The True Cost of Auto Insurance in 2024 | Bankrate (2024)

Annual Report

The True Cost of Auto Insurance in 2024 | Bankrate (1)

By

Shannon Martin

Shannon Martin

Writer, Insurance

To paint a clear picture of the true cost of car insurance, we analyzed what percentage of household income is spent on an annual full coverage car insurance policy. Nationally, the average cost of full coverage car insurance rose to $2,543 in 2024, an increase of 26 percent over last year. With a national median household income of $74,580 according to the latest data from the U.S. Census Bureau, Americans spend 3.41 percent of their income on car insurance.

The True Cost of Auto Insurance in 2024 | Bankrate (2)

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AVERAGE ANNUAL PREMIUM

$2,543

for full coverage insurance

HIGHEST TRUE COST

Louisiana

highest percentage of income spent on car insurance

PERCENT OF INCOME SPENT

3.41%

on full coverage insurance

LOWEST TRUE COST

Massachusetts

lowest percentage of income spent on car insurance

Average annual premium

The national average cost for full coverage car insurance is $2,543 per year, or $212 per month. Drivers with minimum coverage pay an average of $740 a year, or $62 a month.

Highest True Cost

Drivers in Louisiana have the highest true cost of car insurance, with an average annual premium of $3,618 — 6.53 percent of their household income. Florida and Michigan are next in line on the true cost ranking, with 5.69 and 5.01 percent of their household income going toward car insurance, respectively.

Percent of income spent

Based on the median annual income of $74,580, the average U.S. driver spends 3.41 percent of their income on full coverage car insurance policy.

Lowest True Cost

Massachusetts drivers enjoy the nation's lowest true cost of car insurance. While the average insurance premium in Massachusetts isn't the cheapest at $1,665 per year for full coverage, when considering the state's median income of $94,488, drivers in the Bay State pay only 1.76 percent of their annual income toward car insurance.

With the average cost of full coverage car insurance increasing 26 percent over last year, you may be shopping around for a new policy. Looking at average rates in your region can give you a starting point for comparing quotes. Explore the interactive map below to see the true cost of auto insurance in all 50 states and the top 25 metro statistical areas (MSAs).

Average annual premium

$

Percent of income spent

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Change of percentage of income spent vs 2023

%

True cost rank: # of 50

Average annual premium

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$less than nat. avg.more than nat. avg.

Percent of income spent

%% less than nat. avg.% more than nat. avg.

Change of percentage of income spent vs 2023

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True cost rank: # of 25

Average annual premium

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$less than nat. avg.more than nat. avg.

Percent of income spent

%% less than nat. avg.% more than nat. avg.

Change of percentage of income spent vs 2023

%

Life events that affect cost

Credit score decreased

Added cost

Annual premium

$

$

Life events that affect cost

Received a speeding ticket

Added cost

Annual premium

$

$

Life events that affect cost

Caused an accident

Added cost

Annual premium

$

$

Life events that affect cost

Lapse in coverage

Added cost

Annual premium

$

$

Life events that affect cost

Convicted of a DUI

Added cost

Annual premium

$

$

Life events that affect cost

Insured a teenage driver

Added cost

Annual premium

$

$

*2024 calculations for the percentage of income spent on auto insurance use the most recent median income data from the U.S. Census. All previous True Cost of Auto Insurance reports utilized average income data from the U.S. Census. Bankrate chose to switch to median income data in 2024 as a more representative statistic of what people earn in a given geographic area.

To determine the true cost of car insurance, Bankrate’s insurance editorial team analyzed the average total percentage of household income spent on car insurance. Next, we assigned a true cost ranking to each state and 25 metros in the country. The higher the ranking, the higher the true cost of car insurance.

