Did you know your ZIP code could make or break your car insurance premium? When setting a premium, insurers use location-specific criteria, including state regulations, environmental conditions, crime statistics, uninsured driver rates, and repair costs, all of which can raise or lower your premium. Carriers also take into account personal risk factors such as driving history, age, and marital status.

Keep reading to learn which state-specific factors can impact your rates.

Key Highlights
  • State regulations – such as minimum liability coverage requirements and no-fault insurance laws – are two factors that can dictate how much insurance (and what types of coverage) you need.
  • Other location-specific factors that can affect how much you pay for coverage include the risk of severe weather like hurricanes, hail, or flooding; local motor vehicle crime and accident rates; and how many uninsured or underinsured drivers are on the road.
  • Generally speaking, drivers in urban areas will pay more for coverage than drivers in underpopulated regions.
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Written by:
Mark Vallet
Contributing Researcher
Mark is a freelance journalist and analyst with over 15 years of experience covering the insurance industry. He has extensive experience creating and editing content on a variety of subjects with deep expertise in insurance and automotive writing. He has written for autos.com, carsdirect.com, DARCARS and Madtown Designs to name just a few. He is also a professional blogger and a skilled web content creator who consistently turns out engaging, error-free writing while juggling multiple projects.
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Laura Longero
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Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
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What factors affect your car insurance rates?

Insurance companies consider a wide variety of factors when setting a premium. While you have control over some factors, such as your credit score and driving record, other factors fall outside your control. 

Your state will require a certain level of liability coverage, affecting your insurance costs. Local crime statistics, uninsured driver rates, and whether you live in a no-fault state will also affect your rates. In addition, economic factors such as labor shortages, inflation, and supply chain problems can all impact your rates. 

Personal factors affect car insurance costs

Insurers will consider your age, driving history, the vehicle you are driving, and the coverage options you choose. New and young drivers will pay higher rates, as will elderly drivers. Family sedans, minivans, and SUVs are cheaper to insure than sports cars or luxury vehicles. 

Drivers with tickets, accidents, or claims will pay more than drivers with a clean record. Low deductibles and higher coverage limits will also push your premium up, but the proper coverage can be a financial lifesaver after a serious accident.

State-specific rating factors

Insurance requirements are set at the state level, so required coverage minimums will vary. Most states require liability limits of 25/50/25, which translates to $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 in property damage.

In addition to liability coverage requirements, local laws, and uninsured motorist rates can significantly impact your premium.

For example, Colorado has some of the highest car insurance rates in the country and is ranked ninth for uninsured drivers—more than 17% of drivers are not carrying insurance, according to the Insurance Information Institute.

Economic influences affect premiums

The general state of the economy will impact car insurance rates, as the pandemic showed. Labor shortages and supply chain issues can dramatically push up repair costs. In turn, insurance companies pass that expense to policyholders via higher premiums. Higher medical costs and the rate of insurance fraud will also affect car insurance rates. 

How state laws influence car insurance rates

Car insurance is controlled at the state level, which means that coverage requirements, the insurance system (tort vs. no-fault), and how tightly rates are regulated are all impacted by where you live. 

Let’s look at a few state-specific factors that will impact your insurance rates.

  • Coverage requirements: Most states require drivers to carry a minimum amount of liability insurance coverage. The required amount of insurance will vary by state, meaning drivers will often have higher insurance costs in states with higher required limits. 
  • Regulation of rates: Insurance companies are often prevented from raising rates independently. Many states require insurance companies to seek approval for rate increases, and the state insurance department may reject or readjust the rate request.
  • No-fault vs. at-fault states: Most states are at-fault states, which means that when an accident occurs, one of the drivers is considered responsible. The at-fault driver must cover the cost of the injuries of the other driver and their passengers, as well as damage to their vehicle. There are currently 12 no-fault states in the United States. In these states, each driver involved in an accident pays their own medical bills, which requires personal injury protection (PIP) coverage.

Geographic and environmental impacts on car insurance rates

Insurers will also consider your specific location in a state with questions like the following: Are you in a rural area or a major city? Is car theft an issue in your community? How likely is a natural disaster like a wildfire, hurricane, or earthquake?

