Which States Pay the Most in Car Insurance?
Your state's car insurance laws and statewide vehicle-related statistics have an impact on your annual auto insurance premium—the dollar amount you pay for six to 12 months of auto insurance coverage.
In fact, your premium comprehends your geography in other, more specific ways, taking into account not only your state but also your county, town, neighborhood, and street. Crazy, right? When it comes to determining risk, the insurance industry has statistics for everything.
Would I Have Lower Insurance Costs in Another State?
Your insurance rate is a result of many, many factors, not just your zip code. So, there's always some wiggle room on your car insurance rate. Comparison shopping is the best and only way to find the cheapest car insurance premium. By comparison shopping, many savvy customers find two things to be true:
You can find a policy that's cheaper than your state's average rates for car insurance.
You can find a policy that's cheaper than your current auto coverage insurance.
You don't have to move to another state to find a car insurance policy that meets your budget and coverage needs.
Why Do Auto Insurance Rates Vary by State?
A state's average car insurance rates are partly determined by that state's statistics for accidents, DUI-related accidents, fatal accidents, auto theft and insurance fraud. Additionally, the fewer uninsured drivers there are in that state, the lower the cost of car insurance in that area. Other factors are also considered.
But the most common factor in every state's average insurance costs is each state's mandated minimum coverage auto insurance. Specifically, every state requires its licensed drivers to buy a package of minimum liability coverage, which protects other drivers if the insured's vehicle causes an accident:
Bodily injury liability insurance per person
Bodily injury liability insurance per accident
But each state has different liability limits, or coverage amounts, for each type of liability protection. For example, Alabama law wants drivers to purchase $25,000 per person, $50,000 per accident and $25,000 for property damage, while California only wants $15,000 per person, $30,000 per accident and $5,000 for property damage. These different coverage amounts make a big state-to-state difference in average minimum coverage rates.
Is the Minimum Coverage the Same in Each State?
No, and that's another reason why the average cost of auto insurance varies from state to state. While 22 states only require liability coverage, 28 states and Washington, D.C., require liability coverage as well as one or more of the following insurance products:
Uninsured motorist bodily injury
Uninsured motorist property damage
Personal injury protection (PIP)
These additional insurance products protect you, not other drivers. As you might have guessed, PIP and uninsured motorist bodily injury insurance both cover medical expenses. If you carry personal injury protection and uninsured motorist bodily injury, the latter will pick up the tab after the former has reached its liability limit. However, uninsured motorist bodily injury only pays when the at-fault driver has no insurance; on the other hand, PIP pays no matter who is at fault.
An Odd Case: New Hampshire
New Hampshire is the only state that requires all six types of insurance. Here are the state's minimum coverage limits for each product:
$25,000 of bodily injury liability coverage per person
$50,000 of bodily injury liability coverage per accident
$25,000 of property damage
$25,000 of uninsured motorist bodily injury
$50,000 of uninsured motorist property damage
$1,000 of personal injury protection (PIP)
Geez, that's a lot of coverage. But you know what? New Hampshire doesn't have higher premiums than the national average ($120.33 per month) or even the top-10 states for the most costly car insurance rates! In fact, New Hampshire's average car insurance costs are only $97.22 per month on average, according to SmartFinancial's statistics on insured drivers. Florida, which has the 10th-highest minimum coverage average cost among all the states, pays a whopping $209.41 per month compared to New Hampshire.
Quotes Are Based on a State's Minimum Coverage
When you are comparing auto coverage quotes, the quotes you receive are based on your state's mandated minimum coverage. If you want to purchase other types of insurance, called "add-on" insurance, in addition to the mandated minimum liability coverage, you'll get higher quotes.
No matter what state you live in, the cost of your auto coverage insurance depends on how much insurance you purchase, whether that's the minimum coverage or minimum coverage plus other products. In other words, if you want to snag the cheapest car insurance rate, just purchase your state's mandated minimum coverage.
