Is $500 a month a lot for car insurance?

Imagine paying $6,000 a year just for car insurance — sounds outrageous, right? For many drivers, it’s a harsh reality.

A $500 monthly premium is more than double the national average of $209 in 2025, according to our data, but it’s not unheard of. Younger drivers, owners of luxury cars, and people living in high-cost states are most likely to face these steep rates.

Let’s take a closer look at who ends up paying $500 a month for car insurance — and what you can do to lower your costs if you’re one of them.

What’s the average monthly car insurance premium in the U.S.?

The average monthly car insurance rate in the U.S. is $209 for full coverage, according to our data. That includes liability, comprehensive and collision coverage. Those who purchase only the state-mandated minimum liability coverage may have monthly rates as low as $42, on average.

Premiums have risen substantially in recent years, with the Bureau of Labor Statistics (BLS) reporting the following annual increases for motor vehicle insurance.

• 2022: 14.2%
• 2023: 20.3%
• 2024: 11.3%

​​Between July 2024 and July 2025, the cost of motor vehicle insurance increased by 5.3%, according to the BLS. While some experts say rates are beginning to stabilize, others warn that new tariffs on automotive parts could drive up repair and insurance costs in the months ahead.

Your own premium may differ from national averages, but these figures can serve as a helpful benchmark to see whether your rates are competitive — or if it might be time to start shopping for a better deal.

Why would someone pay $500 a month for car insurance?

For car insurance premiums to reach $500 a month — or $6,000 a year — a driver usually has to be considered high-risk.

“This typically happens when multiple factors increase risk for the insurer,” says Erika Tortorici, owner and principal of Optimum Insurance Solutions, in an email. “For example, [they may be] households with several vehicles and multiple drivers, especially if one or more of those drivers are young and inexperienced.”

When it comes to what affects car insurance rates, the following factors can all contribute to high premiums:

• Poor driving history. Drivers with multiple tickets, at-fault accidents or DUIs are considered at high risk for a claim.
• Expensive or luxury vehicles. These may drive up car insurance rates because they cost more to repair if a claim is made. For this same reason, electric vehicles can be more costly to insure.
• Inexperienced drivers. Teen drivers are three times more likely to be in a fatal crash, per mile driven, than older drivers. That – along with the risk of less serious accidents – is why young drivers are often charged some of the highest car insurance premiums.
• Urban or unsafe locations. “Your zip code can play a big role, since areas with higher accident rates, theft, or severe weather usually see higher premiums,” Tortorici says.
• Poor credit score. Not every state allows credit scores to be used when setting insurance rates, but in those that do, this can be another factor that boosts premiums.
• Lapse in coverage. Insurers usually give better rates to those who maintain continuous coverage, even if it is with a different company. However, if you have a gap in your insurance record, be prepared to pay more when buying a new policy.
• High coverage limits. Insurers will charge more if they need to foot more of the bill after an accident. As a result, those with higher coverage limits and lower deductibles will pay more in premiums.

Where drivers pay the most for car insurance

You’re more likely to pay around $500 a month for car insurance if you have a high-risk profile and live in certain parts of the country. Our data shows that the five most expensive states for car insurance are:

• Louisiana
• Florida
• California
• Colorado
• South Dakota

However, even in these states, the average monthly car insurance premiums fall well below $500 per month.

The story is very different, though, for young drivers. Teen drivers in almost every state will pay more than $500 per month for their coverage when added to a parent’s policy. In fact, Hawaii and Vermont are the only two states in which 16-year-olds have average monthly car insurance rates that are less than $500.

In many states, these high car insurance premiums will continue through age 20, and in Louisiana, even 23-year-olds can expect to pay more than $500 per month on average.

The following chart breaks down average monthly auto insurance rates by state for drivers age 16 to 23.

Where you live within a state can make a difference too.

“Living in a high-rated zip code, such as a busy city with more accidents, theft, or claims, can drive up costs,” Tortorici says.

Residents of more rural areas may find they pay less than the average price charged to drivers living in more populated areas.

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Which car insurance companies charge $500 a month?

The company you use for auto insurance can also play a role in how much you pay.

Each company has its own underwriting process and discount policies. Plus, your rates may depend on the financial health of the company. If an insurer has paid out significant claims because of a natural disaster or other event, they may raise rates for all their customers.

As with car insurance by state, you’ll find the highest rates for young drivers. In fact, we found that teen drivers will pay more than $500 per month for insurance at most major national carriers. 

Is paying $500 a month for car insurance ever worth it?

Aside from being a teen driver, there are several other situations that can push your car insurance premiums above $500 a month.

