Monthly car insurance premiums are one of the biggest expenses necessary for maintaining a car. Most states require you to have some form of car insurance. Only one — New Hampshire — doesn’t require it at all, though you will need to prove you can cover the cost of an accident.
Even if it’s not required by law, it is highly recommended to have insurance coverage for your car. Here’s a closer look at factors that can influence what you pay for insurance and what you can do to manage the cost.
Key Points
• The average cost of car insurance premiums in the U.S. is $2,068, or $172.33 a month.
• Young drivers generally face higher insurance premiums.
• A good driving record can significantly lower car insurance costs.
• Discounts are often available for safety features and bundling policies.
• It’s a good idea to shop for car insurance quotes each year.
Average Cost of Car Insurance in the U.S.
A big question on a driver’s mind when they shop for coverage: How much is car insurance per month? The average annual cost of car insurance premiums is $2,068, or about $172.33 per month, according to a 2025 study by U.S. News & World Report. That said, auto insurance quotes will depend largely on your individual situation, so the premium you’re offered may vary widely from the average.
Factors That Affect Car Insurance Rates
Insurers consider a number of different factors when setting rates for their customers. Doing so helps them determine the amount of risk they’re taking on and what they are likely to have to pay should they get in an accident. In other words, they are trying to predict how likely you are to make a claim and what the cost of that claim may be.
Age of Driver
Statistically, age plays a big role in how likely an insurance customer is to make a claim. Young, inexperienced drivers, for instance, are at higher risk of being in an automobile accident. Consider this sobering fact from the Insurance Institute for Highway Safety: Teenagers aged 16 to 19 are three times more likely to be in a fatal car accident than drivers aged 20 and older.
As a result, insurance costs for young drivers tend to be much higher than for older adults. Premium prices due to age typically level out after about age 25.
Type of Vehicle
Vehicle type has a big effect on insurance costs for comprehensive and collision coverage. The more expensive your car, the more an insurance company will have to pay to replace or repair it.
Again, this represents a greater risk for your insurance company, which they compensate for with higher rates. So if you drive a 2024 Honda Civic sedan, for example, you can expect to pay less in car insurance than you might if you drive a luxury vehicle, like a Lexus or Audi sedan.
Driving Record and Claim History
Age and vehicle type can only tell insurers so much. They will also look at your driving record to gain insight into your past driving behavior. In fact, it’s one of the most influential factors that affect insurance rates.
If you have a clean driving record, without accidents, violations, or other infractions, insurers may see you as less risky and offer you lower rates. If you have caused an accident or have moving violations, your insurance rates will likely be higher. A major infraction, like a DUI, can cause your insurance rates to skyrocket by 50% to 100% or more.
How to Lower the Cost of Car Insurance
Luckily, car insurance premiums are not set in stone. There are steps you can take to keep costs low. Let’s look at some common strategies.
Bundle Insurance Types
When you bundle insurance, you purchase multiple types of insurance from the same provider at the same time. For instance, you might bundle homeowners insurance with your auto insurance. Bundling helps streamline insurance providers’ operational costs, and it incentivizes customer loyalty. As a result, a lot of providers will offer steep discounts from 10% to 25%, depending on the coverage you choose and other factors such as where you live.
Check Insurance Coverage Needs
It pays to consider carefully how much auto insurance you really need. If you purchase more than necessary, you might not be getting much value for the extra money you spend.
You will need to purchase enough coverage to meet your state’s insurance requirements as well as requirements mandated by your loan or lease agreement if these apply.
However, consider factors such as the value of your vehicle when purchasing a policy. For example, older vehicles tend to be less valuable than newer ones. Weigh the cost of collision coverage and whether it’s worth the payout you are likely to receive if you were in an accident. If the payout is relatively low, you may be able to reduce your collision coverage.
Shop Yearly for Quotes
As the variables in your life change, so too will your insurance needs and costs. What’s more, insurance rates are always in flux due to factors such as industry trends and inflation. That’s why it’s a good idea to shop for car insurance quotes at least once a year.
Insurers set new rates for the upcoming year in December, so this may be a good time to look for the cheapest auto insurance companies. However, you can switch carriers at any time.
Understanding Different Types of Car Insurance Coverage
Generally speaking, there are six types of car insurance coverage.
• Liability coverage: This coverage is mandatory in most states, and you are usually required to have a minimum amount that varies depending on where you live. It helps pay for the cost of injury to another person and the damage you cause to another person’s property.
• Collision coverage: If you hit another car, or an object like a fence or a tree, collision coverage can help pay for the cost to replace or repair your vehicle.
• Comprehensive coverage: This helps cover the cost of damage to your car by things like fire, hail, theft, and vandalism. There’s usually a deductible associated with comprehensive coverage, which you’ll have to pay yourself before the coverage kicks in.
• Uninsured and underinsured motorist coverage: Unfortunately, not all drivers carry insurance. If you’re hit by an uninsured driver, uninsured and underinsured motorist coverage can help pay for the cost of your medical care and sometimes help repair your car.
• Medical payments coverage: If you or your passengers are injured in an accident, this can help cover the cost of medical care.
• Personal injury protection: Only available in some states, personal injury protection can help pay for medical expenses after an accident as well as related expenses incurred because you were injured, such as lost income.
The Takeaway
The cost of car insurance depends on a lot of factors, including the coverage you need, your driving history, your age, and the type of vehicle you drive. With so many variables, it pays to shop around for the best deals. Get quotes from several providers, and consider doing it at least once a year.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
FAQ
Is $200 per month a lot for car insurance?
A monthly premium of $200 per month is more than average for car insurance. However, price depends on a lot of factors. Depending on your circumstances, $200 per month may be appropriate.
Is $500 per month a lot for car insurance?
A monthly premium of $500 per month is quite expensive, generally speaking. It is more than twice the national average.
How much should insurance for a car be per month?
Average monthly car insurance premiums are about $172.33 per month. You may pay more or less depending on your circumstances.
How much should car insurance be per year?
Average annual car insurance premiums are $2,068, though costs will vary depending on a variety of factors.
How much is car insurance for a 16-year-old?
It can be quite expensive to insure a 16-year-old driver. On average, it costs $2,735 a year to add a 16-year-old to their parents’ policy. But it costs $8,765 per year on average for that 16-year-old to have their policy.
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