States with the Highest Car Insurance Rates
Car insurance expenses vary due to many factors. For example, for those of us who have a poor credit score and a not-so-clean driving record, our auto insurance rates will reflect those sad realities, no matter which state we live in. Insurance companies charge the most for auto coverage, on average, in these states:
No. 1 Michigan
Michigan has the most expensive car insurance rates by state. The Wolverine State's average auto insurance rate is $2,239 per year, which is 64% higher than the national average of $1,365. Why is auto insurance so high in Michigan? There was a law that required all drivers to buy unlimited, lifetime medical coverage for car accident injuries. This law led to costly medical claims and fraud as well as legal battles among insurers, medical providers and policyholders over what was covered and how much it would cost.
Thanks to a new law that took effect in July 2020, drivers can now purchase PIP in any amount they choose. There is hope that this new law will lead to lower average auto insurance premiums and less legal wrangling. For now, the state has the highest car insurance premiums in the U.S, even for people with a clean driving record.
No. 2 Louisiana
In Louisiana, the average yearly car insurance cost is $2,126 a year, which is 56% higher than the national average. Why is car insurance so high in Louisiana? The culprits are the Bayou State's high number of uninsured drivers and its high rate of auto-related litigation. Both these factors contribute to the state's high car insurance costs.
No. 3 Florida
In Florida, the average annual car insurance cost is $2,050 a year, which is 50% higher than the U.S. average. Why are the car insurance rates so high in the Sunshine State? Once again, a high number of uninsured motorists is to blame. In fact, almost 24% of the state's drivers have no liability auto insurance.
No. 4 Rhode Island
In Rhode Island, the average yearly auto insurance premium is $1,852 a year, which is 36% higher than the national average. The Ocean State's population density leads to more accident claims. Another reason Rhode Island is one of the most expensive states for car insurance is, yes, the high number of drivers who have zero liability coverage. There are other factors, too, such as higher-than-average bills for body-shop repairs and labor costs. All these factors contribute to the state's higher car insurance premiums.
No. 5 Connecticut
In Connecticut, drivers pay an average annual auto insurance premium of $1,831 a year, which is 34% higher than the U.S. average. Why is the Constitution State one of the most expensive states for car insurance? Interestingly, the state's affluence impacts its average auto insurance costs: Many drivers buy higher limits of liability coverage because they have big-ticket vehicles, artificially pumping up the state's average with add-on coverage. Further, Connecticut has a high-density population in its urban areas, so its urban areas have congested roadways that result in more traffic accidents than the national average. Alas, more accidents mean higher car insurance costs. Interestingly, Connecticut has high car insurance rates even though the state has only 6.3% uninsured drivers, according to the Insurance Information Institute.
States that Pay the Least for Car Insurance
These states have the cheapest car insurance rates. If you live in Vermont, Ohio, Idaho, Virginia, and Iowa, your average cost for minimum coverage will be lower than the nation's average rates.
No. 1 Vermont
Vermont has the least expensive car insurance rates in the U.S. On average, drivers pay an annual auto premium of just $932, which is 32% less than the national average. Why are car insurance policies in the Green Mountain State so low? Vermont's small population is spread out, which makes for a low accident rate and a low number of claims. Further, it has a low number of uninsured drivers (just 8.8%). All these factors give Vermont the lowest car insurance rates in the country.
No. 2 Ohio
In Ohio, drivers pay a yearly auto premium of $944 per year, which is 31% less than the U.S. average. Why is auto insurance coverage so cheap in the Buckeye State? Ohio has a population of safe drivers and a very competitive auto coverage marketplace. All the competition between insurance companies drives down insurance rates for Ohio drivers. Interestingly, despite Ohio's rock-bottom car insurance rates, it has a fairly high number of uninsured drivers (13%).
No. 3 Idaho
In Idaho, the average annual auto insurance premium is $989 a year, which is 28% less than the national average. As with Vermont, Idaho has a small population that is not congested in any one place. This small population leads to fewer auto accidents and fewer insurance claims. Both these things drive down the state's auto insurance rates.
No. 4 Virginia
In Virginia, drivers pay a yearly auto insurance premium of $1,013 a year, which is 26% less than the U.S. average. Why is the average cost of car insurance so inexpensive in Old Dominion? There are large numbers of insurance companies doing business in Virginia, and competition drives down coverage car insurance costs. Also, car repair costs are low in Virginia. Both these factors lead to low auto insurance insurance premiums for Virginia drivers.
