The Average Monthly Auto Insurance

Written by shoaib khan
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The Average Monthly Auto Insurance
The average premium policyholders have to pay monthly depends on a number of factors. (Car headlamp image by Warren Millar from

In most states, drivers must carry the required minimum amount of liability coverage in their auto insurance policies. Some states enforce financial responsibility laws, which ensure that drivers pay for damages and injuries they cause. Some states may require drivers to carry additional insurance over the basic liability coverage. The average price a driver has to pay for insurance depends on the state's minimum required coverage, the driver's demographic information, driving history and vehicle type.


Consumers pay for auto insurance in the form of premiums. When the policy is formed, a car owner usually has to pay a specific amount upfront, usually 25 per cent of the policy's price, and the rest in equal monthly instalments over the term of the policy. The average premium paid by U.S. drivers in 2010 was £928 for one year, or approximately £78 per month. This figure is computed by considering state averages for all states, and each state's average is determined by considering premiums paid by all drivers. As a result, the premium a particular driver has to pay monthly may be vastly different from the national average, based on several factors.

State Averages

Most states have averages close to the national average of £78 per month, with drivers in 15 states paying between £70 and £81 per month. Pennsylvania, Delaware and Florida have state averages that are closest to the national average. The least expensive states for auto insurance are Wisconsin, Ohio, Maine and Vermont. In 2010, drivers in these states paid £48 to £55 to insure a vehicle for one year. At the opposite end of the spectrum lie the most expensive states---Louisiana, Oklahoma, Michigan and Montana---where drivers paid £97 to £133 to insure a vehicle for one year.

Risk and Premium

Insurers charge different premiums to different groups. The general rule is that a customer who represents higher risk is charged more than another customer with lower risk. The assumption is that a high-risk customer is more likely to be involved in an accident, which from the insurer's perspective means that the customer is more likely to file a claim and expect payments. Since an insurance company makes a profit only when premium collections exceed claim payments, the company offsets the risk of insuring high-risk customers by getting more in return, in the form of higher premiums. Typically, young and newly licensed drivers are considered riskier than older drivers with a good driving history. Additionally male drivers are riskier than females drivers of the same age, and single drivers are riskier than married ones.

Basic Coverage

Liability insurance is the most basic coverage in an auto insurance policy. This coverage includes protection for property damages and bodily injuries suffered by another party, as a result of an accident caused by the policyholder. For liability coverage to be in effect, the property damage or bodily injury need not occur while the other party is driving. The policy will have to pay the other party, for instance, when the policyholder damages a fence or drives into a mailbox belonging to the other party. Most states have minimum amounts of liability coverage that drives have to carry; if you buy only the state-required minimum coverage and are part of a group that are charged low premiums by insurers, your annual cost of insurance will be significantly lower than the national or state average. Similarly, drivers who purchase additional insurance over the basic requirement, or are part of a group that are charged higher premiums, may have to pay more than the national or state average.

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