Car insurance rates are expected to increase by 8.4% across the U.S. in 2023, amid the increase in drivers returning to the road. That's the biggest jump in car insurance costs in the past six years. The average cost of full coverage car insurance across the U.S. is $1,780 per year.
ValuePenguin used the Quadrant Information Services database to analyze millions of quotes for drivers across the U.S. It also analyzed car insurance rate changes filed by top companies across the country to show the current and historical landscape of the auto insurance industry.
Auto Insurance Cost by State
The average cost of full coverage car insurance for 2023 is $1,780 per year.
Auto insurance rates in Michigan average $4,788 a year, the highest in the U.S. and 168% higher than the national average, largely due to the state having the highest minimum insurance requirements.
Florida ($2,856 per year---60% higher than the national average) and Rhode Island ($2,748---53% higher) are the second and third most expensive states for car insurance, thanks to high population density and traffic congestion.
For cheap car insurance, drivers in Vermont ($1,104), Maine ($1,116) and Idaho ($1,188) typically have the most affordable rates across the U.S. Auto insurance in these states is 36% cheaper, on average, than the national average.
Average Car Insurance Rate Changes by State
Drivers are likely to pay substantially more for car insurance in 2023. The average annual rate increase across the U.S. is 8.4%---up from 1.3% in 2022.
Every state is expected to see a rate increase of at least 1% this year except California, D.C., Hawaii, Vermont and Wyoming.
The biggest year-over-year rate increases are in Illinois (17.1%), Arizona (15.6%), Georgia (13.8%) and New Hampshire (13.6%).
The average cost of car insurance has increased 16.5% overall since 2017.
Traffic Violations Increase Car Insurance
Drivers with a traffic violation or accident could see an average car insurance rate increase of 52% in 2023.
North Carolina has the largest average increase (115%) in full coverage auto insurance rates for drivers with a ticket, accident or DUI on their driving record.
Nebraska auto insurance companies tend to be the most forgiving to drivers with an imperfect driving record, where rates only increase by 35% on average.
A DUI will have the biggest impact on rates, with an average increase of 84% nationwide.
Cost of Car Insurance for Most Popular New Cars
The cheapest new cars to insure tend to be crossover SUVs and sedans, while pickups and larger SUVs cost more to insure. Smaller sedans and midsize SUVs like the CR-V and RAV4 are typically cheaper to repair or replace than larger cars, so they're typically cheaper to insure.
Electric cars are growing in popularity. The Mini Cooper Electric is one of the cheapest EVs to insure, while Teslas are some of the most expensive. The Porsche Taycan is one of the most expensive cars to insure, as it's both a sports car and an EV.
2023 Car Insurance Trends
Car insurance companies have begun raising rates for 2023 due to an increase in car repair costs and claims. Many drivers can expect to see a higher car insurance bill this year.
Car accidents and claims have increased as more people resume regular travel or return to their daily commute. More people driving means a higher risk of getting in a crash, which means higher car insurance rates.
Cars are becoming more expensive to repair, in part because replacement parts are becoming difficult to find due to supply shortages or more expensive due to inflation. The lack of availability for used and new cars has also increased the typical market value for many cars, which means insurance companies are paying out higher amounts for claims across the board.
Severe storms and hurricanes cause a rise in car insurance claims from cars that are flooded, damaged or destroyed. As the U.S. faces more extreme weather over time, car insurance rates will increase to match a higher risk of damage, especially in coastal areas.
The popularity of electric vehicles will only increase as technology improves. However, EVs cost around 28% more to insure than a new gasoline-powered car. Look for vehicle-specific insurance discounts, like electric car and safety feature discounts.
How Drivers Can Save Money in 2023
The most important part of searching for car insurance is comparing quotes from several companies. Quotes can vary by hundreds of dollars across companies, even for the same driver.
Insurance companies offer many discounts to help lower rates. In the wake of increased remote work, many companies offer discounts or lower rates for driving less. Pay-per-mile car insurance can reduce rates even more for low-mileage drivers.
Switching from full to minimum coverage is a great way to save a significant amount on car insurance premiums if the owners doesn't have a car loan or an expensive car. Full coverage is 157% more expensive than liability-only coverage. Removing optional coverages like roadside assistance can bring down the bill, too.
Insurance companies in most states evaluate credit as a factor for insurance rates. The difference between a good and poor credit score can change premiums by 80%, as people with poor credit may be more likely to file car insurance claims.
ValuePenguin has a mission to empower people with information and resources to help them make smarter financial decisions. Car insurance can be a difficult and time-consuming topic to understand. This report attempts to unmask some of the critical issues.
In crafting the analysis, ValuePenguin reviewed more than 3.6 million quotes for different drivers, adjusting for various factors that affect auto insurance premiums. It gathered rates from 37 top insurance companies across the country since rates can vary widely by company.
Source: ValuePenguin