The true cost of auto insurance in 2024 by state

State

True Cost Ranking

Average annual premium

Percent of income spent

Alabama37$2,1993.68%
Alaska21$2,3302.64%
Arizona33$2,5353.40%
Arkansas42$2,1903.95%
California27$2,6972.95%
Colorado30$2,9023.25%
Connecticut14$2,1552.44%
Delaware29$2,6253.19%
Florida49$3,9455.69%
Georgia35$2,6103.58%
Hawaii2$1,6541.79%
Idaho6$1,4211.95%
Illinois28$2,3103.01%
Indiana17$1,6342.45%
Iowa13$1,6812.42%
Kansas39$2,6243.81%
Kentucky44$2,5494.29%
Louisiana50$3,6186.53%
Maine8$1,5072.17%
Maryland20$2,4932.62%
Massachusetts1$1,6651.76%
Michigan48$3,3565.01%
Minnesota16$2,0132.44%
Mississippi41$2,0553.90%
Missouri45$2,8014.32%
Montana32$2,2323.30%
Nebraska25$1,9892.86%
Nevada47$3,5494.91%
New Hampshire4$1,6361.82%
New Jersey22$2,5552.65%
New Mexico38$2,2103.70%
New York46$3,8404.83%
North Carolina19$1,7052.53%
North Dakota10$1,6372.27%
Ohio12$1,5142.30%
Oklahoma43$2,5484.27%
Oregon18$1,9012.51%
Pennsylvania40$2,7903.89%
Rhode Island31$2,6833.28%
South Carolina26$1,8792.93%
South Dakota24$1,9422.79%
Tennessee23$1,8072.77%
Texas36$2,6203.62%
Utah7$1,9292.16%
Vermont5$1,3531.83%
Virginia11$1,9752.30%
Washington3$1,6431.80%
West Virginia34$1,8813.46%
Wisconsin15$1,7322.44%
Wyoming9$1,5812.26%

Louisiana drivers have the highest true cost rank of 50, shelling out an average of 6.53 percent of their income toward car insurance. Historically, Florida consistently has higher insurance costs than most states and has the second-highest true cost ranking, with drivers spending a whopping 5.69 percent of their income on car insurance on average. Florida and Louisiana both experience frequent catastrophic claims from extreme weather. Since insurance rates are determined with risk and historical data in mind, the high financial risk insurance companies and reinsurance companies take on in both states is likely a driving factor of these high premiums.

After analyzing 25 major metro areas, our research found that drivers in Detroit pay the highest net average cost of car insurance and highest true cost of car insurance, with a staggering 7.98 percent of income spent on auto coverage. Florida is also home to three of the six MSAs with the highest true cost of insurance: Miami, Tampa and Orlando.

Massachusetts has the lowest true cost rank of 1, with drivers spending 1.76 percent of their income on car insurance. While the average rate of car insurance increased this year for Washingtonians by 32 percent, that is still much lower than the national average rate increase of 26 percent. Hawaii drivers spend only slightly more on car insurance at 1.79 percent.

In terms of the lowest percentage of income spent on car insurance for MSAs, Seattle takes first place with a True Cost score of 1.65. Boston and Washington, D.C., are not far behind with True Cost score of 2.01 and 2.07, respectively. All three of these metros have median household incomes over $100,000 per year. New York stands out as the MSA with the highest median household income at $136,405 per year, but its high average full coverage cost of $4,198 per year puts it in the middle of the pack in terms of true cost ranking.

From population density to weather patterns, your car insurance rate is strongly influenced by where you live. However, insurance is multifaceted. Several other rating factors, such as driving experience and life events, are assessed to assemble an insurance premium based on your unique driving characteristics.

How much have auto insurance rates increased?

Nationally, the average cost of full coverage car insurance increased by 26 percent in 2024, but some states saw larger rate hikes. Missouri saw a massive 44 percent increase in the average annual cost of full coverage car insurance, from $1,943 in 2023 to $2,801 in 2024 — the biggest increase in any state. Florida has the highest average rate of full coverage car insurance at $3,945 per year, an increase of $762 from the year before.

When it comes to rising auto insurance costs, drivers in Wyoming seem to have caught a break. The average cost of full coverage car insurance in the Equality State dropped by $1 from 2023 to 2024 — resting at $1,581.

Largest premium change by state

Largest premium change by metro

Smallest premium change by state

Smallest premium change by metro

Largest change in full coverage premium

Largest change in full coverage premium

Smallest change in full coverage premium

Smallest change in full coverage premium metro

SECTION

How you can save on auto insurance

The national average of full coverage car insurance is currently $2,543, a $529 increase over last year. In 2021, the average cost of full coverage car insurance was $1,674, meaning a 52 percent increase in just three years.

Whether your insurance premium is higher or lower than the national average, understanding how car insurance companies evaluate risk and calculate your premium can help you find ways to save money.

Several factors influence your rate, and some you can't control. These include state-mandated car insurance requirements, population density and driving habits of others living in your state or ZIP code. Inflation and extreme weather, which are both significant influencers for rates in 2024, are also beyond your control. However, driving history, vehicle type, coverage limits and — for drivers in most states — credit history are all variables you can control to positively influence your premium.

