Auto insurance plays a crucial role in protecting drivers against financial losses from accidents, vehicle damage, and liability claims. With over 280 million registered vehicles in the United States in 2022 and millions of vehicle crashes occurring annually, the demand for auto insurance remains strong. While most states require drivers to carry coverage, the cost and accessibility of insurance vary significantly based on factors like location, age, and driving history.
Understanding key trends and statistics in auto insurance can help consumers make informed decisions about their policies, coverage options, and affordability.
Auto Insurance Coverage Overview
The auto insurance market is expanding both in the United States and worldwide. By the end of 2025, the global auto insurance market is estimated to reach $940.79 billion in gross written premiums. With a projected annual growth rate of 1.48% through 2029, the market is expected to reach $997.74 billion by the end of the decade.
In 2025, the United States leads the world in gross written premiums, estimated to reach approximately $349.4 billion.
Auto Insurance Costs and Premium Trends
The average annual auto insurance expenditure in the U.S. increased by 6.1% in 2022, rising from $1,062 in 2021 to $1,127. Premiums have generally trended upward over the past decade, reflecting inflation, rising vehicle repair costs, and increased claims.
Average Auto Insurance Expenditures (2013-2022)
| Year | Average Annual Premium | Percent Change |
| 2013 | $841.06 | +3.5% |
| 2014 | $869.47 | +3.4% |
| 2015 | $896.66 | +3.1% |
| 2016 | $945.22 | +5.4% |
| 2017 | $1,008.35 | +6.7% |
| 2018 | $1,058.10 | +4.9% |
| 2019 | $1,075.08 | +1.6% |
| 2020 | $1,047.76 | -2.5% |
| 2021 | $1,062.31 | +1.4% |
| 2022 | $1,126.79 | +6.1% |
Factors like urbanization, disposable income, and traffic congestion influence regional price variations. Premiums are also affected by the types of coverage purchased, as some policyholders opt out of comprehensive or collision coverage.
Most and Least Expensive States for Auto Insurance
Auto insurance rates vary widely by state, influenced by local traffic conditions, accident rates, and legal requirements.
Most Expensive States for Auto Insurance (2022)
| Rank | State | Average Annual Premium |
| 1 | Florida | $1,624.77 |
| 2 | Louisiana | $1,557.85 |
| 3 | New York | $1,548.58 |
| 4 | D.C. | $1,501.94 |
| 5 | Rhode Island | $1,428.12 |
Least Expensive States for Auto Insurance (2022)
| Rank | State | Average Annual Premium |
| 1 | North Dakota | $728.89 |
| 2 | Maine | $757.65 |
| 3 | Idaho | $772.31 |
| 4 | Iowa | $776.25 |
| 5 | Vermont | $793.38 |
High insurance costs in Florida, Louisiana, and New York stem from higher accident rates, extreme weather risks, and dense urban traffic. Meanwhile, states like North Dakota, Maine, and Idaho benefit from lower population densities and fewer accident claims.
Auto Insurance Affordability
While auto insurance is a necessity, it represents a significant portion of household expenses in many states. On average, U.S. households spent 1.67% of their income on auto insurance in 2018. However, affordability varies widely by region.
Least Affordable States for Auto Insurance (2018)
| Rank | State | % of Median Income Spent on Insurance |
| 1 | Louisiana | 3.09% |
| 2 | Florida | 2.61% |
| 3 | Michigan | 2.43% |
| 4 | Mississippi | 2.27% |
| 5 | Georgia | 2.17% |
Most Affordable States for Auto Insurance (2018)
| Rank | State | % of Median Income Spent on Insurance |
| 1 | Iowa | 1.02% |
| 2 | North Dakota | 1.03% |
| 3 | New Hampshire | 1.04% |
| 4 | Hawaii | 1.04% |
| 5 | Vermont | 1.11% |
Louisiana, Florida, and Michigan consistently rank as the least affordable states, while Iowa and North Dakota offer the best affordability for drivers.
Factors Influencing Auto Insurance Costs
Several factors impact the cost of auto insurance, including:
- Location – Urban areas with high accident rates have higher premiums.
- Age & Gender – Younger drivers, especially those under 25, pay the highest rates.
- Vehicle Type – Luxury cars and high-performance vehicles cost more to insure.
- Driving Record – Accidents, DUIs, and speeding violations significantly raise premiums.
- Credit Score – In many states, lower credit scores result in higher insurance rates.
- Coverage Levels – Policies with comprehensive and collision coverage cost more.
Auto Insurance Claims and Losses
Auto insurance claims cover bodily injury liability, property damage, and vehicle repairs. Claim frequency and severity have fluctuated in recent years due to rising repair costs and inflation.
Key Auto Insurance Claim Statistics (2023)
- 0.77% of liability insurance policyholders had a bodily injury claim.
- 2.58% of liability insurance policyholders had a property damage claim.
- 4.54% of collision insurance policyholders filed a claim.
- 4.06% of comprehensive insurance policyholders filed a claim.
- Average bodily injury claim payout: $26,501
- Average property damage liability claim payout: $6,551
- Average collision claim payout: $5,470
- Average comprehensive claim payout: $2,306
Insurance providers are adapting to rising claim costs by using telematics, AI-based fraud detection, and data-driven pricing to manage risk more effectively.
Conclusion
The auto insurance industry continues to grow, driven by increasing vehicle ownership, evolving consumer preferences, and technological advancements. The United States leads the global market, generating an estimated $349.4 billion in gross written premiums by the end of 2025.
However, insurance costs are rising due to higher claim severity, inflation, and accident rates. Affordability varies widely by state, with Florida, Louisiana, and Michigan among the most expensive, while North Dakota and Maine remain the most affordable.
As embedded insurance, telematics, and digital claims processing gain traction, the auto insurance industry is poised for further transformation. Consumers should remain informed about market trends, affordability factors, and coverage options to make cost-effective insurance decisions.
With a strong background in the marketing industry and healthcare leadership roles, Filip is responsible for CLICKVISIONBPO’s sales strategies and onboarding new clients. With a passion for sharing insights gained from his experience, he also shares valuable knowledge through industry related articles.