Here is a quick overview of the local risk factors insurance companies consider.

  • Urban vs. rural areas: Generally, urban areas are more expensive for car insurance than rural areas. This is because urban areas have more vehicles on the roads, leading to more accidents, vandalism, and claims. Rural areas have fewer cars and less traffic, resulting in lower rates.
  • Severe weather: Frequent severe weather leads to more claims, pushing up costs for insurers. If you live in an area prone to tornadoes, hurricanes, hail, wildfires, or wind damage, your car insurance rates will be higher. Finding coverage in the private market may be difficult in some disaster-prone places.
  • Crime rates: Vehicle theft rates tend to be higher in cities than in rural areas, raising rates for everyone. Insurers consider the theft rate in your neighborhood and adjust your rate accordingly. 

See how auto insurance rates vary by state

According to our data, Louisiana is the most expensive state in the country for car insurance, with an average premium of $2,883 a year. Florida was the second most expensive at $2,694, and California rounded out the top three at $2,416.

Louisiana is impacted by many factors that push up the cost of insurance. The state experiences hurricanes and other severe weather regularly, has a high crime rate, and state laws make it easy to sue after an accident, which keeps rates high. 

On the other end of the spectrum, Maine had the lowest annual premium, at $1,175, followed by New Hampshire in second place, at $1,265, and Vermont in third, at $1,319 per year for full coverage auto insurance. 

These states are mainly rural, have lower crime rates, and experience catastrophic weather events infrequently, all of which help keep insurance costs reasonable. 

State  Annual full coverage rates  Monthly full coverage rates 
Alaska$1,676$140
Alabama$1,860$155
Arkansas$1,957$163
Arizona$1,812$151
California$2,416$201
Colorado$2,337$195
Connecticut$1,725$144
Washington, D.C.$2,157$180
Delaware$2,063$172
Florida$2,694$224
Georgia$1,970$164
Hawaii$1,517$126
Iowa$1,630$136
Idaho$1,428$119
Illinois$1,532$128
Indiana$1,515$126
Kansas$1,900$158
Kentucky$2,228$186
Louisiana$2,883$240
Massachusetts$1,726$144
Maryland$1,746$145
Maine$1,175$98
Michigan$2,352$196
Minnesota$1,911$159
Missouri$1,982$165
Mississippi$2,008$167
Montana$2,193$183
North Carolina$1,741$145
North Dakota$1,665$139
Nebraska$1,902$159
New Hampshire$1,265$105
New Jersey$1,902$159
New Mexico$2,049$171
Nevada$2,060$172
New York$1,870$156
Ohio$1,417$118
Oklahoma$2,138$178
Oregon$1,678$140
Pennsylvania$1,872$156
Rhode Island$2,061$172
South Carolina$2,009$167
South Dakota$2,280$190
Tennessee$1,677$140
Texas$2,043$170
Utah$1,825$152
Virginia$1,469$122
Vermont$1,319$110
Washington$1,608$134
Wisconsin$1,664$139
West Virginia$2,005$167
Wyoming$1,758$146

Why do auto insurance rates vary by state?

Weather and state regulations have some of the most significant impacts on insurance rates. The top five states all experience severe weather or have state regulations in place that lead to higher car insurance costs, as you can see below:

  • Louisiana: Frequent severe weather, a relatively high crime rate, and one of the highest litigation rates in the country, all of which contribute to the highest car insurance rates in the country.
  • Florida: Hurricanes and tropical storms frequently pummel the Sunshine State, and it’s ranked No. 10 by the National Insurance Crime Bureau (NICB) for the number of vehicle thefts. A no-fault insurance system also contributes to higher rates in Florida. 
  • California: California has the most vehicle thefts by volume of any state, according to the NICB, and large urban areas with more accidents and claims. 
  • Michigan: Car insurance is expensive in Michigan because it’s a no-fault state with high coverage requirements. Michigan is the only state with unlimited lifetime coverage for catastrophic injuries, which has kept rates high. It also is ranked No. 5 for the percentage of uninsured drivers, according to the Insurance Information Institute (Triple-I).
  • Colorado: Wildfires, hailstorms, and wind events have led to massive claims that result in higher rates. In addition, Colorado has the sixth-highest auto theft rate in the U.S. and is ranked No. 9 by the Triple-I for the number of uninsured motorists.

