The 10 Cheapest and Most Expensive States for Car Insurance

Automobile insurance in the US is mainly regulated at the state level, resulting in different rules, minimum requirements, and varying premium costs. Several factors contribute to these differences, including state regulations, minimum coverage mandates, demographics, economic conditions, social factors, weather, road conditions, congestion levels, and competition among insurance providers. The state you live in has a substantial impact on your car insurance premiums. Knowing whether your state’s vehicle insurance rates are low or high in comparison to the national average can provide valuable insight and help you assess if you are paying a reasonable premium.

There are significant differences in auto insurance rates even between two neighboring states. Below figures are based on quotes received from various companies in each zip code and averaged out to give a more meaningful figure. They are for a middle-aged person with a good driving history and credit score and driving a modest sedan.

The states with the most expensive and cheapest car insurance rates are placed in order for both the average cost of minimum coverage required in that state and full coverage auto insurance in the tables below. The aim is to see the premium difference between a basic liability-only and full coverage policy so that you have a pretty good idea about the costs. And this provides us two comparison points in terms of costs and is extra helpful because most people either choose liability-only or full coverage in their states.

=> The 10 Most Expensive States for Auto Insurance

New York, Florida and Michigan are the most expensive states for a minimum coverage policy and New York, Florida and Louisiana for a full coverage policy. The premiums in these expensive states are much higher than the closest states to them and can be six times higher than the cheapest states. So, this comparison serves well in terms of showing how important your zip code is for auto insurance calculations.

Table 1): The average cost of a state required minimum coverage policy (most expensive to cheapest):

1.New York$1,371
8.New Jersey$782

Table 2): The average premium for a full coverage car insurance policy (most expensive to cheapest):

2.New York$3,139

Most of the states on the above tables consistently stayed in the top ten for both types of policies. Of course a minimum coverage liability-only policy is a lot cheaper than a full coverage policy since the level of provisions are much different. Minimum coverage provides Liability and other state required covers while a full coverage policy typically offers a higher level of liability limits and Collision and Comprehensive coverage for your own automobile.

=> The 10 Cheapest States for Car Insurance

Again, below tables will show the states with the cheapest vehicle insurance rates for a basic liability-only and full coverage policy. However, observant eyes will immediately detect the price gap between these figures and the ones above. As clearly demonstrated, the average cost of a minimum state-required auto insurance policy in New York ($1371) is more than 6 times higher than the same coverage in Iowa ($223). The gap in case of the average cost of a full coverage policy between the most expensive state Florida ($3,183) and cheapest Maine ($941) falls to over 3.3 times but the difference is still $2,242.

Table 3): The average state required minimum coverage premiums (cheapest to most expensive):

6.North Dakota$269
7.South Dakota$276
9.New Hampshire$319

Table 4): The average full coverage auto insurance costs (cheapest to most expensive):

5.New Hampshire$1,262
10.North Dakota$1,302

In general, heavily urbanized states tend to have higher auto insurance rates compared to more rural states. This disparity is often attributed to the population density and traffic congestion in urban areas. In densely populated and heavily built-up regions, there is a greater likelihood of auto-related crimes and accidents, which contributes to higher average insurance premiums.

An interesting observation from the tables is that the ratio of the premium gap between minimum coverage and full coverage policies tends to be wider in states with lower average premiums, whereas the opposite is true in states with higher average premiums. However, it’s important to note that when considering car insurance premium amounts in dollars, the reverse is the case. This discrepancy is primarily due to the differences in the baseline premium amounts in each state, which can significantly impact the relative percentage increases between minimum and full coverage policies.

For example, in Idaho, a full coverage policy is 4.2 times more expensive than a basic liability-only policy and the difference in dollars is $866. On the other hand, in New York, a full coverage policy is only 2.3 times more expensive than a basic liability-only policy but the difference in dollars is $1,768.

The figures provide a clear illustration of how your vehicle insurance rates are substantially influenced by the state you live in. Additionally, your driving record, credit score, age, experience, and vehicle details are among the other significant factors that play a crucial role in determining your auto insurance rates.

It’s essential to emphasize the need for shopping around and comparing car insurance quotes to ensure your premium is reasonable and within your budget, regardless of your location and your perception of insurance affordability. The following example underscores the significance of understanding average rates in your state and obtaining quotes before making a decision:

Consider this scenario: You relocate from New York to Maine and receive a low vehicle insurance quote compared to your previous New York premium. You might initially believe you’ve found a great deal. However, it’s important to remember that auto insurance rates in Maine are significantly lower than those in New York. Therefore, that seemingly low quote may not be competitive when assessed within the context of Maine’s insurance market.