If you own a car in the United States, you’re spending an average of $1,674 a year to insure it. But that number doesn’t tell the full story. You could be paying a lot more, or a lot less: what you pay for auto insurance can vary by hundreds of dollars depending on where you live.
A 40-year-old person with a clean record who fully insures a standard, midsize car pays on average $1,034 a year in Ohio. If that same person were to move just one state over to Michigan, it would cost them double for the same coverage, according to Bankrate’s latest data.
“You’ve got different coverage requirements that impact rates. You’ve got different road dynamics based on the geography of the state, and then you have different rule systems,” says Douglas Heller, an insurance consultant and expert with the Consumer Federation of America (CFA), a nonprofit consumer advocacy group.
It’s not just your state that factors into your car insurance rate; dozens of other factors like your age, gender, and even level of education can also increase or decrease the amount of money you spend on coverage, too.
In Louisiana, the state with the most expensive car insurance, you would pay $2,724, more than $1,000 over the national average. The least expensive car insurance is in Maine, with just $965. Ohio’s average rate of $1,034 is the second-lowest in the nation.
To help you better understand what you can expect to spend, NextAdvisor put together a comparative snapshot of auto insurance premiums nationwide. The data will help you if you’re planning to move to another state, or give you a sense of whether you’re spending more than you should on auto insurance. For more on how we gathered this data, see the methodology below.
The data we used from Bankratre reflects the average cost of full automotive coverage (liability, collision, and comprehensive) for all states and District of Columbia in 2020. Bankrate used Quadrant Information Services to analyze over 2,000 rates for all ZIP codes and carriers across the nation.
Why Do Car Insurance Costs Vary from State to State?
If you’ve ever purchased car insurance in more than one state, you know how significantly the rates can vary.
“Somebody who has a policy in California could be paying a very different rate from someone who has the exact same policy in South Carolina,” says Laura Adams, an insurance expert with AutoInsurance.org and host of the “Money Girl” podcast. “Location is just a key factor in the rates we have to pay.”
Heller and Adams say fluctuations in premiums between states are also related to the ways that individual states monitor the insurance industry, theft and driving statistics in the state, age demographics, the percentage of drivers who are uninsured, and incidences of bad weather. Here are the three that play the biggest roles in how auto insurance premiums are set in each state:
Every state, except New Hampshire, requires some form of automobile insurance, and they each set their coverage requirements. For example, each state has its own minimum level of liability that someone must have in order to drive. “The amount they say you have to purchase is different. In some states, you have to purchase up to $30,000 of liability insurance for all the injuries you cause. In other states, you have to purchase up to $100,000 for liability coverage,” says Heller. “That’s going to affect how much people pay.” For example, Michigan requires $100,000 in liability coverage and personal injury protection, whereas Florida drivers only need a minimum of $10,000 in personal injury protection and property damage liability.
Rating Factors and Rules
States decide what factors insurance companies can use to set their rates. What may be allowed in one state to set rates can easily not be allowed in another. For example, Hawaii doesn’t allow insurance companies to use age, gender, or credit history. Also, 37 states and the District of Columbia allow insurers to set some auto insurance rates without approval beforehand, according to the Insurance Information Institute. This can heavily influence rates over time. According to a recent report by the Consumer Federation of America, states with stronger regulatory systems — that is, states that require prior approval of rates before they can take effect — have been able to slow the rate increases more over time. States with prior approval regulations have seen a 45% increase between 1989 and 2019, whereas states without have seen rates rise more than 80% during the same period.
Insurance companies set their rates based on risk. The riskier the location, the more insurance companies charge for insurance. For example, insurers may measure the number of uninsured drivers in a state and the state’s rate of car theft and break-ins to set rates. Urban areas have a higher population density, which typically means more cars on the road and therefore more accidents. “There are some states that are almost all urban and suburban, and those tend to have more but smaller accidents. Then you have some states that are much more rural that have fewer accidents, but they tend to be at higher speeds and include more damage,” says Heller. “There are going to be regional factors that affect rates.”
Top 5 Cheapest States for Car Insurance
The average cost in the five cheapest states in the U.S. is nearly 65% lower than the national average. There are a few reasons these states have cheaper car insurance; states like Maine, Vermont, and Wyoming are more rural and tend to have less congested roads. Also, states with lower average rates are not as prone to severe weather, like hurricanes, and tend to have fewer uninsured drivers. For example, the rate of uninsured drivers in Maine is 4.9%, significantly lower than the nationwide rate of 12.6%. According to the Insurance Research Council, at-fault drivers who are uninsured or underinsured increase the cost of insurance for those who comply with state requirements.
There can be other factors at play, too. For example, Ohio, the second-cheapest state on the list, has more than 250 companies that write car insurance policies, according to the Ohio Insurance Institute, and the competition helps keep rates down. Hawaii and Washington have more heavily regulated insurance systems, Heller says, making it more difficult for insurers to increase rates and use certain factors, like credit scores, to price auto insurance.
These are the five least expensive states for car insurance:
1. Maine: $965
2. Ohio: $1,034
3. Idaho: $1,045
4. Hawaii: $1, 127
5. Washington: $1,176
Top 5 Most Expensive States for Car Insurance
The places with the priciest car insurance aren’t concentrated in one region of the U.S; they’re all over the country.
While it might make sense that states with high traffic and dangerous weather have higher insurance premiums, that doesn’t entirely explain why car insurance is so expensive in certain states. For example, insurance companies are more wary of Louisiana drivers because nearly 12% are uninsured and about 40% only have the state minimum coverage of $15,000 per person and $30,000 per accident, which is low compared to other states.
“Some states are more protective of consumers and want to make sure rates are more fair, and others have very limited oversight over insurance companies,” says Heller. “That can drive real differences in rates. ”
Two other states on the list also have an unusually higher number of uninsured drivers: Michigan at nearly 26%, the second-highest in the country, and Florida, at about 20%. When an uninsured driver crashes, the cost of the accident is passed along to insured drivers, typically through higher premiums. But there’s a reason Michigan, a no-fault state, has so many uninsured drivers: it has some of the highest minimum coverage requirements for auto insurance in the country, which has made coverage unaffordable for many.
“Because Michigan is a no-fault state, drivers have to purchase a type of protection called personal injury protection (PIP),” says Adams. “It’s going to pay for injuries after you get into a crash no matter who’s responsible, and that coverage tends to be expensive.”
These are the five most expensive states for car insurance:
1. Louisiana: $2,724
2. Florida: $2,364
3. Michigan: $2,309
4. New York: $2,321
5. Nevada: $2,245
The Bottom Line
These numbers are no more than a comparative snapshot of what auto insurance costs in your state; your insurance bill will invariably differ from the state average. Even within a state, rates can fluctuate according to your ZIP code. Auto insurance rates are affected by the car you drive, your age and driving habits, the types of coverage you choose, and more.
“It’s good for consumers to know if they are above or below average when it comes to paying for auto insurance,” says Adams. “If you are paying above average rates, you really want to find out why and ask questions.”
Rates can also vary significantly among insurers, so it pays to shop around and compare insurers at least once a year.
“Shopping more is better than shopping less,” says Adams. “It gives you more information to make a smart decision, and it doesn’t negatively impact you in any way. Only good things can come from shopping around for auto insurance.”