One survey from NerdWallet finds that switching car insurance could save good drivers about $417 a year.
Adobe Stock (New Africa)
There’s no doubt that car insurance is expensive — NerdWallet reveals that the average cost of car insurance is $1,630 per year– and one survey from the company finds that switching could save good drivers about $417 a year. (See the lowest car insurance rates you can qualify for here.)
But the high cost of car insurance can depend on the state you live in (see the chart below for average premiums by state), with Maine often being the cheapest and Louisiana the most expensive. Louisiana’s high rates are largely due to its higher crime rate, frequent extreme weather and growing traffic density, while Maine, a state with low population density, has the lowest amount of uninsured drivers and a lower risk of accidents, says Andrew Hurst, auto insurance expert at Policygenius.
In general, states with cheaper car insurance may have lower levels of required car insurance, more insurance company competition, lower crime rates, lower rates of uninsured drivers, fewer total claims from drivers, drivers who overall drive fewer miles and/or less extreme weather. “A rural state with little crime, many car insurers and not much extreme weather will likely pay less than a largely urban state with many car insurance claims, few insurers and many weather-related claims for flooding and hail,” says Les Masterson, insurance analyst with Carinsurance.com. (See the lowest car insurance rates you can qualify for here.)
It’s also important to consider whether you are in a no-fault state: “No-fault states (there are 12) — [this] means that insurance companies cover their members’ injuries and damages instead of having the at-fault driver’s coverage pay — often lead to higher rates,” says Masterson. These include Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kentucky, Massachusetts, Minnesota, North Dakota and Utah. Litigious states also get handed higher rates, as insurers price against litigation. “If a policyholder makes a claim and isn’t satisfied with it, they may take their insurance company to court. This process can be expensive, creating the potential for higher expenses and losses for insurance companies,” says Hurst. In places where rate setters have judged the population to be more litigious, rates may be higher.
The number of uninsured drivers can also be a big driver in rates, experts say. Indeed, Louisiana and Florida, which frequently land near the top of lists of the most expensive states to insure your car, have a lot of uninsured drivers, which creates a feedback loop: when there’s a large number of uninsured drivers, other drivers are more likely to carry more forms of insurance against them, explains Hurst: “This increases the likelihood of a single insurer paying more settlements, meaning that insurer will file for higher rates to cover expected losses,” says Hurst. Insurers also price against litigation and if a policyholder makes a claim and isn’t satisfied with it, they may take their insurance company to court. “This process can be expensive, creating the potential for higher expenses and losses for insurance companies. In places where rate setters have judged the population to be more litigious, rates may be higher,” says Hurst. Michigan, another state that has high rates, also faces this problem, Hurst says, and it “requires high personal injury protection coverage that often results in high settlements for insurance providers,” he adds, when explaining its high rates. (See the lowest car insurance rates you can qualify for here.)
Average car insurance premiums, by state
1
Louisiana
$2,839
2
Michigan
$2,112
3
Florida
$2,082
4
California
$1,966
5
Missouri
$1,895
6
DC
$1,881
7
Rhode Island
$1,801
8
Wyoming
$1,768
9
Texas
$1,710
10
Georgia
$1,705
11
Montana
$1,627
12
Connecticut
$1,580
13
South Dakota
$1,575
14
Colorado
$1,574
15
Arkansas
$1,462
16
Kansas
$1,454
17
Delaware
$1,443
18
Arizona
$1,417
19
Maryland
$1,410
20
South Carolina
$1,409
21
Minnesota
$1,407
22
Oklahoma
$1,393
23
New Mexico
$1,391
24
Nebraska
$1,383
25
Nevada
$1,380
26
Mississippi
$1,378
27
Alabama
$1,358
28
North Carolina
$1,326
29
Kentucky
$1,321
30
New Jersey
$1,319
31
Massachusetts
$1,314
32
West Virginia
$1,299
33
Washington
$1,298
34
Hawaii
$1,254
35
Utah
$1,250
36
North Dakota
$1,234
37
Oregon
$1,229
38
Tennessee
$1,206
39
Illinois
$1,205
40
Indiana
$1,189
41
Alaska
$1,175
42
New York
$1,163
43
Vermont
$1,151
44
Virginia
$1,033
45
Iowa
$1,032
46
Pennsylvania
$1,028
47
Ohio
$992
48
Idaho
$985
49
Wisconsin
$938
50
New Hampshire
$885
51
Maine
$858
Source: Insure.com, 2021