Check out our interactive map for detailed information on your particular state. 

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  • Alaska (AK)
  • Alabama (AL)
  • Arizona (AZ)
  • Arkansas (AR)
  • California (CA)
  • Colorado (CO)
  • Connecticut (CT)
  • Delaware (DE)
  • Florida (FL)
  • Georgia (GA)
  • Hawaii (HI)
  • Idaho (ID)
  • Illinois (IL)
  • Indiana (IN)
  • Iowa (IA)
  • Kansas (KS)
  • Kentucky (KY)
  • Louisiana (LA)
  • Maine (ME)
  • Maryland (MD)
  • Massachusetts (MA)
  • Michigan (MI)
  • Minnesota (MN)
  • Mississippi (MS)
  • Missouri (MO)
  • Montana (MT)
  • Nebraska (NE)
  • Nevada (NV)
  • New Hampshire (NH)
  • New Mexico (NM)
  • New York (NY)
  • New Jersey (NJ)
  • North Carolina (NC)
  • North Dakota (ND)
  • Ohio (OH)
  • Oklahoma (OK)
  • Oregon (OR)
  • Pennsylvania (PA)
  • Rhode Island (RI)
  • South Carolina (SC)
  • South Dakota (SD)
  • Tennessee (TN)
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  • Utah (UT)
  • Vermont (VT)
  • Virginia (VA)
  • Washington (WA)
  • Washington D.C. (DC)
  • West Virginia (WV)
  • Wisconsin (WI)
  • Wyoming (WY)

How to lower your auto insurance rates

While you cannot control all the factors that go into your car insurance rate, there are steps you can take to keep your premium affordable.

  • Compare auto insurance policies regularly: This is one of the best ways to lower your rate. Insurers rate risk differently, which can result in dramatic differences in rates. It is best to shop your coverage yearly; always compare apples to apples regarding coverage levels and deductibles. 
  • Seek discounts: Insurance companies offer various discounts that can help lower your rates. Common discounts include bundling your home/renters insurance with your auto insurance, safe driver, good student, new car discounts, and savings for anti-theft devices. Ask your insurer to ensure all available discounts are applied to your policy.
  • Consider usage-based coverage: Many insurers offer usage-based coverage via a smartphone app or a plug-in device that monitors your driving habits, such as distance traveled, time of day, speed, acceleration, and braking. Bear in mind that just as you can be rewarded for good driving, your insurer may penalize you for poor driving habits.
  • Improve your personal factors: Keeping your driving record clean is one of the best ways to lower your rates. You will pay much more for coverage if you have numerous tickets or accidents on your record. Insurers also consider your credit history (most states allow this), and drivers with low credit will pay more for coverage. Your choice of vehicle can also have an impact; when considering a vehicle purchase, always get an insurance quote. 

Final thoughts

Multiple factors impact car insurance rates, including your driving record, the vehicle you drive, age, marital status, and state laws regarding coverage levels. While you can control some of these factors, others fall outside your influence.

Resources & Methodology

Sources

Methodology

CarInsurance.com editors collected 2023 rates from Quadrant Information Services for a 40-year-old male and female driving a  Honda Accord LX with a good insurance score and no violation on record for a full coverage insurance policy with limits 100/300/100 and $500 comprehensive and collision deductible. We analyzed 51,088,003 records, 34,588 ZIP codes and 167 insurance companies across the nation. 

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Contributing Researcher

Mark is a freelance journalist and analyst with over 15 years of experience covering the insurance industry. He has extensive experience creating and editing content on a variety of subjects with deep expertise in insurance and automotive writing. He has written for autos.com, carsdirect.com, DARCARS and Madtown Designs to name just a few. He is also a professional blogger and a skilled web content creator who consistently turns out engaging, error-free writing while juggling multiple projects.