• You own an exotic, luxury or collector vehicle with a high replacement value
• You need commercial or rideshare insurance, which is coverage that will pay for damages incurred in the line of work
• You have bundled coverage that includes additional protection such as gap insurance, roadside assistance or rental reimbursement
• You are court ordered to have a SR-22 or FR-44 certificate because of DUIs, reckless driving or other major violations

Factors that impact your car insurance rates

Every car insurer has its own underwriting standards, but generally, the following all play a significant role in how much you pay for coverage:

• Your driving record
• Your claims history
• The age and type of your vehicle
• Your state and ZIP code
• Your age and gender
• Your credit score (where allowed)
• Your annual mileage
• Your coverage levels and deductible

“It’s worth thinking carefully before filing small claims,” Tortorici advises. “In many cases, the increase in your premium over time can end up costing more than just paying for the repair out of pocket.”

How to lower a $500 monthly premium

Paying $500 a month for car insurance can feel overwhelming, but there are practical ways to bring that number down. High premiums are often tied to risk factors like your driving record, location, or vehicle type — but many of these can be managed or offset over time. By adjusting your coverage, improving your profile as a driver, and taking advantage of available discounts, you may be able to significantly reduce what you pay each month.

You may be able to lower your car insurance costs in the following ways:

Compare quotes regularly

Auto insurance rates can vary dramatically year-to-year. Make sure to compare rates frequently to ensure you are paying a competitive price.

“One of the best things consumers can do is work with independent carriers or brokers who can shop around with multiple companies to find the best fit,” Tortorici says.

We also have an easy-to-use comparison tool that can quickly gather rates from many of the nation’s largest insurers.

Improve your credit score

If you live in a state where credit scores can be used to calculate rates, make it a priority to increase yours. That means making payments on time, reducing balances and keeping your credit usage to less than 30% of your available limits.

Increase your deductible

The deductible is the amount of money you pay out of pocket when you make a claim. Common deductibles are $500 and $1,000, and selecting a larger amount can reduce your premiums.

However, be sure you have enough in savings to cover your deductible should you need to make a claim.

Drop unnecessary coverage

Look over your policy and consider whether you need all the extras, such as roadside assistance or rental reimbursement.

In some cases, you may be paying for services you could get elsewhere for free or at a lower cost. For instance, some car manufacturers warranties and credit cards come with road assistance so there is no need to pay extra to have it on your auto insurance policy.

Bundle home and auto policies

Purchasing home and auto insurance from the same company is a common way to get discounted rates. Even if you don’t own a home, you might get a discount by bundling car and renters insurance.

Sign-up for a telematics program

Some insurers will give discounts based on your actual driving data. Known as telematics, companies may use a device in your car or a mobile phone app to track how far and how fast you drive as well as how often you brake suddenly, among other things.

Maintain continuous coverage

Keeping continuous coverage is an easy way to reduce your rates. Don’t drop your current policy until you have another one lined up.

Take a defensive driving course

If you are paying high car insurance rates, check to see if your insurer will provide a discount for completion of a defensive driving course or other driving safety program.

What to do if you can’t afford $500 a month for car insurance

If none of those options help bring your car insurance rates below $500 a month, you may need to look into some alternatives.

For instance, some newer car insurance companies may offer lower pricing. Root is a company that bases its rates almost entirely on telematics – that is, how you actually drive. Meanwhile, Metromile and Lemonade offer coverage using a per-mile model which may be ideal for those who drive infrequently.

However, there can be pitfalls to usage-based coverage, Tortorici cautions.

“While it might sound appealing for someone who doesn’t drive often, it can quickly become difficult to track and manage, creating more of a headache than a solution,” she says. “In many cases, adjusting coverage levels, seeking discounts, or shopping different carriers can be a more reliable way to save.”

Other alternatives to consider may be to look for discounts through membership groups for students, military members or industry professionals. Or you could drop your insurance to liability-only coverage, although this may only make sense if you have an older or less valuable vehicle.

A more radical option may be to forgo driving a car and eliminate insurance altogether. Depending on where you live, you may be able to get by using public transportation and ride-sharing services. Although not as convenient as having your own vehicle, the savings can be significant.

You don’t have to overpay for car insurance

Most drivers don’t have to worry about paying $500 a month for car insurance. That is well above the national average. However, if your bill is that much – or even if it isn’t but you’d still like to save – you have options to reduce your costs.

Don’t wait to put more money back in your pocket. You can quickly get quotes from multiple insurance companies using the our  car insurance comparison tool.