While rates for auto insurance have been increasing for years, the prices that millions of American drivers pay for coverage are unavoidable, with insurance required in nearly every U.S. state.
With dozens of car insurance companies on the market to choose from, it is critical to understand how this industry is changing and what factors may affect your rate.
Auto insurance is a contract between you and the insurance company, in which you pay a premium in exchange for financial protection against damage or injury caused by accidents or theft. “Higher risk” drivers face higher premiums, while drivers who are determined to pose less risk pay reduced sums.
The average amount a typical U.S. driver paid for auto insurance in 2021 was $1,062.
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The U.S. auto insurance industry recorded a market size of more than $362 billion in 2023.
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In 2023, State Farm ranked as the top insurer of private passenger vehicles, with a market share of more than 18%.
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The share of drivers who are uninsured has steadily risen in recent years, with about 1 in 7 U.S. drivers lacking insurance as of 2022.
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The U.S. Consumer Price Index for motor vehicle insurance has increased by more than 92% between May 2014 and May 2024.
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Car insurance statistics
The car insurance industry had a market size of more than $362 billion in 2023, a 1.7% increase over the year prior.
Despite a slight decline in the industry amid the COVID-19 pandemic, including a drop in average premiums in 2020, U.S. drivers have seen monthly payments for auto insurance rise significantly over the past decade.
The hefty increases after 2021 have come even as drivers made fewer auto insurance claims during the pandemic.
How much is car insurance?
Nationally, the average amount a U.S. driver spent on auto insurance in 2021 was $1,062 in 2021, up from $1,046 in 2020 and just $812 in 2012.
Some measures have indicated an even steeper rise in rates. The U.S. Consumer Price Index, an inflation gauge that measures the average change over time in the prices paid by urban consumers, indicates that motor vehicle insurance prices have nearly doubled over the past 10 years.
But rates also vary significantly by state. In 2021, the average expenditures for car insurance were highest in New York ($1,511), Louisiana ($1,500) and Washington, D.C. ($1,435), while they were lowest in North Dakota ($692), Maine ($713) and Iowa ($725).
These costs can vary significantly depending on a wide range of factors, including a person’s age, driving record and level of coverage.
A 2022 analysis from AAA found that a driver who is under 65 years old, has more than six years of driving experience, has no accidents, lives in the suburbs or city, and has full auto coverage would pay an average of $1,588 per year for their premium.
Car insurance rate changes by state
Between 2018 and August 2023, rates for auto insurance increased by 27%, according to an S&P Global analysis.
The increases were largest in the Southwest, where the effective change in rates was highest in Utah (40.4%), followed by Nevada (39.4%) and Arizona (38.7%) during that period.
The smallest change occurred in Hawaii, where rates declined by 2% across those five years and auto insurance rates are typically below the national average.
Among the key drivers behind the change were Farmers Insurance, American Family Insurance and Geico, which ranked as the top three companies in rate changes between 2018 and August 2023 among the 10 largest insurers.
For example, in 2023, Geico increased rates in Nevada by nearly 54% in less than a single year.
Car insurance market size
The market size, measured by revenue, of the U.S. auto insurance industry was $362 billion in 2023, a slight increase over 2022.
The recent growth has come as claims have increased post-pandemic because of greater traffic volume and higher costs to repair or replace a vehicle.
In 2024, the industry is expected to continue to grow in size as it continues its rebound from a down year in 2020.
The largest companies in the auto insurance industry by market size in 2023 were State Farm (18.3%), Progressive (15.2%), Berkshire Hathaway through subsidiary Geico (12.3%), Allstate (10.4%) and USAA Insurance Group (6.2%).
What factors affect your car insurance rate?
While higher auto insurance premiums are typically associated with high-risk drivers and lower premiums with less risky drivers, there are a wide range of factors that affect how insurance underwriters calculate your premium.
- Driving record: A better record means a lower premium, with any accidents or traffic violations in your history likely to drive your price higher.
- Car usage: The more miles you drive, the higher the risk of an accident and, as a result, the higher the cost.
- Location: Urban drivers pay higher premiums due to greater rates of accidents and theft.
- Age: Younger drivers are typically charged more because of their inexperience driving.
- Gender: Women often pay less because they typically get into fewer accidents, have fewer DUIs and have less serious accidents than men.
- Car type: The car you drive, including its size, expected costs for repair, likelihood of theft and other factors, will affect your rate.
- Credit: Your credit score may affect how an underwriter determines the likelihood of you filing a claim and the cost of that claim.
- Coverage type: The type and level of your coverage, including its limits and deductible, will affect your rate.
- Legal exclusions: It is against the law for your race or religion to be determined to set your rate.
Is motor vehicle insurance expected to rise?
The global market for auto insurance is expected to see continued growth throughout the latter half of the 2020s. Rising consumer income and a greater number of vehicle purchases are projected to sustain the growth of the auto insurance industry.
Additionally, a greater number of accidents is expected to fuel demand for auto insurance, with recent increases in collisions, DUIs and other traffic accidents.
Between 2022 and 2030, the global auto insurance market is projected to grow at a compound annual growth rate of 8.7%.
How many drivers are uninsured each year?
Over the past few years, a greater number of U.S. drivers have forgone auto insurance, with the rate of uninsured drivers growing from 11.1% in 2019 to 14% in 2022.
Washington, D.C., had the highest rate of uninsured drivers in 2022, at more than 25% of drivers, followed by New Mexico (24.9%) and Mississippi (22.2%). The states with the lowest percentages of uninsured drivers were Wyoming (5.9%), Maine (6.2%) and Idaho (6.2%).
An insurer involved in an accident with one of these drivers or a hit-and-run driver may be covered by uninsured or underinsured motorist coverage.
FAQ
What percentage of people have car insurance?
As of 2022, 86% of U.S. drivers are covered by insurance. The highest rates of insured drivers are in Wyoming, Maine and Idaho, at about 94%, while the lowest is in Washington, D.C., where 1 in 4 drivers were uninsured as of 2022.
What state has the highest car insurance rates?
In 2021, the places with the highest average auto insurance expenditures were New York ($1,511), Louisiana ($1,500) and Washington, D.C. ($1,435).
Which age group spends the most on car insurance?
Younger drivers under the age of 25 are typically charged greater amounts for car insurance because of their inexperience and limited driving record.
Which gender pays more for car insurance?
Men pay higher car insurance premiums. Women often pay less because they get into fewer accidents and have less serious accidents than men.
References
- “Facts + Statistics: Auto insurance.” Insurance Information Institute. Evaluated July 8, 2024.Link Here
- “Automobile Insurance in the US – Market Size (2004–2030).” IBISWorld. Evaluated July 8, 2024.Link Here
- “Facts + Statistics: Uninsured motorists.” Insurance Information Institute. Evaluated July 8, 2024.Link Here
- “Motor vehicle insurance in U.S. city average, all urban consumers, not seasonally adjusted.” U.S. Bureau of Labor Statistics. Evaluated July 8, 2024.Link Here
- “Your Driving Costs.” AAA. Evaluated July 8, 2024.Link Here
- Woleben, J. “US private auto insurance rates see double-digit jump in 2023.” S&P Global. Evaluated July 8, 2024.Link Here
- “Automobile Insurance in the US – Market Size, Industry Analysis, Trends and Forecasts (2024-2029).” IBISWorld. Evaluated July 8, 2024.Link Here
- “What determines the price of an auto insurance policy?” Insurance Information Institute. Evaluated July 8, 2024.Link Here
- “Auto Insurance Market.” Straits Research. Evaluated July 8, 2024.Link Here
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