How to choose the right car insurance company

How does car insurance work?

Depending on your policy, car insurance can cover damages, theft and bodily injury. Policyholders pay premiums monthly or biannually and are reimbursed for repairs or other bills relating to covered collisions or other incidents.

There are five basic types of car insurance coverage. You’ll need liability insurance to drive in every state but New Hampshire, though many people add collision and comprehensive coverage.

Liability coverage: Pays for property damage and bodily injury when you are found responsible for a collision. It is required in most of the country, though the amount differs by state.

Collision coverage: Pays for repairs stemming from a collision with an object, like a house or a mailbox, rather than another vehicle.

Comprehensive coverage: Protects you in case of damages caused by a non-vehicular incident, like theft, vandalism or weather-related damage.

Personal injury protection: Pays for your medical expenses and lost income after an accident.

Uninsured/underinsured motorist coverage: Kicks in if you are involved in an accident with another driver who has no insurance or insufficient coverage.

How much is car insurance?

In July 2025, the average cost of car insurance was $2,677 a year for full coverage and $807 a year for minimum coverage.

Rates vary greatly by state, however, and premiums are typically higher in no-fault states like New York and Michigan.

State	Average annual cost for full coverage	Average annual cost for minimum coverage
Alabama	$2,074	$505
Alaska	$2,477	$513
Arizona	$2,775	$830
Arkansas	$2,405	$492
California	$3,100	$911
Colorado	$3,224	$569
Connecticut	$2,702	$1,052
Delaware	$2,924	$1,071
Florida	$4,069	$1,078
Georgia	$2,865	$1,006
Hawaii	$1,652	$403
Idaho	$1,460	$380
Illinois	$2,423	$677
Indiana	$1,719	$442
Iowa	$1,930	$327
Kansas	$2,496	$578
Kentucky	$2,780	$761
Louisiana	$3,953	$1,014
Maine	$1,631	$418
Maryland	$2,923	$1,041
Massachusetts	$2,066	$524
Michigan	$3,076	$878
Minnesota	$2,573	$718
Mississippi	$2,317	$525
Missouri	$2,532	$646
Montana	$2,354	$400
Nebraska	$2,408	$516
Nevada	$3,571	$1,055
New Hampshire	$1,741	$467
New Jersey	$3,008	$1,303
New Mexico	$2,160	$444
New York	$4,021	$1,719
North Carolina	$1,955	$595
North Dakota	$1,794	$395
Ohio	$1,810	$482
Oklahoma	$2,746	$558
Oregon	$2,214	$917
Pennsylvania	$2,411	$519
Rhode Island	$2,973	$913
South Carolina	$1,957	$626
South Dakota	$2,287	$370
Tennessee	$1,993	$509
Texas	$2,607	$740
Utah	$2,110	$806
Vermont	$1,501	$324
Virginia	$2,141	$756
Washington	$1,901	$573
West Virginia	$2,178	$551
Wisconsin	$1,916	$453
Wyoming	$1,759	$263
Washington, D.C.	$2,758	$834

Source: Bankrate data as of June 2025

Why is car insurance so expensive?

Premiums have steadily increased for several reasons, according to the Insurance Information Institute, including the rising cost of repairing and replacing vehicles and paying medical and legal bills.

Cars are also more technologically advanced, and the number and severity of collisions have gone up, according to the Insurance Institute for Highway Safety, including fatal crashes.

Factors influencing individual premiums include:

Policy type: Full coverage is more expensive than a liability-only policy. A low deductible can also raise the price of your premiums, as can buying add-ons like gap insurance and roadside assistance.
Your location: Where you live greatly influences how much you’ll pay and, in many states, so will your age, gender and marital status.
Your credit history: In all but a handful of states, insurance companies can use your credit-based insurance score to tabulate your premium.
Your driving history: Having an at-fault accident, speeding ticket or DUI on your record makes you a high-risk driver and usually results in pricier premiums.
Car make, model and features: A six-figure sports car will cost more to insure than a used sedan. While replacement costs can factor into this difference, discounts for safety features can also play a part.

How to choose the right car insurance company

If you’re shopping for car insurance, consider the following criteria:

1. Availability

Not all insurers are licensed in every state or provide the same coverage or discounts nationwide. Be sure what you want is available in your region.

2. Coverage options

Make sure any provider you’re considering has the options you want, whether that’s gap insurance, accident forgiveness or rideshare insurance.

3. Customer satisfaction

J.D. Power’s surveys provide insight into customers’ sentiment in key areas, including the level of trust with their insurance company, the price for coverage, the representatives they deal with, the ease of doing business and the helpfulness of a company’s digital channels. You can also see how a company is rated by the Better Business Bureau and the volume of complaints registered by the National Association of Insurance Commissioners.

4. Financial strength

It’s important that any insurance company you’re considering can pay out on claims. A.M. Best’s financial strength scores indicate the likelihood that an insurer will be able to make good on its financial obligations. Look for companies that score an A or better.

Car insurance FAQs

How much does car insurance cost?

The amount you’ll pay for car insurance varies greatly depending on where you live, your age, your driving record and many other factors. In July 2025, the nationwide average for full coverage was $2,677 a year. For a liability-only policy, it was $807 a year.

Can you get a refund on your car insurance?

Most car insurance is paid on a monthly or biannual basis. In most cases, if you cancel a policy you’ve already paid for, you’ll get a prorated refund. There may be a cancellation fee, however.

How do car insurance companies pay out claims?

After you file a claim, your insurer will review your documentation and investigate the circumstances of the claim. Depending on the provider, they may either issue you a check directly or send payment to the repair shop or medical provider.

What is the cheapest car insurance company?

According to our analysis, the major auto insurance companies with the lowest average premiums are USAA, Auto-Owners and Geico. Individual rates vary, however, depending on where you live, your driving record and other factors.