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Every state has its own car insurance laws, and that's one reason why car insurance rates by state vary dramatically across the country. Another reason is that your location is chief among the factors car insurance companies use when setting rates. Based on the number and severity, or cost, of car insurance claims within the area, insurers assign ZIP codes different risk levels. Insurers take into account the frequency of thefts, collisions and vandalism to gauge the likelihood of such incidents happening to drivers within the ZIP code. This is used as the base rate from which insurers calculate your premium. Other pricing factors, such as your driving record, type of car you drive, how much coverage you buy and your age are then added into the calculation.

Insurance Rates by State Minimum and Full Coverage Policy

Below you’ll see how states rank for a full coverage policy, as well as what the average cost is for bare-bones coverage. The difference in price is significant, as minimum coverage only pays for damage you do to others and their property. In accidents that are your fault, your own car is not covered under a state minimum policy. Full coverage includes collision insurance, which pays for damage to your car in accidents you cause. It also includes comprehensive insurance, which pays out up to the cash value of your car to repair or replace your car for damage due to fire, flooding, hail and animal strikes. Comprehensive insurance also covers theft. Liability limits under full coverage are higher than state minimums, so provide more financial protection. That’s why there is a significant price difference.

Rank State Full Coverage Minimum Coverage Difference
1Michigan$3,141$1,855$1,286
2Louisiana$2,601$771$1,830
3Nevada$2,402$717$1,685
4Kentucky$2,368$669$1,699
5DC$2,188$839$1,349
6Florida$2,162$828$1,334
7California$2,125$606$1,519
8New York$2,062$867$1,195
9Rhode Island$2,040$738$1,302
10Connecticut$2,036$891$1,145
11New Jersey$1,993$846$1,147
12Montana$1,963$447$1,516
13Colorado$1,948$553$1,395
14Delaware$1,921$843$1,078
15Georgia$1,865$684$1,181
16Texas$1,823$538$1,285
17Maryland$1,816$853$963
18Oklahoma$1,815$418$1,397
19Missouri$1,798$546$1,252
20Arizona$1,783$578$1,205
21Wyoming$1,782$328$1,454
22Arkansas$1,763$449$1,314
23Alabama$1,713$498$1,215
24Pennsylvania$1,700$502$1,198
25Kansas$1,689$464$1,225
26Mississippi$1,684$413$1,271
27West Virginia$1,654$541$1,113
28South Carolina$1,653$617$1,036
29South Dakota$1,643$323$1,320
30Washington$1,620$537$1,083
31Minnesota$1,619$614$1,005
32New Mexico$1,604$479$1,125
33Hawaii$1,589$485$1,104
34North Dakota$1,577$423$1,154
35Alaska$1,560$412$1,148
36Illinois$1,538$493$1,045
37Nebraska$1,500$393$1,107
38Oregon$1,496$674$822
39Tennessee$1,493$462$1,031
40Utah$1,492$565$927
41Massachusetts$1,466$520$946
42North Carolina$1,425$438$987
43Vermont$1,410$398$1,012
44Iowa$1,352$326$1,026
45Wisconsin$1,335$401$934
46Idaho$1,285$377$908
47Indiana$1,266$430$836
48Virginia$1,196$380$816
49Ohio$1,191$406$785
50New Hampshire$1,086$424$662
51Maine$1,080$355$725

 

Which States Have the Lowest Car Insurance Rates?

States that are more rural and have fewer drivers generally have lower car insurance rates, overall, because there are fewer accident claims. A states’ rate of uninsured drivers also plays a role in keeping costs low. Other factors come into play, too: for instance if the majority of drivers in a state have good credit, that can impact the state average, in states where it is legal to use credit when setting prices. Finally, rates are typically lower in states that have a competitive market for car insurance, meaning there are many local, small-sized carriers as well as major insurance companies selling policies in that state.

