How Much Is Car Insurance?

by COUNTRY Financial

If you’re in the market for a new car, one of the first questions you’ve likely asked yourself is, ‘How much is car insurance?’

As with most insurance, there’s no single answer; NerdWallet suggests the average cost of car insurance is $2,324 per year,¹ but that number can vary wildly based on multiple factors.

What determines car insurance rates?

Generally, auto insurance rates are determined by a combination of factors, including your car insurance coverages, personal risk factors and the type of car you’re insuring. 

A car insurance policy is a collection of various coverage types; some are required by state law, and others you can buy as add-ons. All 50 U.S. states require certain minimum levels of coverage, and each state’s requirements are different. (We’ll discuss coverages in the next section.)

Beyond coverages, there are personal risk factors that affect car insurance rates. Things like:

• Your age
• How long you’ve been driving
• How often you drive
• Any history of accidents or tickets
• Where you live
• Your car itself (sports cars, for example, are generally more expensive to insure)
• Your car’s mileage

How much car insurance do I need?

How much coverage you actually need is mostly subjective; it depends on your state requirements and what level of protection you personally want. 

Most states require some form of liability coverage, of which there are two types:

• Bodily injury liability: Covers medical costs for others if you injure them in an accident you caused.
• Property damage liability: Pays for damage you cause to someone else’s vehicle or property.

There are other coverages you can purchase separately. Drivers often purchase these when they want extra protection:

• Collision: Helps pay for repairs if your car collides with another vehicle or object, whether another driver is involved or not (if you hit a mailbox, for example).
• Comprehensive: Covers car repairs for damage caused by events other than a collision (e.g., theft, vandalism, fire, etc.).
• Medical payments (MedPay)*: Helps pay for medical costs if you or your passengers are injured in an accident, regardless of which driver is at fault.
• Personal injury protection (PIP)*: Offers the same coverage as MedPay but is more comprehensive. PIP also helps reimburse lost wages, physical rehab and more following an accident.
• Uninsured or underinsured motorist coverage*: Pays for damage to your car if you’re in an accident with another driver who has no insurance (uninsured) or not enough coverage to pay for damages (underinsured).

*Note: Coverages with asterisks are required by law in some states.

Car insurance discounts

Most insurance companies offer car insurance discounts as incentives to reduce the risk of insuring you. These discounts—like those for safe driving, bundling multiple policies, good student performance and more—help insurers reduce their overall risk and claim costs. By encouraging behaviors that lower the likelihood of accidents or insurance payouts, companies can keep premiums more affordable while rewarding responsible drivers.

Final thoughts

Car insurance can be expensive, but understanding what drives the cost can help you find the right auto insurance policy for you. 

If you’d like to know more about how much car insurance costs, talk to your insurance agent today—they can help you determine how much coverage you need and answer any questions.

Updated 3-24-26