How Much Does the Average American Pay for Auto Insurance?

If you feel like your auto insurance payments have become far more expensive in recent years, you aren't alone. In many cases, drivers are paying insurance premiums that are 50% greater (or more) than they paid just a couple of years ago.

With that in mind, here's how much the average American pays for auto insurance, why it's become so much more expensive, and how you might be able to save money.

Are you paying too much for auto insurance? Click here for our updated list of the best auto insurance companies, where you can compare quotes quickly and easily.

The average American's auto insurance bill

To be sure, the average auto insurance premium somewhat depends on who you're asking. However, according to Motley Fool Money's own research, the average driver pays $3,017 per year for car insurance.

Of course, this can vary dramatically based on what type of vehicle you own, your age and marital status, the amount of coverage you select, and other factors. It can also be heavily dependent on what state you live in. And some insurance companies tend to be cheaper than others, although there's no way to know what your lowest auto insurance premium could be unless you get personalized quotes.

Why has insurance become so expensive?

This is significantly more than the average driver was paying just a couple of years ago. In fact, according to Insurify, the cost of the average auto insurance policy increased by 24% in 2023, and is expected to rise by another 22% by the end of this year. In certain states, the 2024 increase could be 50% or more.

It might seem logical to blame it on inflation, and that's certainly a part of it. From 2020 to 2022, the average cost of a new vehicle increased by 19% and repair costs increased by a similar percentage, so it makes sense that this would be factored into insurance prices.

However, it isn't only inflation that is responsible. An increasing frequency of damaging weather events in recent years has led to more frequent and costly claims. And because of the high-dollar nature of auto insurance claims, more people are choosing to involve lawyers in the process, leading to higher average settlement costs for insurance companies.

Take the time to shop around

You've probably seen those Geico commercials that claim "15 minutes can save you 15% or more on your car insurance." And while I'm not necessarily saying that Geico is going to be the most affordable insurance company for you, there's some great advice in that line.

One of the biggest personal finance mistakes people make is failing to shop around for big-ticket items simply because they assume "it's all the same." Mortgages are a good example, as are auto loans.

Auto insurance is no exception. While you don't need to constantly get new auto insurance quotes, it's a good idea to do so at least once every few years. It doesn't take too long to obtain a handful of quotes, and the time it does take could be well justified if you can save hundreds of dollars over a year, which isn't uncommon.

And if your auto insurance rates recently increased, now is as good a time as any to make sure you aren't paying too much.