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Cheap car insurance for young drivers

Des Toups

By

CarInsurance.com

Cheapest car insurance

Even a no-frills car represents a huge expense for the 4 million or so Americans working a minimum-wage job.

But it represents a bigger challenge in some places than in others. Young drivers in Rhode Island and New Hampshire will work nearly three times as long as their counterparts in Illinois to buy the legally required state-minimum liability coverage, according to a CarInsurance.com analysis.

We ranked states by the number of hours needed to buy coverage, comparing their cheapest car insurance for 18-year-olds with their minimum wage.

This is as cheap as insurance gets, and there are few trade-offs available to save further. For example, you can’t reduce your limits below the minimum amounts. And you can’t raise your deductible. There are no deductibles on liability insurance.

According to the Bureau of Labor Statistics, the average hourly wage was $24.57 in December 2014, up from $24.17 per hour a year earlier. The average annual outlay for liability car insurance, says the Insurance Information Institute, was $504 as of 2012.

This means an average worker could buy a year of liability car insurance with about 21 hours of work.

But consider an 18-year-old working an entry-level job. The average state minimum wage as of July is just $7.92 an hour. And teenagers pay much more for insurance: The average price of a year of bare-bones coverage was $841, according to rates gathered from the national carriers in CarInsurance.com’s online quotes tool.

At those averages, a year of state minimum liability insurance would require 106 hours of work.

Because both wages and car insurance rates swing dramatically, we looked at affordability by comparing the cost of legal-minimum auto insurance with each state’s minimum wage. Young drivers in Rhode Island and New Hampshire had it worst, with 174 hours required to buy the cheapest liability policy we found. A young driver finds much cheaper insurance in Illinois -- a year of liability insurance takes just 56 hours of work.

How much is car insurance for an 18-year-old?

These are best-case scenario numbers. Keep in mind that car insurance for young drivers is always expensive.

We compared rates using the state’s cheapest ZIP code for a young driver with a clean record, good credit and previous insurance on a parent’s policy. We chose the least expensive rate we found. Unless you’re 18, male, a resident of the particular addresses we used and proud owner of a 1997 Ford Taurus, your quotes probably won’t exactly match ours, which are only a snapshot of available rates.

They are, however, a good indicator of the financial hurdle confronting teenagers who depend on their own car to commute to school or work.

What an 18-year-old pays for state-minimum liability

Rank

State

ZIP code

Annual liability cost

Minimum wage

Hours to buy

1

Illinois

61761

$459

$8.25

56

2

North Carolina

28778

$419

$7.25

58

3

Iowa

50010

$419

$7.25

58

4

Nevada

89427

$492

$8.25

60

5

Missouri

65101

$458

$7.65

60

6

Indiana

47905

$462

$7.25

64

8

California

93441

$602

$9.00

67

7

New Mexico

88310

$557

$7.50

74

10

New York

14580

$669

$8.75

76

9

Montana

59602

$625

$8.05

78

11

Connecticut

06498

$728

$9.15

80

15

Nebraska

68504

$662

$8.00

83

12

Pennsylvania

16823

$611

$7.25

84

13

Washington

99163

$795

$9.47

84

14

Kansas

67401

$625

$7.25

86

16

Vermont

05446

$826

$9.15

90

18

Florida

32669

$755

$8.05

94

17

Mississippi

39759

$688

$7.25

95

19

Tennessee

37686

$721

$7.25

99

20

Wisconsin

53081

$727

$7.25

100

22

Arizona

86426

$805

$8.05

100

23

Arkansas

72768

$751

$7.50

100

21

Wyoming

82007

$732

$7.25

101

24

Alabama

36543

$759

$7.25

105

25

Georgia

31601

$763

$7.25

105

26

Virginia

22652

$787

$7.25

109

27

Idaho

83712

$791

$7.25

109

28

Texas

76306

$802

$7.25

111

30

Colorado

80525

$916

$8.23

111

29

Louisiana

71021

$811

$7.25

112

31

Oregon

97330

$1,060

$9.25

115

32

Utah

84772

$848

$7.25

117

33

Minnesota

56003

$939

$8.00

117

37

Maryland

21780

$1,049

$8.25

127

34

South Carolina

29692

$943

$7.25

130

35

Maine

04105

$1,039

$7.50

139

36

Oklahoma

74003

$1,019

$7.25

141

38

Michigan

49866

$1,204

$8.15

148

43

Delaware

19939

$1,327

$8.25

161

39

Ohio

44833

$1,330

$8.10

164

40

Kentucky

41075

$1,227

$7.25

169

44

West Virginia

25427

$1,370

$8.00

171

42

New Jersey

07933

$1,446

$8.38

173

41

New Hampshire

03303

$1,261

$7.25

174

45

Rhode Island

02842

$1,569

$9.00

174

*

Alaska

99829

$8.75

* Hawaii 96722 $7.75
* Massachusetts 02158 $9.00
*

North Dakota

58285

$7.25

* South Dakota 57069 $8.50
* Washington, D.C. 20006 $10.50
National average $841 $7.92 106

* Data missing or unavailable at time of publication

** States that have no minimum wage or a minimum wage lower than the federal wage are displayed at the federal minimum.

What you can do: How young drivers can get more affordable car insurance

The cost of liability insurance has more to do with the driver than the car. (The insurance company isn’t going to fix your car, just the person’s you hit.) In your search for affordable auto insurance, these are the factors you have some control over:

  • Your driving record: More than one violation or accident is going to hurt.
  • Your credit: If it’s dismal, you’re seen as a bigger risk of a claim and thus charged more in many states.
  • Your mileage: The less you drive, the less risk of your hitting someone.
  • Your insurance history: If you’ve let your policy lapse, even for a few days, you’ll pay about 5 percent more than you would have otherwise, according to Insurance.com.
  • Your insurance company: No two insurers offer identical rates, and even on state-minimum policies, premiums can differ by hundreds of dollars a year.

Insurers do look at your car, and if it has a significantly higher rate of claims than most (because, say, it’s driven mostly by young drivers), your liability rates will reflect that risk.

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2 Responses to "Cheap car insurance for young drivers"
  1. megan

    Interesting! Thanks.

      Reply»  
  2. Aja

    Quite good and valuable information is provided here. Thanks.

      Reply»