The most (and least) expensive states for car insurance

August 4, 2017

Like all insurance, auto insurance premiums can be affected by a wide range of variables, including a driver's age, driving record, and credit score. One of the most important factors in determining that rate, though, is where the driver lives. 

State laws can have a huge effect on what insurance companies pay out to policy holders when things go wrong. And that, in turn, can drive premiums up or down. 

Insure.com has just completed a survey of insurance rates in all 50 states, revealing which have the highest and lowest premiums. To ensure that the comparison was apples-to-apples, the study gathered rates from six major agencies in 10 ZIP codes in each state, using average rates for the 20 best-selling vehicles in America. In each case, full-coverage policies were quoted for a hypothetical 40-year-old male driver with good credit and no accidents on his driving record. 

The winners

The cheapest car insurance in America is found in Maine, where the survey's average policy rang in at $854--nearly $500 lower than the national average of $1318. Why? It's due largely to Maine's lack of major urban centers, where congestion and accidents would mean bigger problems for drivers and bigger payouts for insurers. The state also has fairly good weather--it's cold, to be sure, but Maine has few of the tornadoes or hailstorms that can lead to huge claims in other parts of the country.

Perhaps most importantly, Maine boasts a low number of uninsured drivers. Nationwide, about 13 percent of drivers don't have auto insurance. In Maine, however, the figure is closer to five percent. 

Ohio comes in as the second-cheapest, with an average yearly premium of $919. Like Maine, Ohio is helped by strong competition in the insurance market, with nearly 250 firms vying for business.

The situation is similar in the third-cheapest state, Idaho, where premiums average $942. Idaho also has few heavily urban areas, and its residents are less litigious than those in other states, which helps keep premiums low. 

The losers

As in previous years and surveys, Michigan is once again the nation's most expensive state for auto insurance. There, premiums average a staggering $2,394. 

How is that possible? It's due largely to three factors:

  • The state sets no limits on payouts for personal injury. 
  • There's a lot of insurance fraud, with roughly 10 percent of no-fault claims considered fraudulent.
  • Roughly 21 percent of Michigan's drivers are uninsured.

Louisiana is the second-most expensive state, with an average premium of $1,921. Like Michigan, a significant number of Louisiana motorists are uninsured--around 14 percent. That, combined with a tendency toward litigation helps keep insurance costs high. (Insurance commissioner Jim Donelon blames two other factors for Louisiana's sky-high rates: cheap gas, which encourages more driving, and smart phones, which result in more distracted-driving accidents.)

The third-most expensive state for auto insurance is Connecticut, where premiums average $1,897. That's due to the congested nature of Connecticut's roads, which leads to more accidents and thus, more claims. However, the rates may also be higher because there's little state oversight when it comes to rate hikes. As a result, insurance companies can file rate increases without too much worry that they'll be denied. 

You can use the interactive map at the bottom of this page to see whether your home state is cheap, pricey, or just about right. 

2018
The Car Connection
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2018
The Car Connection
 
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