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Unraveling the Factors: Understanding Why Car Insurance Costs More in Arizona Compared to the National Average


On average, metro Phoenix households pay around $2,770 annually for car insurance, which is approximately $226 higher than the national average, as per a Bankrate analysis.

In 2024, Bankrate calculated that the national average cost of full-coverage car insurance rose by 26% to $2,543, which is $529 higher than the previous year.

According to a recent article in USA TODAY, the price increase is six times faster than overall inflation and higher than any other food item at the grocery store.

The analysis reveals that despite Arizona falling slightly below the national average, it ranks as the fifth highest state in terms of “true cost” for car insurance, as per Bankrate.

The “true cost” is a calculation done by Bankrate experts based on the average percentage of household income allocated to car insurance in a particular region.

Residents of Phoenix pay over the average statewide amount of $2,535 in annual premiums.

Arizona’s average household spends a higher percentage of their income, as shown by an interactive map that utilizes data from all 50 states and the top 25 metro areas in the US.

According to the map, Arizonans allocate approximately 3.40% of their income towards car insurance, while metro Phoenix households spend around 3.34%. Both fall just under the national average of 3.41%.

Arizona Leads in Auto Insurance Spending: Exceeds National Average with Top 5 Rates

SCOTTSDALE, AZ – JANUARY 20: In this handout provided by Chevrolet, a collector edition of the 2013 Corvette 427 convertible is shown on display at the Barrett-Jackson collector car auction January 20, 2012 in Scottsdale, Arizona. The newest version of the iconic car, featuring a 7.0 liter V8 engine and carbon fiber body parts that lighten the load, is the fastest Corvette ever made, according to the company.

There was a significant increase in the state percentage compared to the national average. Arizona experienced a 1.28% rise, while the rest of the nation only saw a 0.48% increase in the percentage of income spent on car insurance.

Top 5 states with the highest percentage of income allocated to auto insurance

Florida’s rate is 5.69%. The average yearly premium is $3,945.

Arkansas has a rate of 3.95%. The average yearly premium is $2,190.

Alabama: 3.68%. The average yearly premium is $2,199.

Georgia: 3.58% The average yearly premium is $2,610.

Arizona: 3.40% The average annual premium is $2,535.

Car insurance rates are influenced by factors such as your location, age, driving record, credit history, and type of vehicle. Electric cars often come with higher insurance premiums due to their expensive price tags and repair expenses.

Factors such as the significant rise in car crash fatalities, vehicle parts and labor costs, and extreme weather claims in recent years have all played a role in the increase in rates, according to Shannon Martin, an analyst at Bankrate.

Incidents of theft have been on the rise, reaching over 1 million in 2022, the highest number since 2008, as reported by the National Insurance Crime Bureau.

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