According to a study, the annual average cost of car insurance differs by $4,004, depending on your geographic location and state. While the annual national average cost for a minimum auto insurance coverage policy is $565 factors such as state laws could affect how much you pay for car insurance.
Finding the best car insurance by state can be pretty challenging and time-consuming. That’s because you need to take your time and look at different affordable car insurance companies, their prices, and what they cover under their policies.
Fortunately, our guide below has all the information you need to start your journey to an auto insurance policy based on your specific state.
Understanding Car Insurance Costs by State
Understanding your state’s car insurance laws can help you know how to purchase insurance and file a claim. While most people find it quite helpful to know their state-specific minimum auto insurance limits, it’s no use memorizing them. That’s because you can always find companies offering policies at much lower rates than your state’s minimum cost.
The States With the Most Expensive Insurance Rates
Only three states top this list when it comes to the most pricey states for car insurance. The reasons for these high premiums vary. However, they include unique insurance systems, the number of drivers without insurance, expensive insurance claims, and increased population density.
Below are the top three most costly states to purchase your car insurance:
Louisiana is the king of high car insurance premiums. Louisiana has been in the top five states with the highest insurance rates for the past decade. This state’s average car insurance premium is $2,839 per year, making it over 95% higher than the average national rate.
In the last two years, most states have experienced a reduction in car insurance premiums. However, Louisiana saw a significant increase in its rates by 19%. The biggest factors contributing to these high rates include easy lawsuits and many underinsured and uninsured drivers.
According to a report, over 11.7% of all drivers in Louisiana are cruising the roads without proper insurance. Most drivers only have the minimum required coverage, even with insurance, making it challenging to cover their losses in an accident.
In the past eight years, Michigan has had the highest car insurance rate. However, the state dropped to number two because of the 27% drop in insurance premiums. However, the state’s average insurance cost is still 48% above the country’s national average, raging at $2,112.
There have also been changes in car insurance rules in Michigan, allowing drivers to decide the amount of money they pay for personal injury protection. In the past, drivers were mandated under law to have PIP insurance coverage that insured lifetime, infinite medical benefits for victims of car accidents.
This law drastically increased the risks that insurance companies faced, and they passed them on to the drivers through high premium rates. These insurance law changes have been applicable since July 2020. Now, drivers can choose to continue with the “no limit” insurance coverage or decide to follow the other medical policies.
Florida is full of college students, older drivers, and a large percentage of drivers without insurance. With a premium average of $2,082, it’s easy to see why insurance coverage is expensive in Florida.
One of the most significant issues facing Florida insurance companies is the high number of drivers without insurance. According to research, over 20% of Florida drivers don’t have insurance. This is among states with the highest rates of uninsured motorists in the U.S.
Additionally, Florida is packed with thousands of college students, older people, and a high number of tourists. Insurers consider these individuals high-risk drivers, who are more likely to cause an accident and file an insurance claim.
Another major factor affecting insurance premiums is the bad weather in Florida. The area is prone to hail storms and hurricanes, resulting in significant vehicle damage. These weather risks often result in high insurance premiums, especially for comprehensive coverage customers.
States With the Cheapest Auto Insurance Premiums
Most states with lower car insurance rates are less populated and smaller in size. The lower the population density, the lower the number of accidents. This reduces the number of insurance claims filed in the area, reducing the premium rate for everyone.
Likewise, the higher the number of insured drivers in an area, the lower the auto insurance premiums. This keeps everyone’s premiums low. Below are the states with the lowest insurance rates in the country:
For the past few years, Maine has been among the top states with the cheapest car insurance. This state’s average auto insurance rate was reduced by 6% in 2020 to around $858. The rate is significantly lower than the country’s national average.
Due to the low car insurance losses and the state’s highly competitive insurance market, Maine has managed to stay at the top of this list. The high number of fully insured drivers and the low population density have also helped keep car insurance premiums low.
Maine is ranked 39th in terms of population density, hence, it has fewer insurance claims and car accidents than other states. Research shows less than 4.9% of motorists are driving without insurance.
New Hampshire has always been second on this list, and for a good reason. The average car insurance premium rate dipped by 10% in 2020, making the new average insurance cost $885. This is 38% lower than the average car insurance rate in the country.
Just like Maine, New Hampshire has a lower number of people driving without insurance. The state only has 6.1% of uninsured motorists, making it one of the safest states to drive. It also has the most careful motorists in the country; hence, they are reaping the benefits in the form of reduced insurance premiums.
Wisconsin made this list because its insurance coverage premiums dropped by 11% in 2020. The average cost of car insurance now stands at $938 per year. The competitive insurance market and steady regulations have contributed to these low insurance premiums.
