Average Auto Insurance Rates By State
All states are not created equal, at least, not when it comes to auto insurance rates! Read on to find out which states have the highest & lowest insurance rates in America.
One of the most interesting stats in auto insurance is the state-by-state differences in premiums, and while we break this down, remember, the best way to get lower rates is by comparing auto insurance quotes online...and we make that super easy!
It's important that you compare car insurance rates at least every 6 months to make sure you're paying a fair price. No one wants to pay more than they have to for coverage!
"Why is 1 state more expensive than another?" you ask.
Unfortunately, the answer isn't as simple as we'd like. However, it all really boils down to a ratio of these key metrics, all of which are out of your control.
- Population density: Higher population density often results in more accidents and higher traffic congestion, which inevitably leads to higher insurance rates.
Bottom line: High population states are more expensive.
- Cost of living: Higher costs for medical care, vehicle repairs, and liability judgments in a state can result in higher insurance rates to cover these expenses.
Bottom line: High COL states (and especially cities!) simply have higher average premiums.
- Weather and natural disasters: States with more frequent natural disasters such as hurricanes, earthquakes, or tornadoes may experience higher insurance rates due to the increased risk of vehicle damage.
Bottom line: States like California, Florida & Texas have higher frequencies of natural disasters and thereby, higher insurance rates. In some cases insurers won't even write policies in states with higher risk!
- Cost of medical care: The cost of medical treatment for accident victims can vary greatly from state to state, and this can impact insurance rates. States with higher medical costs tend to have higher insurance rates to cover these expenses.
Bottom line: Talk about a variable you can't control! It seems like medical care is expensive anywhere in the US, so it's almost like this is a built-in excuse, but sadly, it's one of the factors that determine your rates.
- Traffic laws and enforcement: Stricter traffic laws and enforcement can lead to fewer accidents and lower insurance rates. I also want to add that speed limits, which were created through insurance lobbyists, play a huge role. An example is in Oregon. In the Portland area we have 55mph speed limits on the Interstate! While it can help keep rates down, the reality is that all of the other factors weigh in as well. It's pretty much lose-lose.
Bottom line: If your state has strict traffic/driving laws, rates could be cheaper. Is it worth the trade off? Hard to say.
- Insurance regulation: Higher regulation in the insurance industry can result in added compliance costs and higher insurance rates. A good example of this is New York, Hawaii & Florida. Regulation is very strict and compliance is as well.
Bottom line: This is an element you can't control and is subject to change on a year-to-year basis.
- Number of uninsured drivers: A higher number of uninsured drivers in a state can increase the likelihood of accidents involving uninsured drivers, leading to higher insurance rates. It's just common sense. You might also notice that many states have UI/UIM requirements for this very reason.
Here are some states that require UI/UIM coverage
- North Carolina
- Incidence of auto theft and vandalism: Higher rates of auto theft and vandalism in a state can result in higher insurance rates to cover the cost of replacing stolen or damaged vehicles. Major cities are typically the culprits here.
Bottom line: If you live in a high-crime area, prepare to pay higher insurance premiums.
- Cost of vehicle repairs: Higher costs for vehicle repairs in a state can result in higher insurance premiums to cover these expenses. Insurance repairs seem to be a bit of a racket, much like US healthcare, in the sense that repair shops often charge a premium to insurance companies for covered repair vs. the typical consumer. These added costs get passed on to policyholders in the form of higher premiums.
Bottom line: Vehicles are expensive to repair. Repair shops charge top dollar to insurance companies, insurance companies pass that on to you. Only the repair shops win this game!
- Vehicle ownership rates: Higher vehicle ownership rates in a state can result in a higher frequency of accidents and higher insurance rates. More cars on the road means more opportunities for accidents. At least, that's the way insurance companies see it.
Bottom line: If you live in a high population, high density, or location where there are a lot of drivers, prepare to pay higher premiums.
- Liability coverage limits required by state law: Higher liability coverage limits required by state law can result in higher insurance rates to cover the increased coverage amounts. There's no getting around this one. States require certain limits, and those limits must be met. If those limits are above average, that's just the way it is. It's not necessarily that insurance companies charge more because of that, but that you have to pay more because you need higher limits.
Bottom line: States with higher coverage requirements cost more. Not surprisingly.
- Personal injury protection requirements: States with mandatory personal injury protection requirements are often more expensive than states without the requirements.
Here's a list of states that require mandatory PIP coverage
- New Jersey
- New York
- North Dakota
- No-fault insurance laws: States with no-fault insurance laws have higher premiums due to the added coverage requirements and the fact that no driver is deemed "at fault"
Bottom line: Once states decided to create no-fault laws, rates went up.
- Insurance company competition in the state: Would it surprise you at all to know that states that have higher competition result in lower prices? No? We didn't think so!
That's right. If there's a lot of competition in your state for policyholders, insurance companies are forced to be competitive with their rates. Imagine that. Lucky you Florida!
Average Auto Insurance Rates by State ($/Per Year)