Auto Insurance Rates: Which State Pays The Most?

Car insurance rates vary from state to state, and several factors influence this variation. The average cost of car insurance ranges from $29 per month in South Dakota to $154 per month in Michigan for minimum coverage. The national average rate for full coverage car insurance is $1,895, but the state you reside in is one of the biggest factors influencing the price of your auto insurance premium.

The state with the highest average car insurance rate is Michigan, with an average annual premium of $4,003, more than three times the national average of $1,265. Michigan's high insurance rates are due to its no-fault insurance laws and a high percentage of uninsured drivers.

On the other hand, the state with the lowest average car insurance rate is Maine, with an average annual premium of $589, which is 53.4% below the national average. Maine has higher minimum insurance requirements, but they keep their rates low due to a low percentage of uninsured drivers and low rates of vehicle theft and accident fatalities.

Other states with high insurance rates include New York, Louisiana, Florida, and Maryland. States with low insurance rates include Idaho, Iowa, Indiana, and Ohio.

Factors that affect auto insurance rates

There are several factors that affect auto insurance rates. Here are some of the most significant ones:

Location

The state of residence plays a crucial role in determining auto insurance rates. Each state has its own laws, minimum coverage requirements, and categories of mandatory coverage. The more coverage you are required to purchase, the higher your insurance premium is likely to be. For example, Michigan, a no-fault state, requires drivers to carry unlimited Personal Injury Protection (PIP) coverage, making car insurance more expensive. Additionally, population density, weather conditions, accident claims, and the number of uninsured drivers in a state can influence insurance rates.

Age and Driving Experience

Age is a significant factor, especially for young and inexperienced drivers, who are considered higher-risk and tend to pay higher insurance rates. Statistics show that teen drivers are more likely to drive recklessly and be involved in accidents. Insurance rates typically decrease after age 25 and rise again after age 65, as older drivers are more likely to get into accidents and suffer injuries.

Driving Record

Insurance companies closely examine an individual's driving history, including traffic violations, accidents, and DUI/DWI convictions. A history of at-fault accidents, speeding tickets, or other infractions will result in higher insurance rates. A clean driving record, on the other hand, can lead to lower rates and safe-driver discounts.

Credit History

In most states, credit history is a significant factor in determining insurance rates. Insurance companies use credit-based insurance scores to assess the likelihood of an individual filing a claim. Statistics suggest that drivers with poor credit tend to file more claims and that these claims are generally more expensive. However, it's important to note that the use of credit-based insurance scores is banned in certain states, including California, Hawaii, Massachusetts, and Michigan.

Vehicle Type

The type of car being insured also impacts insurance rates. Insurance companies consider the safety ratings, repair costs, theft rates, and comprehensive claims history of similar vehicle models. Luxury vehicles and high-performance cars often come with above-average insurance costs due to their higher replacement value and potential for expensive claims.

Marital Status

Marital status can also influence insurance rates, as married drivers are generally considered less risky to insure. Historical data indicates that married couples share driving duties and tend to have fewer accidents, resulting in slightly lower insurance rates compared to single, divorced, or widowed drivers.

Other factors that can affect auto insurance rates include gender, insurance history, annual mileage, and the specific insurance company and coverage options chosen. It's important to note that insurance rates can vary significantly from state to state and among different insurance providers.

Average cost of auto insurance by state

The cost of car insurance varies significantly from state to state. The national average annual cost of a full-coverage policy is $1,895, but prices differ depending on the state you live in, as each state has its own car insurance laws and requirements.

The Most Expensive States for Car Insurance

Louisiana, Florida, California, Michigan, and Colorado are the states with the highest car insurance rates in the U.S. The average annual cost of car insurance in these states ranges from $2,337 to $4,357. Factors such as severe weather, high traffic, congested roadways, and a high number of uninsured motorists contribute to the high insurance rates in these states.

The Least Expensive States for Car Insurance

Maine, New Hampshire, Vermont, Hawaii, and Idaho are among the states with the cheapest car insurance rates. The average annual cost of car insurance in these states ranges from $970 to $1,588. Lower population density, milder weather, and rural areas are factors that contribute to the lower insurance rates in these states.

Factors Affecting Car Insurance Rates

Several factors determine the cost of car insurance in each state, including driving record, credit history, age, marital status, location, state insurance minimums, gender, and vehicle type. The frequency of thefts, collisions, and vandalism in specific ZIP codes also impact insurance rates. Additionally, states with higher minimum liability coverage requirements, such as personal injury protection and uninsured motorist coverage, tend to have higher average car insurance premiums.

States with the cheapest car insurance rates

The cost of car insurance varies significantly from state to state, with location being one of the biggest factors influencing the price of auto insurance premiums. Other factors include population density, weather conditions, driving records, and the number of uninsured drivers in the state. Here is a list of states with the cheapest car insurance rates:

Maine

Maine has the cheapest car insurance rates in the country, with an average annual premium of $1,175, or $589 according to another source. This is despite the state having higher minimum insurance requirements than many other states. Maine has the lowest percentage of uninsured drivers (4.5%), low rates of vehicle theft, and low overall accident fatality rates, all contributing to lower premiums.