  • Maine ranks 38th in the nation for population density, so that means it’s a state with relatively fewer drivers than others. In addition, Maine has a healthy car insurance market. Thanks to a competitive market, Maine consumers are paying less for auto insurance than consumers in nearly every other state, according to statements made by Insurance Superintendent Eric Cioppa. Maine also has the lowest rate of uninsured drivers (4.5%) in the country. This lowers an insurer’s risk, which results in better premiums for everyone.
  • New Hampshire also qualifies as a low-population, rural state, so that helps keep its rates low, on average. It also nurtures a competitive market in that state laws require insurance companies to accept all drivers with clean records who apply for coverage. Eireann Sibley of the state insurance commission says that the state also has many drivers that are retired, which may mean overall that many drivers are not commuting long distances, which cuts down on accidents. Additionally, the state has a relatively high median income which may mean more drivers have chosen higher deductibles.
  • Ohio is not as rural as Maine and New Hampshire, but like those states, its rates are among the cheapest in the nation because of consumer choice in the market, with over 250 carriers offering car insurance. "Strong competition helps produce some of the lowest rates in the country, and Ohio is fortunate to have many insurers offering a wide array of products giving consumers a lot of choice. The Ohio Department of Insurance focuses on protecting consumers, while also providing stability and predictability in the market to foster competition and growth," says Robert Denhard with the Ohio Department of Insurance Communications.

3 Cheapest States for Full Coverage Policy

  1. Maine with $1,080 per year or $90 monthly
  2. New Hampshire with $1,086 per year or $91 per month
  3. Virginia with $1,191 per year or $99 monthly

3 Cheapest States for Minimum Coverage

  1. South Dakota with $323 per year or $27 per month
  2. Iowa with $326 per year or $27 per month
  3. Wyoming  with $328 per year or $28 per month

Which States Have the Highest Car Insurance Rates?

Generally, states that are more urban or have large populations tend to have higher average car insurance costs than rural states. More drivers means more accident claims, which spikes costs. But other factors come into play, too, such as car insurance laws.

For instance, Michigan is notorious for leading the nation in car insurance costs due to its unique no-fault car insurance laws that provide unlimited benefits. While recent auto reform legislation is changing this, it won’t be in effect until July 2020. So, historically, Michigan car insurance laws operated under an unlimited no-fault car insurance mandate that required all drivers to carry Personal Injury Protection (PIP) coverage. PIP helps cover medical expenses for the policyholder, family members and passengers that are injured in a car accident.

While other states that require PIP have put limits on PIP coverage amounts, Michigan did not. Michigan guaranteed unlimited, lifetime medical benefits to auto accident victims, which dramatically increased an insurer’s risk, and your premium.

Additionally, Michigan ranks fourth in the country for uninsured drivers. Roughly, 20.3% of drivers in Michigan are without insurance. This also helps push rates up for insured drivers.

Louisiana has a different set of issues. Almost 40% of driver are carrying the absolute minimum coverage levels, according to Louisiana Insurance Commissioner Jim Donelon. And, about 13% of Louisiana drivers don’t have car insurance.  As a result, many drivers to turn to the legal system to get higher insurance settlements. Louisiana Watchdog reports that Louisiana lawsuit costs are amount the highest in the U.S., with annual expenses nearly hitting $7 billion, 20.6% higher than the national average. Auto accidents are the largest portion of the tort system costs reaching more than$3 billion. These higher payouts lead to higher premiums for everyone as insurers pass their costs on to policyholders.

In Nevada, there is also a high rate of uninsured motorists, nearly 11%. And as host to Las Vegas, the iconic gambling and resort destination, it has its share of traffic claims that balance out the more rural areas of the state.

Most expensive states for full coverage policy

  1. Michigan with $3,141 per year or $262 per month
  2. Louisiana  with $2,601 per year or $217 per month
  3. Nevada with $2,402 per year or $200 per month

Most expensive states for minimum car insurance coverage

  1. Michigan with $1,855 per year or $155 per month
  2. Connecticut with $891 per year or $74 per month
  3. New York with $867 per year or $72 per month

Learn More About How Car Insurance Rates Vary by State?

