Auto Insurance: Which State Is Cheapest?

The cost of car insurance varies from state to state, with some states offering significantly cheaper rates than others. The cheapest states for car insurance include Maine, Vermont, Ohio, Idaho, and Tennessee, with Maine residents paying the lowest average annual rate of $949. Factors such as population density, traffic congestion, weather conditions, and competition among insurers contribute to the variation in insurance rates across different states.

States with the lowest full-coverage car insurance rates

The cost of car insurance varies from state to state, and several factors determine the price of a policy. These factors include driving history, age, gender, and the type of vehicle being insured. The location also plays a significant role in determining the cost of car insurance, with states having different minimum insurance requirements. Here are the states with the lowest full-coverage car insurance rates:

Vermont

Vermont has one of the lowest crime rates in the country, and its drivers spend less time in traffic congestion compared to those in other states. As a result, Vermont has some of the cheapest average car insurance rates, with an annual premium of around $1,377 for full coverage.

Maine

With a low population density, a low number of licensed drivers, and a low motorist fatality rate, Maine offers cheap car insurance rates. The average full-coverage premium in Maine is approximately $1,238 per year, which is about 35% less than the national average.

New Hampshire

Despite not having mandatory minimum car insurance requirements, New Hampshire has some of the lowest average car insurance rates in the country. The average annual premium for full coverage in New Hampshire is nearly 28% less than the national average.

Idaho

Idaho boasts some of the cheapest car insurance rates, with an average annual premium for full coverage of around $1,402. This is attributed to the state's low population density, a small number of licensed drivers, and a highly-ranked infrastructure.

Tennessee

Although Tennessee has the third-highest proportion of uninsured drivers, it also has a low population density and is ranked third in terms of highway performance. As a result, Tennessee has the fifth-lowest average car insurance rates, with an annual premium of about $1,524 for full coverage.

Honorable Mentions:

Other states with relatively low full-coverage car insurance rates include Ohio ($1,472), North Carolina ($1,828), and Wisconsin ($1,744).

It is important to note that car insurance rates are subject to change and can be influenced by various factors, such as an individual's driving record, age, and the specific location within a state.

States with the lowest minimum liability car insurance rates

The cost of car insurance varies from state to state, and one of the primary factors used in pricing is location. The difference in car insurance costs from state to state can amount to hundreds of dollars per year.

Wyoming, Vermont, South Dakota, Nebraska, and Iowa have some of the lowest minimum liability car insurance rates in the country.

Wyoming has a rural landscape and a low number of uninsured drivers, resulting in the cheapest minimum car insurance rates in the country. The average cost of minimum coverage in Wyoming is $308 per year.

Vermont has the second-lowest average annual rate for car insurance at $310 per year.

South Dakota has the cheapest auto insurance rates in the country, with drivers paying just $28 a month on average for minimum coverage.

Nebraska has the fourth-lowest minimum liability car insurance rates, with an average annual rate of $356.

Iowa has the fifth-lowest minimum liability car insurance rates, with an average annual rate of $34 for minimum coverage.

Factors Affecting Car Insurance Costs

Several factors determine the price of car insurance, including driving record, age, marital status, location, gender, and vehicle type.

Location plays a crucial role in insurance costs, as population density, the frequency of insurance claims, and the number of uninsured drivers in an area can significantly impact premiums.

Additionally, states with higher minimum coverage requirements tend to have higher insurance rates. For example, Texas has higher minimum coverage requirements than Pennsylvania, resulting in higher average insurance costs.

No-fault insurance requirements can also influence rates, as these states require drivers to carry personal injury protection (PIP) insurance, which increases the financial risk for insurance companies.

Other factors, such as weather conditions, local claims history, and road conditions, can also contribute to variations in insurance rates across states.

Factors that affect car insurance costs

Several factors determine the cost of car insurance, and these can be placed into two broad categories: personal factors and vehicle-related factors.

Personal Factors

Personal factors include age, gender, marital status, driving history and record, and credit score.

