Auto Insurance Rates: Most Expensive States

Car insurance rates vary significantly from state to state in the US, with some states having average annual premiums that are hundreds of dollars more than others. The national average for full coverage is $1,895, but this can be as low as $1,175 in Maine and as high as $3,643 in Michigan.

The reasons for these discrepancies are varied, but some of the most common factors include the number of auto insurance claims in a state, the cost of repairs and medical care, the frequency of lawsuits, population density, and the presence of no-fault laws.

For example, Louisiana, the most expensive state for car insurance, has a high rate of bodily injury claims and lawsuits, while Maine, the cheapest state, has a low population density and few uninsured drivers.

No-fault states vs. at-fault states

No-fault insurance states, also called personal injury protection insurance (PIP), require drivers to cover their own medical expenses and loss of income resulting from a car accident, regardless of who is at fault. In these states, drivers must file a claim with their insurance company after an accident, regardless of who caused it, and they may be restricted in their ability to sue the other driver. There are 12 no-fault states: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.

In at-fault states, also known as tort states, the insurance company of the individual found to be at fault pays for all damage costs in the event of an accident. There are 38 at-fault states in total.

No-fault states tend to have higher insurance costs than at-fault states, as insurers have to pay out claims regardless of who is at fault, which can also lead to more fraud and exaggerated injuries. However, claims tend to be settled quicker in no-fault states as fault does not need to be established before the claim is handled.

In a tort state, the responsible driver or their insurance company will need to pay for the damages caused by the accident, including medical issues. The injured party can also sue the negligent driver for economic damages, such as medical payments and vehicle repairs, as well as non-economic damages, such as pain and suffering.

Some states, such as Kentucky, New Jersey, and Pennsylvania, are known as "optional no-fault" or "choice no-fault" states, where drivers can choose between a no-fault and a tort system.

Population density

For example, New York, one of the most densely populated states, has the most expensive car insurance rates in the country. The high population density, coupled with a large number of vehicles on the road, contributes to a higher risk of accidents and claims. Similarly, Florida, with its high population density and many metropolitan areas, experiences higher insurance rates.

On the other hand, states with lower population density tend to have cheaper insurance rates. Vermont, Iowa, and Idaho, which rank low in population density, have some of the lowest car insurance rates. The sparse population in these states results in fewer accidents and claims, reducing the financial risk for insurance companies.

However, population density is not the sole determinant of insurance rates. Other factors, such as weather conditions, crime rates, and the number of uninsured drivers, also play a role in calculating insurance premiums. For instance, Louisiana has a high rate of bodily injury claims and lawsuits, while Florida is prone to severe weather, both of which contribute to higher insurance rates.

Weather conditions

• Severe Weather Events: States prone to extreme weather conditions, such as hurricanes, floods, hailstorms, and tornadoes, tend to experience higher insurance rates. Florida, Louisiana, and Texas are notable examples, where weather-related claims can lead to substantial underwriting losses for insurers. Florida's position in "hurricane alley" makes it vulnerable to high winds, flooding, and property damage, resulting in elevated insurance premiums.
• Volatile Weather and Crime: States like Louisiana, with volatile weather and a high crime rate, often see a spike in insurance rates. The combination of weather-related damages and the increased risk of theft or vandalism contributes to higher premiums for residents.
• Climate Change Impact: Climate change is expected to intensify extreme weather events, and insurers are taking note. As scientists predict more frequent and severe weather patterns, insurance companies are likely to adjust their rates accordingly, especially in areas prone to hurricanes, floods, and other climate-related disasters.
• Hazardous Driving Conditions: In addition to causing direct damage to vehicles, extreme weather can create hazardous driving conditions. This increases the likelihood of accidents, leading to more insurance claims and, consequently, higher insurance rates.
• Weather-Related Claims: The frequency and severity of weather-related claims can significantly influence insurance rates. For instance, states with a high number of weather-related claims due to hurricanes, hail, or flooding may experience a significant increase in insurance premiums as insurers try to manage their risks and financial exposure.
• Regional Weather Patterns: Weather conditions vary across different regions, and insurers take this into account when setting rates. For example, states in the Midwest or Northeast may contend with icy roads and snowstorms, while states along the Gulf Coast or the Atlantic seaboard are more susceptible to hurricanes and tropical storms. These regional weather patterns are factored into the insurance rates for residents in these areas.
• Wildfire Risk: In recent years, states like California have faced the devastating impact of wildfires, which has led to increased insurance claims and higher premiums for residents. The risk of wildfire damage is now a significant factor in determining insurance rates in these affected regions.

