Car Insurance Costs on the Rise
High inflation rates and recession fears plagued much of 2023. Although inflation rates have since dropped to 3.1%, car insurance costs remain significantly higher than they were a year ago. Rates have surged by 24%, pushing the average full-coverage insurance policy beyond $2,000 annually in 2023, according to ’s latest data.
While 63% of surveyed drivers experienced rate increases in 2023, only about half took steps to cut costs, such as raising their deductibles or switching from full coverage to state-minimum liability insurance.
However, these adjustments could expose drivers to greater out-of-pocket expenses. Additionally, drivers who finance or lease their vehicles are usually required to maintain full coverage, and dropping to liability-only insurance could violate lender or leasing company terms.
With further rate increases expected in 2024, examined the factors behind rising insurance costs and the best ways for drivers to save money.
Projected Car Insurance Rate Increases for 2024
Car insurance rates have been volatile, but prices are beginning to stabilize, with less severe increases expected in the coming months.
projects that car insurance premiums will rise by about 7% in 2024. This forecast is based on ’s database of over 97 million quotes from partnering insurance companies.
Further rate hikes are likely due to high insurer loss ratios in 2023, driven by the rising cost of auto parts and an increasing number and severity of claims.
«The supply chain slowdown, labor shortages, and inflationary trends that began during COVID-19 continued throughout 2023,» says Betsy Stella, ‘s VP of carrier management and operations.
Still, personal auto insurer losses have slowed as rate increases start to outpace loss trends. «Some pressure is lifting. Drivers can expect industry stabilization as we enter the second half of 2024,» says Stella.
Low-Income States Hit Hard by Rising Car Insurance Rates
Among the 15 states that pay the highest percentage of earnings toward car insurance, only four have median household incomes above the U.S. average. In Mississippi, the lowest-income state, drivers pay an average of $1,718 per year for car insurance, which is 3.4% of the median household income of $50,700.
In comparison, the average consumer in Mississippi pays $2,060, or 4.1% of the median household income, for energy each year, according to Mississippi State University.
Conversely, Utah residents pay only $47 more for car insurance, with an average rate of $1,765. However, Utah’s median income is nearly double that of Mississippi, meaning drivers spend only 1.8% of their income on car insurance.
Many insurance companies consider credit history when setting rates. On average, policyholders with excellent credit pay $179 per month for full-coverage auto insurance, compared to $260 for drivers with poor credit. In areas where more drivers struggle financially, poor credit can drive up statewide rates.
| State | Percentage of Income Toward Car Insurance | Median Household Income | Average Annual Cost of Car Insurance |
| United States | 2.6% | $76,967 | $2,019 |
| Louisiana | 4.7% | $59,905 | $2,792 |
| Florida | 4.3% | $68,181 | $2,917 |
| New York | 4.3% | $77,808 | $3,374 |
| South Carolina | 4.2% | $64,055 | $2,680 |
| Kentucky | 4.1% | $57,556 | $2,348 |
| Nevada | 4.0% | $74,428 | $2,975 |
| Michigan | 3.7% | $71,336 | $2,640 |
| Mississippi | 3.4% | $50,700 | $1,718 |
| Arkansas | 3.4% | $56,031 | $1,932 |
| Georgia | 3.4% | $69,491 | $2,351 |
| Delaware | 3.4% | $82,607 | $2,806 |
| West Virginia | 3.3% | $55,660 | $1,841 |
| Texas | 3.1% | $77,028 | $2,359 |
| Rhode Island | 3.0% | $80,408 | $2,452 |
| New Mexico | 2.8% | $60,087 | $1,669 |
| Oklahoma | 2.7% | $65,724 | $1,753 |
| Washington, D.C. | 2.6% | $105,463 | $2,756 |
| Alabama | 2.5% | $62,306 | $1,558 |
| South Dakota | 2.5% | $69,733 | $1,751 |
| Missouri | 2.5% | $74,381 | $1,879 |
| New Jersey | 2.5% | $93,817 | $2,304 |
| Maryland | 2.4% | $110,580 | $2,645 |
| Connecticut | 2.4% | $94,178 | $2,228 |
| Colorado | 2.4% | $94,247 | $2,222 |
| Tennessee | 2.3% | $67,864 | $1,572 |
| Kansas | 2.3% | $75,962 | $1,759 |
| Arizona | 2.3% | $76,315 | $1,793 |
| Pennsylvania | 2.1% | $73,654 | $1,548 |
| Montana | 2.1% | $76,191 | $1,629 |
| Iowa | 2.1% | $78,304 | $1,667 |
| Illinois | 2.1% | $80,049 | $1,656 |
| Wyoming | 2.0% | $76,452 | $1,528 |
| California | 2.0% | $88,200 | $1,725 |
| Washington | 2.0% | $93,812 | $1,853 |
| Indiana | 1.9% | $71,431 | $1,337 |
| Virginia | 1.9% | $88,832 | $1,716 |
| Ohio | 1.8% | $69,613 | $1,271 |
| Vermont | 1.8% | $75,150 | $1,330 |
| Wisconsin | 1.8% | $75,457 | $1,375 |
| Nebraska | 1.8% | $81,024 | $1,463 |
| Utah | 1.8% | $99,824 | $1,765 |
| North Carolina | 1.7% | $67,282 | $1,114 |
| Idaho | 1.7% | $74,975 | $1,296 |
| Oregon | 1.7% | $88,863 | $1,475 |
| Minnesota | 1.7% | $92,379 | $1,606 |
| North Dakota | 1.6% | $82,577 | $1,320 |
| Maine | 1.5% | $77,640 | $1,197 |
| Hawaii | 1.5% | $94,650 | $1,389 |
| Massachusetts | 1.4% | $95,421 | $1,383 |
| New Hampshire | 1.2% | $87,689 | $1,010 |
Alaska is excluded due to insufficient data.