No. 5 Iowa
In Iowa, the yearly auto insurance premium is $1,025, which is 25% less than the national average. As with Vermont and Idaho, Iowa has a small population. This small population results in fewer car accidents and few auto insurance claims. These factors lead to lower auto insurance premiums.
What's Up with No-Fault States?
Intended to lower the cost of auto insurance by taking small claims out of the courts, the no-fault system compensates its own policyholders for the cost of minor injuries, regardless of who was at fault in the accident. In short, no-fault states' car insurance requirements include PIP.
The extent of coverage varies by from state to state. According to the Insurance Information Institute, "In states with the most comprehensive benefits, a policyholder receives compensation for medical fees, lost wages, funeral costs and other out-of-pocket expenses." But it is important to remember that drivers in no-fault states can, in fact, sue for severe injuries if the case meets certain conditions.
There are 12 no-fault states:
- New Jersey
- New York
- North Dakota
Puerto Rico also has a no-fault system. So, if you live in a no-fault state, be prepared for your minimum insurance costs to include not only liability coverage but also PIP. But every no-fault state has its own system, so speak with your licensed auto insurance agent about you options.
All Insurance Companies Offer Full Coverage
No matter what state you live in, you should consider getting full coverage auto insurance if your car is worth $4,000 or more. While liability coverage protects other drivers, full coverage car insurance protects your car, even if you are held responsible for a roadway smash-up. Full coverage insurance includes both collision and comprehensive coverage.
This coverage pays to repair your vehicle when it collides with an object, such as a tree, a fence or another car. It also pays for damages when your car rolls over or it hits an ugly pothole.
This coverage pays to repair your vehicle when an object collides with your car. That object could be hail, a tree or an animal. Comprehensive insurance also pays for damage due to fire or the effects of a natural disaster. Finally, only comprehensive covers your vehicle is vandalized or stolen.
Remember, it's not full coverage unless the policy includes both collision and comprehensive. While this add-on coverage will increase your coverage costs, it may well end up saving you money. What's more, all car insurance companies offer this type of coverage, so ask your licensed agent about full coverage. Many savvy drivers swear by full coverage insurance.
Ways To Save Money on Car Insurance
Wherever you live, these money-saving tips will help to lower the cost of your car insurance premium.
Pay Once or Twice a Year
Rather than signing up for monthly payments with your car insurance, pay the annual amount or six-months amount instead. Auto insurance premiums are lower when you pay once or twice a year.
Bundle your auto insurance policy with another insurance policy such as a homeowners insurance policy and save money on your auto insurance premium.
Insure More Than One Car
Got more than one car to insure? Insure them both at the same company and save with a multi-car discount.
Be a Safe Driver
Be a safe and responsible driver and follow all the rules of the road and you'll save money on your car insurance. Good drivers get good driver discounts and you'll be rewarded with a lower coverage rate.
Check for Discounts
In addition to good driver discounts, insurance companies offer discounts for veterans and students. So if either of these apply to you, be sure to let your auto insurance company know. You'll save money on your car insurance.
Check for Safety Features
Having certain safety and anti-theft features on your car will lower your car insurance cost. So check with your car insurance company about the safety and anti-theft features on your car and find out if you qualify. You could save money on your premium.
Some professional organizations and affiliates get discounts on auto insurance. So check the memberships in your wallet to see if you warrant a discount.
Drive Fewer Miles
If you are a heavy commuter, you will pay more for car insurance. But if you are a low-mileage driver you will pay less on your car insurance. So drive less, pay less on your auto insurance.
Choose a Safe Neighborhood
If you live in a neighborhood with high insurance claims and auto theft, you will pay more for your car insurance. If you live in a neighborhood with low insurance claims and low crime, you will pay less for your car insurance. So choose a safe neighborhood and save money on car insurance.
Compare Car Insurance Rates
Regardless of where you live, chances are that you can get a lower rate. You may even save hundreds of dollars a year by comparing. Do so now, for free, by entering your zip code below.
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