The true cost of auto insurance in 2025

The average cost of full coverage car insurance is 12 percent higher in 2025 compared to last year, but your personal rate change may be higher or lower. A driver who had an accident last year may have seen a steeper rate increase at renewal, while someone who moved to a new ZIP code or reduced their mileage may have seen a rate decrease. Understanding the average rates in your region gives you a benchmark for how your rate stacks up. Compare the true cost of auto insurance in all 50 states and 25 metropolitan statistical areas (MSAs) with this interactive map:

The true cost of car insurance is calculated by dividing the average annual full coverage car insurance premium by the median annual income for each state and MSA. We assigned a true cost ranking to each state and 25 metros. The higher the ranking, the lower the true cost of car insurance. 

The true cost of auto insurance in 2025 by state

With a true cost rank of 50, Louisiana drivers face more financial pressure from rising auto insurance rates than any other state. The Pelican State has a median household income of $58,229 per year and an average annual full coverage car insurance premium of $3,978 — corresponding to 6.83 percent of household income. Florida consistently has higher average insurance costs than Louisiana, but with a significantly higher median income, there is a noticeable gap in the true cost of insurance between these two states. Floridians pay 5.69 percent of their income toward car insurance — 1.14 less than Louisiana.

Louisiana and Florida share similar risk characteristics. Both have high vehicle theft rates, frequent extreme weather losses and high rates of insurance fraud. These risk factors are inherently costly to insurance carriers and reinsurance companies, which could explain why both states tend to have high premiums. 

Hawaii came in the top spot with a true cost rank of 1. Drivers spend 1.77 percent of their income on car insurance. Vermont and New Hampshire are close behind, securing true cost ranks of 2 and 3 with 1.81 percent and 1.88 percent of median income spent on car insurance, respectively. 

Of the 25 MSAs analyzed, we found that drivers living in the Miami-Fort Lauderdale-West Palm Beach MSA have the highest average cost of full coverage car insurance at $5,174 per year and the highest true cost rank, forking over 6.78 percent of their income to car insurance. Florida also has the second most expensive MSA, Tampa-St. Petersburg-Clearwater, with an average of 6.29 percent of annual income spent on coverage. 

The top three MSAs with the lowest true cost ranking are Seattle-Tacoma-Bellevue, with 1.79 percent of income spent on car insurance; Boston-Cambridge-Newton, with 1.93 percent; and Washington-Arlington-Alexandria, with 1.96 percent. These three MSAs have some of the lowest average premiums of the MSAs we analyzed, median annual incomes above $110,000 and easy access to highly-rated public transportation. 

Car insurance is based on the concept of shared risk. We pay premiums to transfer some of the financial risk associated with driving to an entity with deeper pockets: a car insurance company. In return, carriers pay for covered claims from accidents and other damage. However, we also share the risk of the road with each other. Insurers evaluate several hazards to set rates in an area, including traffic density, insurance fraud, theft and vandalism rates, weather patterns and claim frequency. 

How much have auto insurance rates increased?

At $220 per month, the average cost of car insurance is up 12 percent from 2024, causing drivers to spend an additional 0.24 percent of their household income on auto insurance. In dollars, the increase works out to an extra $289 per year or $24 per month. Looking further back, average full coverage car insurance rates rose 31 percent from 2023 to 2025. The average cost of coverage was $2,013 per year in 2023 — $625 cheaper.   

Drivers in Florida saw the most noteworthy jump in insurance premiums from 2024 to 2025, while Missouri had a surprising rate decrease. Florida's annual average full coverage car insurance cost is now $4,171 — $782 more than last year. Missouri drivers pay $2,578 per year for full coverage, which is a decrease of $314 from 2023. However, it's worth noting that average Missouri rates increased from $2,113 in 2023 to $2,892 in 2024, so the cost of coverage in the state is still 22 percent more than it was two years ago. 

Your first step to lower car insurance rates may be shopping around. If you haven't compared quotes in the last year or two, you may be able to find a better deal with a different auto insurance company, especially if your personal circumstances have changed. Car insurance companies use their own proprietary rating algorithms, so one may offer you substantially lower rates than another for a policy with the same coverage types and limits. 