• Younger and less experienced drivers are often considered higher-risk and are therefore charged higher premiums.
• Men are generally considered more likely to take risks while driving and get into accidents, and so they tend to be charged higher premiums than women. However, some states have banned the use of gender as a factor in determining insurance rates.
• Married people are considered safer drivers and are often offered lower premiums than single people.
• A history of accidents, traffic violations, or DUIs will result in higher insurance rates, as insurance companies will consider you a high-risk driver.
• A good credit score will generally lead to lower insurance rates, as it is assumed that those with higher scores are more financially stable and less likely to take risks. However, some states have banned the use of credit scores in setting insurance rates.

Vehicle-Related Factors

Vehicle-related factors include the type of car, its age, and where it is parked or stored.

• Luxury vehicles, sports cars, and cars with advanced technology and safety features are more expensive to repair or replace, and therefore tend to be more expensive to insure.
• Newer cars are usually worth more and hence cost more to insure.
• The location where the car is parked or stored is also a factor. Those in large cities or urban areas tend to pay higher insurance rates due to the higher risk of theft, accidents, and vandalism.

Other factors that influence insurance rates include the state of residence and its insurance requirements, and the insurance company's pricing system.

No-fault state vs. fault states

No-fault insurance states refer to how injuries are covered by car insurance. In a no-fault insurance state, if you're injured in an auto accident, you would file a claim with your own insurance company to pay for related medical costs, regardless of fault. No-fault insurance is often called Personal Injury Protection (PIP).

In no-fault insurance states, drivers are normally required to have a minimum amount of PIP coverage to help ensure that people will have coverage to help if they're injured in an auto accident. This coverage is often in addition to auto coverages like bodily injury and property damage.

In a tort (or fault) state, responsibility for the accident is determined, and the responsible driver or their insurance company will need to pay for the damages caused by the accident, including medical issues.

There are 12 true no-fault states: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.

In general, states with no-fault auto insurance have higher insurance costs compared to others. This is because insurance companies have to pay out claims regardless of who is at fault, which can encourage fraud and exaggerated injuries.

How to find the best price on auto coverage

Finding the best price for auto coverage can be a tricky process, but there are several steps you can take to ensure you get a good deal. Here are some tips to help you get started:

Shop around and compare rates

It's important to get quotes from multiple insurance companies to find the best price. Rates can vary significantly from one company to another, so it's worth putting in the time to research and compare your options. You can use online tools or work with an insurance broker to get quotes from different insurers.

Consider your coverage needs

Determine the level of coverage you need. The two main types of car insurance are liability-only insurance and full coverage insurance. Liability-only insurance covers the minimum required by your state, while full coverage includes additional protections such as collision and comprehensive insurance. Consider your financial situation, the value of your car, and the potential costs of repairs or replacement if your car is damaged or stolen.

Choose a higher deductible

If you opt for full coverage insurance, you can lower your premium by choosing a higher deductible. The deductible is the amount you pay out of pocket before your insurance company covers the rest. Just make sure you can afford to pay the deductible if you need to make a claim.

Look for discounts

Insurance companies often offer a range of discounts that can help lower your premium. Common discounts include those for good students, safe drivers, and customers who bundle their auto insurance with other types of insurance, such as home or renters insurance. Be sure to ask about any available discounts when getting quotes.

Improve your credit score

In most states, your credit score is a factor in determining your insurance rate. A higher credit score can lead to lower insurance premiums, so improving your credit score can help you get a better rate. Pay your bills on time, keep your credit card balances low, and monitor your credit report to identify any errors that may be hurting your score.

Review your policy regularly

Insurance rates can change over time, so it's important to review your policy periodically to ensure you're still getting the best deal. Shop around for new quotes every six months to a year, or whenever your policy comes up for renewal. This will help you stay on top of any rate changes and allow you to take advantage of any new discounts or coverage options that may be available.

Maintain a good driving record

Insurance companies consider your driving history when setting rates, so maintaining a clean driving record is crucial for getting the best price. Avoid speeding tickets, accidents, and other violations that can increase your insurance premiums. If you have a less-than-perfect driving record, work on improving it over time by driving safely and following the rules of the road.

Frequently asked questions