Paul Sanchez
The cost of car insurance varies significantly depending on the state in which you live. The national average for full coverage car insurance is $1,895 per year, but this can range from $1,175 in Maine to $2,883 in Louisiana. The state you live in is one of the most significant factors in determining the price of your auto insurance premium.
The cost of car insurance is influenced by a variety of factors, including the number of uninsured drivers, accident and claim rates, population density, crime rates, weather trends, and local regulations. For instance, no-fault states like Michigan and Florida often have higher insurance rates than other areas.
Additionally, insurance companies assign risk levels to ZIP codes based on theft frequency, collisions, and vandalism, which can further impact rates within a state. Other factors that contribute to the equation include your driving record, the type of car you drive, your desired level of coverage, and your age.
| Characteristics | Values |
|---|---|
| States with the most expensive car insurance | Louisiana, Florida, California, Colorado, South Dakota, Michigan, Kentucky, Montana, Washington D.C., Oklahoma |
| States with the cheapest car insurance | Maine, New Hampshire, Vermont, Ohio, Idaho, Wisconsin, North Carolina, Indiana, Iowa, Hawaii, Tennessee |
| States with the highest average annual car insurance rate | Louisiana ($2,734), Florida ($3,034), Delaware ($2,658), Kentucky ($2,874), Missouri ($2,665) |
| States with the lowest average annual car insurance rate | Maine ($949), Idaho ($992), Vermont ($1,053), Ohio ($1,083), Wisconsin ($1,145) |
| States with the highest monthly car insurance rate for minimum coverage | Michigan ($154), Nevada ($114), Delaware ($107), Florida ($101), Rhode Island ($101) |
| States with the lowest monthly car insurance rate for minimum coverage | South Dakota ($29), Wyoming ($31), Idaho ($34), Vermont ($35), Iowa ($37) |
What You'll Learn
No-fault states vs. fault states
In the United States, auto insurance laws are decided at the state level. There are two primary systems of auto insurance: fault-based and no-fault-based.
Fault-based System
In fault-based systems, injured parties can pursue compensation from any party at fault for the accident. The at-fault driver's insurance company is responsible for paying for the injuries and property damage of the other driver. This is also known as a tort liability insurance system.
No-fault-based System
In no-fault-based systems, injured parties must seek compensation through their own insurance policy, regardless of who is at fault. This is also called personal injury protection (PIP) insurance. In no-fault states, drivers are required to have a minimum amount of PIP coverage in addition to bodily injury and property damage liability coverage.
No-fault vs. Fault-based States
There are 12 no-fault states in the US: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. In these states, drivers cannot rely on the other driver's insurance coverage to pay for their injuries after an accident, even if the other driver was at fault. Instead, they must have PIP coverage, which covers their own injuries. However, the at-fault driver is still responsible for paying for any property damage they cause.
On the other hand, there are 38 fault, or tort, liability states, where the driver who caused the accident is responsible for paying for the injuries and property damage of the other driver through their insurance.
Choice No-fault States
It is important to note that three of the 12 no-fault states (Kentucky, New Jersey, and Pennsylvania) are "choice no-fault" states, where drivers can choose between a no-fault and a fault-based policy. In New Jersey and Kentucky, if a driver does not choose, they are locked into a no-fault policy by default, while in Pennsylvania, the default is a fault-based policy.
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Population density
Living in a densely populated area can lead to higher car insurance premiums. Accidents are more likely to happen in these areas since more vehicles are on the road. Packing lots of people into one area increases the chance of traffic congestion and car accidents. Car insurance companies use this data to charge higher premiums in metropolitan areas.
The more people in a small area, the likelier an accident or crime can happen, which leads to higher premiums. States with lower population density tend to have cheaper insurance rates. For example, Maine, which has the cheapest insurance rates in the country, ranks 42nd for population density, leading to fewer accidents and claims.
The impact of population density on insurance rates can also be seen at the city level. For example, New York City has one of the highest population densities of any city in the country, and it has the second-highest insurance rates in the country. On the other hand, Asheville, North Carolina, which has a lower population density, has the cheapest insurance rates in the country.
In summary, population density is a critical factor in determining auto insurance rates. Insurers use data on population density, along with other factors, to set premiums. Living in a densely populated area can lead to higher insurance rates due to the increased risk of accidents and congestion. States and cities with lower population densities tend to have cheaper insurance rates.
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Weather conditions
On the other hand, states with milder weather, such as Vermont, Idaho, and Maine, tend to have lower insurance rates. The reduced likelihood of weather-related claims in these states contributes to more affordable insurance options.
Additionally, the frequency and severity of weather events can impact insurance rates. For example, Florida's frequent hurricanes and Louisiana's volatile weather patterns lead to higher premiums compared to states with less severe weather.
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Number of uninsured drivers
The number of uninsured drivers varies across the United States, with some states having significantly higher rates than others. As of 2022, about 14% of motorists in the U.S., or around 29 million people, were uninsured, meaning that about one in every seven or eight drivers did not have auto insurance. This figure represents a slight decrease from 2021, when the uninsured motorist rate was 14.2%, but it is still significantly higher than pre-pandemic levels. The uninsured motorist rate started at 11.6% in 2017, decreased to 11.1% in 2019, then jumped to 13.9% in 2020, likely due to the economic impact of the COVID-19 pandemic.
The percentage of uninsured drivers varies by state, ranging from 3.1% in New Jersey to 29.4% in Mississippi. Other states with high rates of uninsured drivers include the District of Columbia (19.1%), New Mexico (21.8%), and Michigan (25.5%). States with the lowest rates of uninsured drivers include New York (4.1%), Massachusetts (3.5%), and Wyoming (5.8% or 5.9% in 2022).
The high rate of uninsured drivers in Mississippi may be due to the fact that Mississippi drivers do not need to show proof of insurance when purchasing a car, renewing license plates, or updating their driver's licenses, making the laws difficult to enforce. Additionally, Mississippi is one of the cheapest states for car insurance but also has the lowest household income, so cost may be a factor for many drivers not purchasing insurance.
The consequences of driving without insurance vary but often include fines, vehicle impoundment, license suspension, and even jail time. Uninsured drivers also increase the cost of insurance for those who are insured, as people with uninsured motorist coverage pay nearly $2 billion annually due to uninsured motorists.
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Cost of living
The cost of living is a significant factor in determining auto insurance rates by state. The cost of living can impact repair and labour costs, which in turn affect insurance premiums.
States with a high cost of living, such as California, tend to have higher insurance costs. California's insurance premiums are also impacted by its low-ranking infrastructure and high population density, which leads to congested roadways and more accidents.
On the other hand, states with a low cost of living, such as Maine, tend to have lower insurance costs. Maine's insurance rates are also influenced by its low population density, resulting in fewer accidents and claims.
The cost of living is just one of many factors that influence auto insurance rates. Other factors include weather conditions, local claims history, state insurance requirements, population density, and the percentage of uninsured drivers. These factors can vary widely from state to state, leading to significant differences in insurance rates across the country.
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Frequently asked questions
The cheapest states for auto insurance are Ohio, New Hampshire, North Carolina, Maine, and Idaho.
The most expensive states for auto insurance are Louisiana, Florida, Delaware, Kentucky, and Missouri.
The difference in auto insurance rates between states can be as much as $1,499 per year.
Auto insurance rates are influenced by factors such as location, age, driving history, gender, credit score, and vehicle type.
Moving to a new state can impact auto insurance rates due to differences in state regulations, location-specific pricing, and coverage requirements.