Another tried and true way to lower your premium is by finding new car insurance discounts. Many discounts, like multi-car and safety feature discounts, are applied to your policy automatically, but others require your active participation. Discounts for automatic payments or enrolling in paperless policy and billing options are fairly easy to acquire, but these opportunities vary among carriers. 

While some other discounts require a little more commitment, they may be worth the effort. Defensive driving discounts, for example, can save drivers between 5 and 20 percent off certain policy coverage types, depending on the carrier and the state. The courses range from four to eight hours to complete but usually remain on your policy for three years. Telematics discounts offer significant savings but require drivers to share their data and driving habits, which some people may not be comfortable with. Bundling discounts are also typically hefty, and may be available for a wide range of policy combinations, including auto and home, renters, condo and even motorcycle. 

The actions that significantly help lower your rates aren’t quick and easy fixes, but they may provide meaningful savings over time. Insurance companies consider driving history, driver experience, vehicle type and, in most states, credit history to determine your rate. By preparing for life changes such as adding a teen driver to your policy and maintaining a good credit score and driving record, you actively reduce your chance of overpaying for car insurance.

Standout statistics:

 

• In Michigan, the average cost of full coverage car insurance is $3,131 per year, and drivers spend 4.53 percent of their income on auto insurance. However, drivers living in the Detroit-Warren-Dearborn MSA have a higher true cost of insurance, at 5.09 percent, with an annual premium of $3,696.
• Despite being neighbors with similar weather challenges, the average cost of full coverage car insurance in Utah is 40 percent less than in Nevada. This gap can be attributed, in part, to Nevada's high fatal crash rate and high number of annual vehicle thefts. 
• With an average yearly state premium of $3,144, Colorado drivers spend an average of 3.38 percent of their income on car insurance. Even though the average annual premium is higher in the Denver-Aurora-Centennial MSA ($3,260), drivers spend only 3.16 percent of their income on auto insurance because their median household income is higher. 

Driving record

Your driving record, and the driving record of anyone listed on your insurance policy, play a significant role in determining your rate and sometimes even your eligibility with certain carriers. 

Drivers with a history of DUIs or multiple tickets and accidents may have to find coverage with high-risk carriers, which usually don’t offer the same benefits as standard and preferred insurance companies. Drivers with clean records typically also benefit from more discount opportunities and benefit options, such as safe driving discounts and diminishing deductibles, where available. 

Your driving history is an admitted rating factor in all states, but carriers typically only consider incidents within the past three to five years (sometimes up to 10 for DUIs or other serious offenses). That said, California does not allow insurers to increase your premium for a lapse in coverage. It does, however, allow carriers to apply a "persistency credit," effectively lowering rates for drivers who maintain continuous coverage.

Standout statistics:

 

• Nationally, the most expensive type of moving violation is a DUI conviction. Drivers with one DUI pay an average annual premium of $5,106 — 94 percent more compared to those with clean driving records. 

• In terms of dollars, California drivers experience the largest premium hike for speeding, an annual increase of $1,136, but North Carolina drivers see the biggest relative increase. Drivers in the state pay an average of 49 percent more for coverage after a speeding ticket conviction. 

• New York drivers see the lowest average premium increase following an at-fault accident, at just 5 percent more. In contrast, California drivers experience an increase of 67 percent more. 

• Florida drivers pay the most for car insurance following a lapse in coverage. Floridians receive an average premium increase of $591 after a lapse — $340 more than the national average increase. 

Credit history

Many drivers aren't aware that insurance companies utilize credit-based insurance scores to rate auto policies. These scores use many of the same inputs as traditional credit scores, and drivers with poor credit histories are deemed more risky to insure in states that allow the use of this metric. 

Some drivers with poor or limited credit history may only be able to secure coverage with high-risk insurance companies. Drivers insured by standard providers may pay rates similar to drivers with DUIs. Based on national rate data, drivers with "poor" credit ratings pay, on average, 76 percent more for auto insurance compared to drivers with "good" ratings. 

