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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 rose from $798 in 2011 to $815 in 2012, according to a December 2014 report from the National Association of Insurance Commissioners. In 2012 (the latest data available), the average expenditure was highest in New Jersey at $1,219, followed by the District of Columbia at $1,154, and New York at $1,152. The 2012 average expenditure was up 2.1 percent from $798 in 2011.

Cost of Auto Insurance by State

The following chart is based on the latest data from the National Association of Insurance Commissioners on 2010-2012 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 2012 Average Expenditure 2012
Rank
2011 Average Expenditure 2011
Rank
2010 Average Expenditure 2010
Rank
Alabama  $659 37 $653 37 $651 37
Alaska $873 13 $873 13 $890 13
Arizona $781 18 $776 18 $804 18
Arkansas $679 35 $665 35 $662 35
California $749 22 $736 24 $746 21
Colorado $737 25 $723 27 $730 25
Connecticut $986 9 $970 9 $965 8
Delaware $1,065 6 $1,052 6 $1,031 6
D.C. $1,154 2 $1,138 2 $1,134 2
Florida $1,127 4 $1,090 5 $1,037 5
Georgia $768 20 $755 19 $749 20
Hawaii $735 27 $748 21 $766 19
Idaho $534 51 $535 51 $548 48
Illinois $731 28 $727 25 $733 24
Indiana $637 40 $621 41 $625 41
Iowa $561 49 $552 48 $547 49
Kansas $632 42 $625 40 $625 40
Kentucky $759 21 $744 22 $723 27
Louisiana $1,112 5 $1,110 3 $1,121 3
Maine $582 47 $577 47 $582 47
Maryland $966 11 $956 10 $948 9
Massachusetts $976 10 $942 11 $891 12
Michigan $1,048 7 $983 8 $935 10
Minnesota $718 29 $696 31 $693 32
Mississippi $748 23 $740 23 $745 22
Missouri $683 34 $675 34 $678 33
Montana $658 38 $654 36 $656 36
Nebraska $616 44 $602 44 $593 46
Nevada $906 12 $904 12 $931 11
New Hampshire $716 30 $705 30 $706 29
New Jersey $1,219 1 $1,183 1 $1,157 1
New Mexico $695 32 $691 32 $704 30
New York $1,152 3 $1,108 4 $1,079 4
North Carolina $611 45 $600 46 $600 45
North Dakota $576 48 $549 49 $529 50
Ohio $634 41 $619 42 $619 43
Oklahoma $737 26 $716 28 $700 31
Oregon $741 24 $723 26 $724 26
Pennsylvania $827 16 $815 16 $812 17
Rhode Island $1,034 8 $1,004 7 $985 7
South Carolina $772 19 $749 20 $738 23
South Dakota $556 50 $540 50 $525 51
Tennessee $673 36 $650 38 $641 38
Texas $858 14 $842 14 $848 14
Utah $713 31 $712 29 $717 28
Vermont $642 39 $633 39 $630 39
Virginia $691 33 $679 33 $674 34
Washington $809 17 $806 17 $815 16
West Virginia $846 15 $834 15 $830 15
Wisconsin $598 46 $601 45 $613 44
Wyoming $618 43 $619 43 $621 42
United States $815 NA $797 NA $791 NA

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