Tuesday, November 12, 2024
Cars

The True Cost of Auto Insurance in 2023


New York has the highest True Cost ranking, with an average of 5.05 percent of drivers’ income spent on car insurance, while Maine has the lowest ranking, with drivers only spending 1.03 percent of their income on car insurance. New York’s average annual premium, $3,139, is well above the national average of $2,014, likely due in part to the crowded roads in the state. More vehicles on the road increases the risk of accidents, and thus the risk to insurers, which charge a higher rate to compensate. Maine, which is a far less densely populated state, has an average full coverage premium of $941, which is 53 percent lower than the national average.

 

Of the MSAs that we analyzed — the 25 largest in the country by population — Miami drivers pay the highest percentage of income toward car insurance at 5.51 percent. Boston drivers pay the lowest percentage at 1.32 percent. These metros also had the highest and lowest True Cost rank, respectively, in 2022. Drivers in Boston benefit from a fairly high average income as well as a below-average full coverage car insurance rate. Conversely, Miami has a much higher-than-average rate combined with an average income slightly below the national average.

 

While your location plays a large role in your car insurance rate, it isn’t the only factor that affects your premium. Life events — including adding a teen driver, getting a speeding ticket or experiencing a drop in your credit score — can also change how much you pay for insurance.

 

2022 vs. 2023

Alaskan drivers saw the biggest increase in percent of income spent on car insurance between 2022 and 2023. Drivers in Alaska spent an average of 2.17 percent of their income on car insurance in 2022 and 3.66 percent in 2023, an increase of 1.49 percentage points. Arkansas drivers had the largest decrease in income spent, dropping from 3.40 percent in 2022 to 2.40 percent in 2023.

 

However, when looking at pure full coverage premium changes, Illinois had the largest increase, going from $1,548 in 2022 to $1,806 in 2023, a change of 16.67 percent. Alaska’s premium increase was close behind, increasing 15.42 percent from $1,686 to $1,946. New Jersey drivers saw average rates decrease by 7.24 percent, from $1,891 to $1,754. Massachusetts drivers had the second-most-impactful average rate decrease, with rates dropping 2.62 percent, from $1,296 to $1,262.

 

Of the metros we analyzed, Orlando and Phoenix had the highest changes to average annual premium. Orlando’s average rates increased from $2,510 in 2022 to $3,078 in 2023, a change of 22.63 percent. Phoenix drivers saw their average rates go from $1,845 to $2,164, a 17.29 percent change. Conversely, Philadelphia had the largest decrease in average premium, from $2,395 to $1,872, a 21.84 percent drop. New York drivers also saw a substantial decrease, with average rates dropping from $3,082 in 2022 to $2,649 in 2023, or about a 14.05 percent downward adjustment.



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