Vermont

Vermont is one of the cheapest states for car insurance, with average annual premiums of $1,265 or $1,539, depending on the source. Vermont has a low population density, which results in fewer accidents and claims. It also has a low rate of vehicle theft, with approximately 88 vehicles stolen per 100,000 people annually.

Idaho

Idaho has the second-lowest insurance costs in the nation, with an average annual premium of $1,588. Idaho has a sparse population, resulting in fewer drivers on the road and, consequently, fewer accidents. It also has a very low rate of vehicle theft, with fewer than 88 vehicles stolen per 100,000 people each year.

Iowa

Iowa has some of the cheapest car insurance rates, with an average annual premium of around $1,256 to $1,286. Similar to Idaho, Iowa has a low population density, reducing the number of accidents. It also has a vehicle theft rate below the national average.

Ohio

Ohio is one of the cheapest states for car insurance, with an average annual premium of $1,660.

Other states with cheap car insurance rates include New Hampshire ($1,265), Wyoming ($303), Hawaii ($1,581), and South Dakota ($2,280).

States with the most expensive car insurance rates

The cost of car insurance varies across the United States, with some states paying more than double the national average. The state with the highest average car insurance rate is New York, with an average annual premium of $8,232. This is followed by Louisiana, Michigan, and Florida, which all have average annual premiums above $4,000.

Factors Affecting Insurance Rates

Several factors influence the high insurance rates in these states, including population density, the number of uninsured drivers, and the frequency of insurance claims. For example, New York City has a very high population density, with more than 27,000 people per square mile, which contributes to its high insurance rates.

In addition, states with no-fault insurance laws, such as Michigan, tend to have higher insurance rates. No-fault laws require Personal Injury Protection (PIP) coverage, which can drive up insurance costs. Louisiana, the second most expensive state for car insurance, has a high percentage of uninsured drivers and a one-year statute of limitations for filing claims, leading to frequent lawsuits that increase costs for insurers.

Other Expensive States

Other states with high car insurance rates include Nevada, Delaware, Rhode Island, and California. Nevada has the second-highest car insurance rates, with an average annual premium of $3,870. This is due in part to the high traffic congestion around cities such as Las Vegas and Reno, where much of the state's population is concentrated.

Increasing Insurance Rates

Insurance rates across the country have been rising due to various factors, including inflation, an increase in the cost of vehicle parts and repairs, and more frequent and severe weather events causing vehicle damage. In 2023, the national average annual cost of car insurance was $3,017, and it is expected to continue increasing.

Ways to Save on Insurance

While insurance rates are rising, there are several ways drivers can save money on their auto insurance. It is recommended to shop around and compare rates from different insurance companies, especially when your policy is up for renewal. Bundling auto and homeowners insurance, paying per mile, and looking for discounts can also help reduce insurance costs. Maintaining a clean driving record and good credit score can also lead to lower insurance rates.

How state coverage requirements affect car insurance costs

The state in which a driver lives is a significant factor in determining their car insurance costs. Differences among states affect car insurance costs based on what auto insurance is required, how much repairs cost, and more.

Minimum state car insurance coverage and limits

Some states require only liability coverage for bodily injury and property damage, while others mandate additional coverages such as uninsured motorist coverage, medical payments, or personal injury protection. States that require more coverage types generally have higher auto insurance costs. For example, states mandating PIP coverage tend to have higher car insurance prices.

Number of auto insurance claims in your state

The number of car insurance claims in a state can also impact auto insurance costs. More claims made in a state typically lead to higher car insurance costs. This can be due to various reasons, such as severe weather events, urban vs. rural settings, and high crime areas.

Cost of car insurance claims in your state

The cost of car insurance claims can vary from state to state, depending on factors such as car repair costs and medical care expenses. If car insurance companies pay out more in claims in a particular state, car insurance costs for that state will generally be higher.

Frequency of lawsuits in your state

States with a higher rate of lawsuits related to car insurance accidents tend to have higher car insurance costs. This is because lawsuits often lead to larger claim settlements, resulting in increased insurance costs for all drivers in that state.

State-specific car insurance laws

Each state has its own car insurance laws dictating the minimum coverage and limits. For example, Michigan requires drivers to have property protection insurance, unique to the state, which covers damages to stationary objects caused by the driver.

No-fault states vs. fault states

Personal injury protection (PIP) is required in some states, known as no-fault states. In these states, drivers must first file a claim with their own insurance company to cover medical expenses after an accident, regardless of who is at fault. This can increase insurance costs. On the other hand, in fault states, the at-fault driver's insurance company compensates the other driver for their losses.

Frequently asked questions