Top 10 Most Expensive States for Car Insurance
The national average rate for full-coverage insurance rose to $2,019 per year in 2023, up from $1,633 in 2022. However, drivers in some states pay up to 67% more than the national average for full coverage. analyzed all 50 states and Washington, D.C., to identify the most expensive places to buy car insurance.
1. New York
- Average annual full-coverage rate: $3,374
- Percent higher than the U.S. average: 67%
New York drivers pay the highest full-coverage car insurance rates in the U.S., averaging $281 per month. The state ties with Florida for the second-highest percentage of income spent on car insurance (4.3%). New York’s dense population increases the likelihood of claims. Recent legislation, like the new supplemental spousal liability law, also plays a role in driving up rates.
2. Florida
- Average annual full-coverage rate: $2,917
- Percent higher than the U.S. average: 45%
Florida’s average full-coverage policy costs $243 per month. The state’s no-fault insurance laws and high rate of uninsured drivers (20.4%) contribute to rising premiums. Replacing these laws with at-fault legislation may help lower rates.
3. Nevada
- Average annual full-coverage rate: $2,975
- Percent higher than the U.S. average: 47%
Nevada residents spend $248 monthly on average for car insurance. High vehicle theft rates (443 per 100,000 people) and uninsured drivers (11.7%) impact premiums.
4. Louisiana
- Average annual full-coverage rate: $2,792
- Percent higher than the U.S. average: 38%
Louisiana’s average full-coverage car insurance costs $233 monthly. The state has high uninsured drivers (10.3%) and dense traffic in urban areas, increasing the risk of accidents and claims.
5. Delaware
- Average annual full-coverage rate: $2,806
- Percent higher than the U.S. average: 39%
Delaware drivers pay an average of $234 monthly for full coverage. The state’s small population and urban density, especially near major cities, lead to higher premiums.
6. Michigan
- Average annual full-coverage rate: $2,640
- Percent higher than the U.S. average: 31%
Michigan residents spend $220 monthly on average for car insurance. The state’s no-fault insurance system and high medical costs contribute to higher rates.
7. Texas
- Average annual full-coverage rate: $2,359
- Percent higher than the U.S. average: 17%
Texas drivers pay an average of $197 monthly for full coverage. The state has a high number of uninsured drivers (8.3%) and frequent severe weather events, which drive up premiums.
8. South Carolina
- Average annual full-coverage rate: $2,680
- Percent higher than the U.S. average: 33%
South Carolina residents spend $223 monthly on car insurance. The state has a high rate of uninsured drivers (9.4%) and frequent hurricanes, increasing claims and premiums.
9. Georgia
- Average annual full-coverage rate: $2,351
- Percent higher than the U.S. average: 16%
Georgia drivers pay an average of $196 monthly for full coverage. The state’s high traffic density, especially in urban areas, leads to more accidents and higher premiums.
10. Kentucky
- Average annual full-coverage rate: $2,348
- Percent higher than the U.S. average: 16%
Kentucky residents spend $196 monthly on car insurance. The state’s no-fault insurance system and high medical costs contribute to higher rates.
Car Insurance Rates by Credit Score
Credit scores significantly impact car insurance premiums, with drivers having excellent credit paying much less than those with poor credit.
| Credit Score | Average Monthly Premium |
| Excellent | $179 |
| Good | $196 |
| Fair | $221 |
| Poor | $260 |
Tips for Saving on Car Insurance
Here are some effective ways to reduce your car insurance costs:
Shop Around
Compare quotes from multiple insurers to find the best rates. ’s database can help you compare prices quickly.
Maintain a Good Credit Score
A higher credit score can lower your insurance premiums. Pay your bills on time, reduce debt, and monitor your credit report regularly.
Opt for Higher Deductibles
Choosing a higher deductible can lower your monthly premium. However, ensure you can afford the deductible amount in case of a claim.
Bundle Policies
Many insurers offer discounts if you bundle multiple policies, such as home and auto insurance.
Take Advantage of Discounts
Look for discounts based on your driving habits, vehicle safety features, or membership in certain organizations.
Drive Safely
Maintaining a clean driving record can help you qualify for lower rates. Avoid accidents and traffic violations to keep your premiums low.
Car insurance rates are expected to continue rising in 2024, but drivers can take steps to mitigate the impact. By shopping around, maintaining a good credit score, and exploring discounts, you can find ways to save on your car insurance premiums.