  • #1

    Focus on your driving

  • #2

    Monitor your credit

  • #3

    Choose the right vehicle

  • #4

    Prepare for major life events

Focus on your driving

Driving incidentAverage annual premium% of income spent
Clean driving record$2,5433.41%
Lapse in coverage$2,8193.70%
Speeding$3,0664.03%
At-fault accident $3,5774.70%
DUI$4,7906.29%

*Premium listed for full coverage policies

Monitor your credit

Credit tierAverage annual premium% of income spent
Poor credit$4,3385.70%
Average credit$1,8983.64%
Good credit$2,5433.41%
Excellent credit$2,2032.89%

*Premium listed for full coverage policies

Choose the right vehicle

VehicleAverage annual premium% of income spent
Honda Odyssey$2,1552.83%
Ford F-150$2,3063.03%
Toyota Camry$2,5433.41%
Toyota Prius$2,5183.31%
BMW 330i$3,0544.01%

*Premium listed for full coverage policies

Prepare for major life events

Average annual premium% of income spent
Ntl. avg. before teen (single driver)$2,5433.41%
Ntl. avg. before teen (married couple) $2,3903.14%
Ntl. avg. after teen (married couple)$5,4217.12%

*Premium listed for full coverage policies

Your location

Location significantly impacts the cost of your car insurance policy. Risk implications from population density, traffic and weather patterns and the cost of medical care vary between states, cities and ZIP codes. Medical bills related to a car accident in New York City are likely to be much more expensive than costs for a similar incident in Buffalo, New York, which directly impacts the cost of coverage types like bodily injury liability and personal injury protection (PIP). Even states like California and Michigan, which do not allow the use of specific ZIP codes as a rating factor, use territories and rated locations to determine premiums.

Our study of MSAs in California demonstrates the True Cost range you can see even within a single state. In Los Angeles, which has a true cost rank of 17, drivers pay an average of just $66 more per year for full coverage car insurance than their Golden State counterparts in San Francisco—which has a True Cost score of 7.

Your driving record

The driving history of you and other drivers on your policy is one of the most substantial rating factors in which you have some influence. Drivers with a lapse of insurance coverage, speeding tickets, at-fault accidents or DUIs on their record may be deemed high-risk and pay significantly more for insurance than those in standard or preferred risk groups. Our research shows that the national average cost for drivers with a lapse of insurance is $2,819 per year for full coverage car insurance — $276 more than drivers who maintain continuous coverage.

Standout statistics:

  • Hawaii drivers see the smallest surcharge in premium after a speeding ticket conviction, only paying an average of $109 more per year, an increase of 7 percent.
  • Drivers in California see the largest average increase in premiums following one at-fault accident at 56 percent. In terms of dollars, Michigan drivers see the biggest average jump with an average premium increase of $1,764.
  • North Carolina drivers experience the most drastic average premium increase following a DUI conviction, paying an average of 287 percent more per year.
  • Out of all the metro areas we analyzed, drivers in Detroit see the largest premium increase following a DUI, paying an additional $8,585 more for car insurance per year — putting their annual average premium for full coverage car insurance at $14,272.

Your credit history

In the majority of states, insurance companies utilize credit-based insurance scores to determine your level of risk, which directly impacts your premium. A credit-based insurance score differs from a typical credit score in the kind of risk it evaluates. FICO scores are modeled to predict the risk of a borrower becoming delinquent on payments, whereas credit-based insurance scores measure the risk of loss from future claims in relation to your premium.

Statistically, drivers with lower credit scores file more claims. The fairness of using credit as a claims predictor is a subject of hot debate, and four states — California, Hawaii, Massachusetts and Michigan — prohibit or limit credit as a rating factor for car insurance.

Standout statistics:

  • The national average premium for drivers with poor credit is $4,338 for full coverage insurance — $1,795 more than drivers with excellent credit with the same level of coverage.
  • New York is the least forgiving to drivers with poor credit, with drivers paying $7,996 per year for full coverage car insurance. This is 108 percent more than the state average premium for drivers with good credit.

Adding a teen driver

Driving is a skill learned over time, and teen drivers tend to pay more for car insurance until they earn enough experience on the road to move into a more standard risk group. According to teen driving statistics, the fatality crash rate for 16- to 19-year-olds is nearly three times the rate for drivers ages 20 and over due to factors such as speeding, distracted driving and lack of seat belt usage.

Adding a teen driver to your car insurance policy can be expensive. Insuring a teen driver on their parents' policy costs an average of $5,421 per year, $2,878 more than a policy without a young driver. The 2024 cost to insure a teen driver is 23 percent higher than last year’s average annual premium of $4,392.

Hawaii and Massachusetts are the two states that prohibit the use of age as a rating factor. However, Massachusetts does allow insurers to use a driver’s years of driving experience as a rating factor. Generally, insurance companies consider any driver under the age of 25 a youthful operator. Fortunately, many carriers offer discounts specifically geared towards this age to help offset the increased insurance cost.

