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Cheapest states for young drivers

Des Toups

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CarInsurance.com

Cheapest car insurance

Even a no-frills vehicle 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 will work nearly four 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.

Where you live matters – a lot

The Bureau of Labor Statistics says the average hourly wage in the U.S. was $24.17 in December 2013. The average annual outlay on liability car insurance, says the Insurance Information Institute, was $492 as of 2011.

[Let CarInsurance.com help you find affordable auto insurance now.]

The means an average worker could buy a year of liability coverage with about 20 hours of work.

But consider an 18-year-old working an entry-level job. The average state minimum wage in 2014 is just $7.60 an hour. And teenagers pay much more for insurance: The average price of a year of bare-bones coverage was $841, using 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 111 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 had it worst, with 196 hours required to buy the cheapest liability policy we found. A young driver finds not only much cheaper insurance in Illinois but higher wages as well; a year of liability insurance takes just 56 hours of work.

The cheapest states for young drivers

These are best-case scenario numbers.

We compared rates using the state’s cheapest ZIP code for a young driver with 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 any teenager who depends on his own car to commute to school or work.

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

RankStateZIP codeAnnual liability costMinimum wageHours 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 $7.50 61
6 Indiana 47905 $462 $7.25 64
7 New Mexico 88310 $557 $7.50 74
8 California 93441 $602 $8.00 75
9 Montana 59602 $625 $7.90 79
10 New York 14580 $669 $8.00 84
11 Connecticut 06498 $728 $8.70 84
12 Pennsylvania 16823 $611 $7.25 84
13 Washington 99163 $795 $9.32 85
14 Kansas 67401 $625 $7.25 86
15 Nebraska 68504 $662 $7.25 91
16 Vermont 05446 $826 $8.73 95
17 Mississippi 39759 $688 $7.25 95
18 Florida 32669 $755 $7.93 95
19 Tennessee 37686 $721 $7.25 99
20 Wisconsin 53081 $727 $7.25 100
21 Wyoming 82007 $732 $7.25 101
22 Arizona 86426 $805 $7.90 102
23 Arkansas 72768 $751 $7.25 104
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
29 Louisiana 71021 $811 $7.25 112
30 Colorado 80525 $916 $8.00 114
31 Oregon 97330 $1,060 $9.10 116
32 Utah 84772 $848 $7.25 117
33 Minnesota 56003 $939 $7.25 130
34 South Carolina 29692 $943 $7.25 130
35 Maine 04105 $1,039 $7.50 139
36 Oklahoma 74003 $1,019 $7.25 141
37 Maryland 21780 $1,049 $7.25 145
38 Michigan 49866 $1,204 $7.40 163
39 Ohio 44833 $1,330 $7.95 167
40 Kentucky 41075 $1,227 $7.25 169
41 New Hampshire 03303 $1,261 $7.25 174
42 New Jersey 07933 $1,446 $8.25 175
43 Delaware 19939 $1,327 $7.25 183
44 West Virginia 25427 $1,370 $7.25 189
45 Rhode Island 02842 $1,569 $8.00 196
* Alaska 99829 $7.75
* Hawaii 96722 $7.25
* Massachusetts 01258 $8.00
* North Dakota 58205 $7.25
* South Dakota 57069 $7.25
* Washington, D.C. 20006 $8.25
National average $841 $7.60 111

* 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

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 "Cheapest states for young drivers"
  1. megan

    Interesting! Thanks.

      Reply»  
  2. Aja

    Quite good and valuable information is provided here. Thanks.

      Reply»