Car insurance rates have jumped nearly 20% in the past year, making the average annual cost over $1,700 and increasingly pushing vehicle ownership out of reach for middle-class Americans.
Aside from depreciation, car insurance is typically the second-largest driving-related expense for the typical driver, according to a new report from the auto club AAA on ownership and operation costs.
Car insurance accounts for over 16% of the total cost of driving a new vehicle in 2024, which comes out to $10,642, assuming you drive 10,000 miles per year, according to the report.
Some of the other major costs of vehicle ownership include depreciation (about $4,280), fuel ($1,490), finance charges (about $1,330), maintenance (about $1,010), and license/registration/taxes ($815).
Auto insurance costs have been soaring since 2022 due to high vehicle prices and more expensive car repairs. Insurers have also cited an increase in dangerous driving, which has led to more claims. In many cases, car insurance companies are trying to pass these higher costs of fixing and replacing vehicles along to their customers.
How much does car insurance cost?
According to AAA, the average annual cost of car insurance is $1,715 in 2024, which represents an increase of more than $500 since 2019.
Inflation in auto insurance tends to lag the rest of the economy: Before insurance companies can charge higher premiums, they have to go through state regulators and wait for drivers’ policies to come up for renewal.
That’s why car insurance is the only major spending category still showing double-digit annual inflation in the consumer price index (CPI), even as inflation for most other items has abated.
The July CPI showed the cost of motor vehicle insurance was up 18.6% in the past year. Of the 200-plus items tracked in the government inflation index, this annual increase in car insurance was surpassed only by the price hikes for eggs and frozen non-carbonated juices.
Cost of car insurance by vehicle type
The cost of car insurance depends on what type of car you drive, along with other factors like your driving record, age and location.
Here’s the average annual cost of car insurance based on vehicle type, according to AAA:
- Small sedan: $1,510
- Medium sedan: $1,583
- Subcompact SUV: $1,684
- Compact SUV (FWD): $1,723
- Medium SUV (4WD): $1,831
- Midsize pickup: $1,527
- 1/2 ton/crew cab pickup: $1,764
- Hybrid vehicle: $1,643
- Electric vehicle: $2,059
Knowing how much other drivers pay for car insurance can help you tell if you’re overpaying.
It’s recommended to shop around at least once per year. And don’t hesitate to switch if you find a better deal. You can also bundle insurance policies and raise your premium to get a lower car insurance premium.
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