Cost of living

The cost of living is a significant factor in determining auto insurance rates, and it varies from state to state. Here are some insights into how the cost of living impacts auto insurance rates:

• Population Density: States with higher population density, such as California, Florida, and New York, tend to have higher auto insurance rates. This is because insurers consider factors like traffic density and the number of licensed drivers when calculating rates. More people and cars on the road can lead to an increased risk of accidents and claims, driving up insurance costs.
• Cost of Repairs and Labor: The cost of vehicle repairs and labor can vary across states, and this is reflected in insurance rates. For example, California is known for its high cost of living, which includes the cost of car repairs. As a result, California's auto insurance rates are among the highest in the country.
• Uninsured Motorists: States with a high percentage of uninsured motorists tend to have higher insurance rates. For instance, Florida and Louisiana, which have some of the highest auto insurance rates, also have a significant number of uninsured drivers. This increases the risk of uninsured motorist claims, driving up insurance costs.
• Crime Rates: States with higher crime rates, particularly vehicle-related crimes like theft and vandalism, often have higher insurance rates. Insurance companies view insuring cars in these areas as riskier, which is reflected in the premiums.
• Weather Conditions: Severe weather events like hurricanes, floods, and hail can cause extensive vehicle damage, leading to increased insurance claims. As a result, states prone to such weather conditions, such as Florida and Louisiana, tend to have higher auto insurance rates.
• Local Claims History: The history of insurance claims in an area can impact rates. States with a high frequency of claims, whether due to accidents, weather events, or crimes, will generally have higher insurance costs.
• State Minimum Requirements: Each state has its own minimum insurance requirements, and states that mandate more coverage types or higher coverage limits tend to have higher insurance costs. For example, states that require personal injury protection (PIP) coverage or higher liability limits will likely have more expensive insurance rates.

While the cost of living is a significant factor, it's important to note that other factors also influence auto insurance rates, such as driving records, age, vehicle type, and gender (in most states). Additionally, the competitiveness of the auto insurance market in a state can also impact rates, with more options potentially leading to lower prices.

Number of uninsured drivers

The number of uninsured drivers varies across the United States. In 2023, the Insurance Research Council (IRC) reported that around 14% of motorists, or about one in seven drivers, were uninsured. This figure is down from 12.6% in 2019, when there were around 28 million uninsured drivers in the US, and 13.1% in 2017.

The percentage of uninsured drivers varies by state. In 2019, Mississippi had the highest rate of uninsured drivers at 29.4%, while New Jersey had the lowest at 3.1%. In 2024, Mississippi still had the highest rate of uninsured drivers at 29%. New Jersey continued to have the lowest rate, at 3%.

From 2015 to 2019, some states saw a decrease in the rate of uninsured drivers. For example, New Jersey's rate of uninsured drivers decreased by 11.8%, and Texas's rate decreased by 5.8%. During the same period, other states saw an increase in the rate of uninsured drivers. Washington, Rhode Island, and Mississippi saw increases of nearly 7%.

The cost of insurance by state does not seem to correlate with the number of uninsured motorists. For example, in 2019, Alabama had the seventh-highest percentage of uninsured motorists in the US, but the average cost of insurance was lower than the national average. On the other hand, New Jersey had the lowest percentage of uninsured motorists but was among the states with the highest average insurance premiums.

Rising insurance costs may be a factor in the increase in uninsured drivers. According to the Insurance Information Institute (III), the average yearly cost of auto insurance increased from $789.29 in 2010 to $1,070.47 in 2019.

Frequently asked questions