While the state faces numerous weather challenges and varying road conditions depending on the season, the state laws enforced by the government help keep car insurance premiums consumer-friendly.
However, the state has a high percentage of drivers without insurance, roughly 13.3%. Fortunately, this isn’t a determining factor in insurance premium rates. The answer could be that the law mandates that all drivers take out uninsured motorist insurance coverage, which helps alleviate the premium rates a little.
Factors That Affect Car Insurance
Car insurance factors vary from state to state and neighborhood to neighborhood. Where you live will always impact the cost of auto insurance. However, this isn’t the primary factor considered when calculating the cost of your insurance.
A hundred other factors could reduce or increase your insurance costs. Some of these risk factors are beyond your control. Below are some car insurance factors to consider:
Your Driving Record
Your driving record is a significant factor in your insurance premium rating. Fortunately, it’s mostly under your control. Past insurance claims, traffic violation tickets, and prior accidents will always increase your insurance rate.
Insurance companies look at your driving record before offering you a rate. If you have many tickets issued within a short period, you will likely have a higher rate. Some insurance companies could even deny you coverage.
To get the best insurance rate today, you need to drive safely, avoid accidents, and stay ticket-free.
Gender and Age
These are significant factors in the pricing of your car insurance premium. However, your age and gender are out of your control. Teenage drivers often pay the highest premiums because, statistically, younger drivers are involved in more accidents.
Teenage drivers also file more insurance claims than older, more experienced drivers. All these factors often result in higher premiums. Teen male drivers are even in a much worse position.
Because they are male and young, their rates will dramatically go up. That’s because researchers found that male drivers are more likely to act immaturely on the road, leading to accidents, insurance claims, and traffic tickets.
Your Credit Score
All insurance companies will consider your credit score as a significant rating factor. However, in some states, this is prohibited. These states include Hawaii, California, Michigan, Massachusetts, Utah, Oregon, and Maryland.
Insurance companies link a low credit score with a higher likelihood of filing a claim. Hence, people with low credit scores are a risk to the insurer. This often results in higher insurance rates to cover these risks.
Your state isn’t the only factor insurers look at when determining your insurance premium. They also check the neighborhood data; areas with a higher rate of crime and claims will result in increased premiums.
They also consider the weather in the area and any risk factors that could increase your chances of filing a claim. Insurers also ask whether you park your car on the street at night or in a safe garage. This will also affect your car insurance rate.
The Type of Car You Drive
It’s a well-known fact that the type of car you drive will impact your insurance premium. Standard cars and minivans are always cheaper to insure than luxury cars and giant-engine vehicles.
High-end luxury vehicles and sports cars are often more expensive to insure because of the high cost of repair. The materials used on these cars are often pricier than those on moderately priced vehicles.
Weather conditions vary from one state to another. If you live in a state with severe weather conditions, you are likely to pay the highest premium on your auto insurance policy. Flooding, strong winds, hurricanes, and even hail storms can severely damage your vehicle.
The insurance company will be responsible for repairing or replacing the car if you have comprehensive coverage. If you live in Texas, Florida, and Oklahoma, where violent storms are frequent, the insurer will charge you more because they receive more claims from these states.
Will Moving to Another State Impact Your Insurance Premiums?
Your location matters a lot when it comes to car insurance rates. Therefore, if you choose to move from your state to another, be prepared for your premiums to change. Every state has its limits and insurance coverage requirements. However, it’s advisable to purchase higher liability limits because they offer the best protection.
If you move to an area with higher insurance premium rates, your rate will also increase. Check out the state’s car insurance rates to determine how your premiums will change if you move.
How to Choose Car Insurance
There are countless insurance companies in the country offering numerous auto coverage plans. If you’re looking for the best car insurance company, you should do your research and pick a policy that best suits your needs.
Below are a few tips to help you pick the best car insurance for you:
- Determine your auto insurance needs to know the type of policy you will need
- Compare different insurance companies’ plans and prices
- Ask the insurer about any add-ons they offer
- Ask about the process of filing a claim and how they handle car accident claims
- Never give the wrong information to the insurer
- Read and understand the policy terms and conditions before signing a contract
The truth is, purchasing car insurance isn’t as challenging as most people think. You need to do your homework well and determine your needs before rushing to the market. This gives you an idea of the type of car insurance plan you will need.
Understand Car Insurance by State
Car insurance rates vary due to local laws and regulations, environmental factors, and the rate of uninsured motorists on the road. If you’re wondering about factors that affect insurance premiums in your state, check out our ultimate guide above on car insurance by state.
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