There are several reasons why auto insurance rates change by state. One major reason is that the state required minimum car insurance limits you need to have in place to drive legally vary by state. Some are lower than others. Liability insurance is typically written out showing amounts for each component. These include personal injury liability to pay medical expenses for those you injure in an accident you cause, and property damage liability, which pays for damage you cause to other vehicles and property. Like this example, for California, 15/30/5:

  • $15,000 for injuries you cause, up to $30,000 per accident
  • $5,000 for property damage

In your particular state, the minimum required liability limits may be as much as 30/60/25, as it is in Texas,  or as low as California’s, where it’s 15/30/5.

Also, some states require you to buy personal injury protection and uninsured motorist coverage, in addition to liability insurance.

See the average car insurance rates for each state. Click on your state to find out:

  • Average rates by ZIP code
  • Minimum insurance requirements
  • Laws specific to your state
  • Largest car insurance companies in your state
  • State car insurance rates by company
  • State car insurance rates by coverage level
  • State car insurance rates by age
  • How much car insurance goes up in your state for speeding tickets, adding a teen driver, bad credit

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Why Does Where you Live Affect your Car Insurance Rate?

Your insurance company's experience with losses in your neighborhood influences how much you pay. So does your state’s car insurance laws. In addition to state minimum liability requirements that differ, some states, for instance, allow insurers to consider your credit history and gender when calculating your cost, while others don’t allow it.

Additionally, urban areas tend to have more cars on the road more often than rural areas. That leads an increased number of accidents, theft and vandalism.  The more claims made in an area, the higher the rates will be.

In your particular ZIP code, factors that can drive rates higher include the number of:

  • Claims for that area and how much they cost
  • Vehicles stolen
  • Fraudulent injury claims
  • Reports of vandalism

Common Questions About State-Specific Car Insurance Laws

What is a tort state?: Thirty-eight states use the tort system, which means that someone is found at fault for every accident that involves car insurance, even if the fault is determined to be 50/50 between two drivers.

What is a no-fault state?: Under the no-fault system, car insurance companies pay for certain damages (typically bodily injuries) regardless of who was at fault. Laws vary among the 12 states that have no-fault insurance.

No pay, no play states: In states with “no pay, no play” laws, driving without insurance is even more risky than in other states. Uninsured drivers in these states are not compensated for any damage, even in accidents that are not their fault.

Which states share speeding ticket information?: Many states have formal agreements with each other, such as the Drivers License Compact and the Non-Resident Violator Compact, to share information regarding traffic tickets when drivers are ticketed out of state.

Should insurers only base rates on driving record? 

A Congressional bill proposed in 2019 would make it illegal for car insurance companies to base rates on anything other than a person’s driving record. In that case, a person’s place of residence would no longer affect car insurance costs.

Eric Poe, lawyer, activist entrepreneur and COO of the not-for-profit CURE Auto Insurance in Princeton, NJ, said the bill “levels the playing field” and protects lower-income consumers against discrimination. 

“The purpose of insurance is to pool risks so that everyone who is compelled to buy it can afford it,” Poe said. “The fundamental mechanism and purpose of insurance is to protect against any one-single catastrophic loss that can't be absorbed by an individual. Ultimately, poor people have no assets to protect and therefore do not receive the typical benefits associated with insurance but are compelled to buy it for statutory reasons (laws require it). 

“If you are required to buy insurance by a state government, it is our position that it should be priced fairly. Charging the lowest income drivers (even the safest clean drivers) significantly more than the higher income drivers is simply fundamentally unfair and unjust,” Poe added.

However, Megan Shepherd, insurance editor at finder.com, said insurers should be able to consider a driver’s state, city and ZIP when figuring out rates. 

“For example, a higher population density means a higher probability for accidents and, therefore, more costs that insurance companies will need to offset. Weather conditions and wildlife also vary by state, since in some states you experience a higher likelihood of damage from say a hurricane or a collision with a deer; those risks factor into your rate,” Shepherd said. 

Shepherd said another issue with the legislation is what to do about new drivers, who don’t have a driving record. In that case, insurers might have to base young driver rates based on statistics alone until they establish a driving record, Shepherd said.