However, four states — California, Hawaii, Massachusetts and Michigan — prohibit or limit credit as a rating factor for car insurance. 

Standout statistics:

 

• The national average cost of full coverage car insurance for a driver with poor credit is $4,644 annually — $2,006 more than drivers with good credit. 
• Florida drivers with poor credit pay $8,254 per year for full coverage car insurance, the highest rate of any state. Among states that allow credit as a rating factor, Idaho drivers with poor credit pay the least of any state at $2,158 per year. 
• South Dakota has the highest relative gap in average rates for drivers based on credit history. Drivers with poor credit pay 148 percent more for auto insurance than their counterparts with good credit. 
• North Carolina is the most forgiving in terms of insurance credit rating. Drivers with poor credit pay an average of $2,845, only 39 percent more than drivers with good credit for the same level of coverage.

Vehicle type

When it is time to purchase a new car, drivers usually think about saving a downpayment and making room in their budget for the monthly lease or loan payment. However, Bankrate's Hidden Cost of Car Ownership Study found that insurance is the largest hidden cost associated with vehicle ownership. And the year, make and model of the vehicle you select have a big impact on your premium. 

Contrary to popular belief, SUVs don't necessarily cost more to insure than sedans. While safety ratings do play a role, the cost of parts and labor associated with a particular make and model vehicle is also a big indicator. For example, full coverage insurance for a 2023 Tesla Model 3 costs 53 percent more than coverage for a 2023 Subaru Forester, all other factors being equal. Whether you are in the market for a luxury vehicle or a budget-conscious ride, pricing out your insurance costs before finalizing your vehicle purchase may help you save money over the life of the vehicle. 

Major life events

Your life changes over time and so will your insurance needs. Major life events such as marriage, divorce, moving and licensing teen drivers will impact your insurance rate. Of these events, adding a teen to your car insurance is one of the most expensive changes you will likely make to your policy. 

The good news is there are steps that you can take to plan for this change and take some of the sting out of the sudden rate hike. Talk to your teen about completing an additional driver's training class and maintaining a grade point average of 3.0 or more so that you can take advantage of discounts available to drivers under the age of 25. 

Please note that Hawaii and Massachusetts prohibit the use of age as a rating factor. However, Massachusetts does allow insurers to rate for years of driving experience.

Standout statistics:

 

• The national average cost of full coverage car insurance with a teen driver is $5,675 per year, an increase of $3,037. 
• Adding a teen driver to your policy in Utah results in coverage that costs an average of 145 percent more, the biggest spike of any state. 
• Excluding states that don't allow age as a rating factor, South Dakota is the most teen-friendly state. Adding a teen driver to their parents' full coverage auto rates only raises average rates by 69 percent more.

From 2023 to 2024, full coverage car insurance rates increased by an average of 17 percent. While average rates are up another 12 percent this year, we're starting to see the much-needed slowdown in rate hikes that drivers have been waiting for. 

According to Mark Friedlander, director of corporate communications for the Insurance Information Institute, this slowdown is expected to continue throughout 2025. "The Insurance Information Institute's underwriting projection forecasts a countrywide average personal auto rate increase of 7 percent in 2025," says Friedlander. "Our projected average premium increase in 2025 includes a 3.8 percent spike in the costs of repairs (parts and labor)."

Below are additional insurance factors to keep an eye on in 2025:

What do these trends mean for me?

Selecting the right level of car insurance and the best car insurance company for your needs offers critical financial protection for you and your vehicle. Admittedly, it may feel more complicated now than it has in the past, and it certainly feels more expensive. While car insurance rate increases are slowing, your premium likely isn't coming down anytime soon. This means it's more important than ever to consider the personal rating factors that are within your control. 

If you are in the market for a new car, consider which cars inherently have cheaper car insurance premiums and compare quotes for different models and trim levels. Think about what extreme weather and other perils you are more likely to incur and speak to your agent about how to best insure your vehicle. Be extra careful on the road, and consider any additional discounts or programs offered by your insurer that could help you earn lower rates or lock in your existing premium. By looking at ways to mitigate the risk surrounding car ownership, you may be able to secure lower car insurance rates.