Standout statistics:

  • Michigan showed the biggest jump in premium when adding a 16-year old to a full coverage insurance policy with an average premium of $7,942 — an increase of $4,586.
  • In South Dakota, parents adding a 16-year-old driver to their policy see the lowest rate increase at just $1,363. This is only a 70 percent increase, much lower than the national average increase of 113 percent.

What vehicle you choose

No matter how level-headed we try to be, buying a car tends to be an emotional decision. If you are financing a car, the loan amount and interest rate are likely your primary concern. While the year, make and model of the vehicle you drive can significantly impact your premium, how the rates of various policy coverage types are impacted is complex. Getting a car insurance quote for your new vehicle before signing on the dotted line can help you understand how certain vehicles and features may increase your rate.

Typically, vehicles that cost more to repair or replace will cost more to insure. Luxury vehicles usually cost more to insure than more standard vehicles. A BMW 330i has an average annual full coverage premium of $899 more than that of a Honda Odyssey, for example. This is likely because BMWs have more expensive parts and can require a special technician for repairs.

Some features may make a vehicle more expensive overall, but could lower the cost of other coverage types. For example, advanced safety technology like blind spot detection may add to the cost to repair or replace a vehicle but could also make collisions much less likely. In this scenario, you may notice that you pay less for your liability coverage — which pays for the damages you cause to others — but more for your collision coverage. A vehicle with advanced anti-theft features may also see that the cost of the comprehensive coverage is reduced, but again, the cost of collision may be higher due to the expense of the technology.

Lastly, the risk factor associated with the driver's behavior behind certain vehicles makes a difference. Vehicles designed to be fast, like muscle cars with high horsepower, tend to attract drivers who want to drive fast, which indicates risky behavior.

SECTION

The current and future state of auto insurance

The auto insurance industry isn't static. Factors like inflation, extreme weather, poor driving habits and high repair costs will continue to impact rates.

  • #1

    Rates are still on the rise in 2024

  • #2

    Extreme weather is becoming problematic

  • #3

    Despite a few bumps in the road, electric cars are the future

  • #4

    What do these trends mean for me?

Rates are still on the rise in 2024

Inflation is slowing down in some sectors, but car insurance rates skyrocketed in 2024, and as of yet, there is no indication of them stalling anytime soon. Across the board, insurance providers filed for several rate increases over the past few years and, once approved, these changes become effective upon policyholders' next renewal. However, even if you saw an increase at your last renewal, that doesn't mean the rates will remain the same in the future.

“Auto insurance rates have been rising at a breakneck pace," said Greg McBride, chief financial analyst for Bankrate. "And though the pace of increases will eventually slow, that doesn’t mean premiums are coming down. The insurance market is very competitive — lots of commercials — so shop around and compare coverage to see if you can get a better deal elsewhere. If you have a healthy savings cushion, see if increasing your deductible can reduce your premiums.”

Insurance companies can and have filed for multiple increases throughout the year. For example, after an almost two-year rate filing freeze, the California Department of Insurance finally approved 111 rate requests by mid-December of 2023 and still had 80 left to review. Car insurance rates generally do not decline but can stabilize, which may happen in 2025.

Extreme weather is becoming problematic

Climate change is pushing extreme weather to become more severe and frequent. The National Weather Service Storm Prediction Center cataloged 1,423 tornadoes, 6,962 hail storms and 17,555 windstorms in 2023 alone. Along with the damage from hurricanes and floods, insurance companies are paying for more claims associated with catastrophic weather events than ever before. In states known to experience repeated devastating losses from wildfires and floods, insurance companies are increasing rates and some are limiting and nonrenewing policies they deem too risky.

Extreme weather may also cause an increase in car accidents. Dr. Jean-Claude Thill, a geography, public policy and data science fellow of the American Association of Geographers told Bankrate: "Extreme weather events are most definitely impacting road safety. Whether we are talking about longer and more pronounced snow or ice storms, tornadoes, rain and hail storms, floodings, vehicular mobility is disrupted, and risk of material and human loss is increased by changing the normalcy of conditions expected by drivers."

As more accidents and injuries occur due to hazardous driving conditions and failing hard infrastructure, insurance companies will likely increase their premiums to compensate for these losses.

Despite a few bumps in the road, electric cars are the future

The demand for EVs that we saw in 2022 took a dramatic hit in 2023. A combination of lower gas prices, high price tags, Tesla recalls and insufficient charging stations may be to blame, but the Federal government's goal to make half of all new cars in the United States zero-emission vehicles by 2030 remains in place. According to S&P Global Mobility, the forecast for EVs is "cautiously optimistic."

