mind:

  1. They need to make enough money to cover all their policyholders' claims and pay their overhead expenses (staffing, light bill, phone bill, etc.), and if they're publicly held, still have enough money left over for their shareholders.

  2. They want to balance their risk by charging higher rates to drivers who file more costly claims, more often and lower rates to those drivers who file less expensive claims, less often.

  3. They want to stay competitive with other insurers in the markets they do business.

State Government Regulations

How your insurance rates are set also depends in part on which state you live in, because rates are regulated on a state-by-state basis. The insurer has to follow the regulations of the state you live in. Click on your state below to contact your state insurance department.

Also visit: Colorado | New Mexico | Utah | Wyoming

Auto Insurance Cost Q&A

Q. Why do things like my age, gender, credit and driving record affect what I pay for auto insurance?

A. What you pay for insurance is largely based on what kind of risk the company predicts you will be, based on known factors like your driving history, the kind of car you drive, how old you are, your gender, your marital status and where you live. These judgments aren't just based on instincts or whims. Insurance rates are based on a wealth of statistical data compiled by your company over a long period of time (commonly up to 20 years). Most insurance companies divide auto risks into three basic types:

  • Preferred (low risk)
  • Standard (average risk)
  • Non-standard (a nice way of saying high risk)

Q. Why does it matter what kind of car I drive?

A. Increasingly insurance companies are basing insurance rates on their claims experience when it comes to the safety record of the make and model of vehicle you are driving. Factors insurance companies may likely consider: crashworthiness, safety features (i.e. airbags, automatic seatbelts, anti-lock brakes), popularity with thieves, cost to repair, age of the vehicle. Every year new cars are separated into various categories according to price by insurers. The number of categories vary from one insurance company to another, but a basic premium is assigned to each price group. For more information on crash testing click here for the Insurance Institute for Highway Safety (IIHS).

Q. Why do my premiums go up if I get a traffic ticket or I'm involved in an accident?

A. Getting several tickets in a short period of time or being involved in an accident can put you in a higher risk classification depending on the severity of the violation and cost of the accident. However, your rates won't automatically go up.

Q. Why do auto insurance premiums vary depending on what I use my car for?

A. Typically, cars are classified based on whether they are used for driving to work, business, pleasure or farming. Cars used primarily for pleasure tend to have the lowest premiums, while cars used for business generally have higher premiums. Insurance companies determine classifications by the number of miles driven per year since the more you drive your car the more likely you are to get into an accident.

Q. What is the average cost of auto insurance?

The average insurance expenditure is calculated by adding all auto insurance premium collected for liability, comprehensive and collision coverages, and dividing by the number of insured cars for the year. This average is based on all policies - including liability-only and policies with optional comprehensive and collision coverage. Limits on policies vary widely and are based on state requirements as well as consumer choice. The average auto insurance expenditure nationwide was $785 in 2009, compared to $832 in 2005. Source: National Association of Insurance Commissioners

The average auto insurance expenditure dropped from $799 in 2007 to $797 in 2011, according to a December 2013 report from the National Association of Insurance Commissioners. In 2011 (the latest data available), the average expenditure was highest in New Jersey ($1,184), followed by the District of Columbia ($1,138), and Louisiana ($1,111). The 2011 average expenditure was up slightly (0.6 percent) from $792 in 2010.

Cost of Auto Insurance by State

The following chart is based on the latest data from the National Association of Insurance Commissioners on 2009-2011 premiums. It shows the "average expenditure" - the total premium collected in each state for liability, comprehensive and collision coverage divided by the number of insured vehicles. The average expenditure reflects not only the cost of insurance, but how much people choose to purchase. States have different requirements and many people choose to purchase more than the minimum required limits. Keep these factors in mind when comparing states.

State 2011 Average Expenditure 2011
Rank
2010 Average Expenditure 2010
Rank
2009 Average Expenditure 2009
Rank
Alabama  $653 37 $651 37 $652 34
Alaska $873 13 $890 13 $897 12
Arizona $776 18 $804 18 $837 14
Arkansas $665 35 $662 35 $656 32
California $736 24 $746 21 $754 19
Colorado $723 27 $730 25 $741 20
Connecticut $970 9 $965 8 $952 8
Delaware $1,052 6 $1,031 6 $1,021 5
D.C. $1,138 2 $1,134 2 $1,128 1
Florida $1,090 5 $1,037 5 $1,006 6
Georgia $755 19 $749 20 $754 19
Hawaii $748 21 $766 19 $786 18
Idaho $535 51 $548 48 $555 45
Illinois $727 25 $733 24 $728 22
Indiana $621 41 $625 41 $620 38
Iowa $552 48 $547 49 $532 46
Kansas $625 40 $625 40 $578 43
Kentucky $744 22 $723 27 $699 27
Louisiana $1,110 3 $1,121 3 $1,099 3
Maine $577 47 $582 47 $598 41
Maryland $956 10 $948 9 $929 10
Massachusetts $942 11 $891 12 $860 13
Michigan $983 8 $935 10 $913 11
Minnesota $696 31 $693 32 $694 28
Mississippi $740 23 $745 22 $738 21
Missouri $675 34 $678 33 $668 30
Montana $654 36 $656 36 $655 33
Nebraska $602 44 $593 46 $559 44
Nevada $904 12 $931 11 $944 9
New Hampshire $705 30 $706 29 $718 24
New Jersey $1,183 1 $1,157 1 $1,101 2
New Mexico $691 32 $704 30 $713 26
New York $1,108 4 $1,079 4 $1,057 4
North Carolina $600 46 $600 45 $610 40
North Dakota $549 49 $529 50 $510 48
Ohio $619 42 $619 43 $616 39
Oklahoma $716 28 $700 31 $680 29
Oregon $723 26 $724 26 $723 23
Pennsylvania $815 16 $812 17 $811 17
Rhode Island $1,004 7 $985 7 $969 7
South Carolina $749 20 $738 23 $738 21
South Dakota $540 50 $525 51 $521 47
Tennessee $650 38 $641 38 $634 36
Texas $842 14 $848 14 $860 13
Utah $712 29 $717 28 $716 25
Vermont $633 39 $630 39 $646 35
Virginia $679 33 $674 34 $667 31
Washington $806 17 $815 16 $826 15
West Virginia $834 15 $830 15 $815 16
Wisconsin $601 45 $613 44 $591 42
Wyoming $619 43 $621 42 $623 37
United States $797 NA $791 NA $785 NA

Additional Information