So far, 13 states have adopted the Zero Emission Vehicle (ZEV) program to promote an increase in EV sales and technology in the next decade. Tax credits allow EV buyers to finance a portion of a residential charging station and as of 2024, some EV purchases qualify for an instant rebate of up to $7,500 at the dealership.

Insurance costs for electric vehicles can be higher than combustion-engine vehicles due to the increased cost and limited supply of specialized parts. However, as EVs become the norm, this will likely change. The wider availability of replacement parts, along with a better understanding of potential risk factors and underwriting criteria, may help lower premiums.

What do these trends mean for me?

Based on the car insurance landscape of 2024, now is a good time to review your car insurance coverage and future financial plans. Insurance is designed to protect your finances from the consequences of an accident, whether this means repairing your vehicle or covering the medical costs of others if you cause an accident.

Consider the climate where you live; including comprehensive insurance in your policy may help you avoid financial loss from an unforeseen weather event. Drivers thinking of purchasing a new car within the next few years may want to weigh the pros and cons of an electric vehicle. As your personal circ*mstances change, so should your policy.

With car insurance costs on the rise, comparing coverage limits and rates among multiple insurance providers may help keep more money in your pocket. Keep in mind that maintaining continuous coverage is another rating factor and policyholders who experience a lapse pay, on average, $274 more per year once they start a new full coverage policy.

“State insurance regulators work hard to protect consumers, including evaluating rate filings for actuarial soundness, ensuring companies are solvent and can pay claims, and being consumers’ ally in the insurance world, whether it’s answering questions, helping navigate options, or resolving complaints," said Connecticut Insurance Commissioner Andrew N. Mais. "Consumers can make the best decision for their unique situation by taking advantage of state insurance regulators’ educational resources and working closely with their agent, broker, or insurance company.”

Correction: A previous version of last year's 2023 True Cost of Auto Insurance report listed different average annual premiums for Detroit, Philadelphia, Phoenix, Riverside/San Bernardino and Boston. The premiums for these metro statistical areas have been updated in all reports to address data anomalies.

About this report

Download report (PDF)

Meet the author

The True Cost of Auto Insurance in 2024 | Bankrate (3)

Shannon Martin

Writer, Insurance

Shannon Martin is a licensed insurance agent and Bankrate analyst with over 15 years of experience in the industry. She enjoys helping others navigate the insurance world by cutting through complex jargon and empowering readers to make strong financial decisions independently.

Meet the editor

The True Cost of Auto Insurance in 2024 | Bankrate (4)

Amelia Buckley

Editor, Insurance

Amelia Buckley is an insurance editor for Bankrate, covering auto, home and life insurance. She emphasizes creating informative, engaging and nuanced content to support readers in making personalized insurance decisions with confidence.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2024 rates for ZIP codes and carriers in all 50 states and Washington, D.C. Rates are estimates and weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

ZIP codes: Premiums for each state and metro were calculated by evaluating rates across a representative list of ZIP codes for each metro statistical area and state. ZIP codes used vary from year to year to account for population density changes.

Credit-based insurance scores: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” For ‘credit score decreased,’ rates were assessed when the drivers’ score went from ‘good’ to ‘poor.’ Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit or restrict the use of credit-based insurance scores as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts, and Michigan. In Michigan, insurers are allowed to use information that contributes to your credit score but not the score itself.

Incidents: Rates were calculated by evaluating our base profile with the following incidents applied: clean record (base), at-fault accident, single speeding ticket, single DUI conviction and lapse in coverage.

Model: To determine cost by vehicle type, we evaluated our base profile with the following vehicles applied: BMW 330i, Ford F-150, Honda Odyssey, Toyota Prius and Toyota Camry (base).

Gender: The following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, North Carolina, Pennsylvania.

Teens: Rates were determined by adding a 16-year-old teen to a 40-year-old married couple’s policy. Age is not a contributing rating factor in Hawaii and Massachusetts due to state regulations, although Massachusetts allows insurers to use a driver’s years of driving experience.

Income data: Median annual income data was calculated using 2022 data, the most recent available, provided by the U.S. Census Bureau. 2024 calculations for the percentage of income spent on auto insurance use the most recent median income data from the U.S. Census. All previous True Cost of Auto Insurance reports utilized average income data from the U.S. Census. Bankrate chose to switch to median income data in 2024 as a more representative statistic of what people earn in a given geographic area.

If you would like to schedule an interview with Shannon, please contact Bankrate's PR Team

The True Cost of Auto Insurance in 2024 | Bankrate (2024)

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