Why Are Car Insurance Rates by State Different?
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While the type of car you own, your insurance coverage requirements, and your driving history are some key factors that determine your car insurance rates, where you live has a profound impact as well. The state where you choose to reside can affect your rate positively or negatively, but how this impacts your rate isn’t entirely clear to most drivers.
Through a mix of statistics, your ZIP code, and a few other aspects, insurance companies have their own methodologies to determine a rate that reflects your odds of filing a claim. So if you’ve ever wondered how buying insurance in California is cheaper or more expensive than in Michigan, here’s what you need to know about car insurance rates by state.
Compare Car Insurance Rates in Your State
Compare Car Insurance Rates in Your State
Car Insurance Rates by State: the Rural, Suburban, and Urban Factor
Before we dive into how car insurance rates by state differ across the country, understanding how they can vary within the boundaries of your own state is important. According to our research, your ZIP code can have a considerable effect on your auto insurance rate based on national averages:
- Rural ZIP code: $151 average monthly premium
- Suburban ZIP code: $176 average monthly premium
- Urban ZIP code: $213 average monthly premium
With prices more than 40% higher in urban areas compared to rural areas, average car insurance rates take into account population density, the rate of car accidents, and more. But seeing how much your rate can change within your state can help you comprehend just how much your location plays a role in determining your car insurance.
Crime rates can play a significant role in car insurance rates by state, even if you’re not a victim of the crime yourself. In particular, ZIP codes or areas with higher rates of property damage crimes, car thefts, DUIs, vandalism, and carjackings are far more likely to have higher auto insurance premiums than low-crime areas — even within the same city.
Unfortunately, there’s little that you can do to lower a crime rate on your own, but you can avoid insurance claims by following a few tips:
- Install security equipment, especially in the vicinity of where you park your car.
- Park your car in a garage whenever possible.
- Report suspicious persons to the police.
- Upgrade to comprehensive insurance, which protects you from paying out of pocket for theft and vandalism—albeit with a deductible.
And just in case you were wondering, full-size Chevrolet and Ford pickups were the most-stolen cars in 2021 for the second year in a row, accounting for 14% of all stolen vehicles.
The Number of Uninsured Drivers
Like crime rates, the number of uninsured motorists in a state can adversely and even disproportionately affect insurance rates. Simply put, the more uninsured drivers in your state, the higher your insurance policy premiums will be.
While uninsured motorist coverage and underinsured motorist coverage can cover bodily injury and property damage if you’re in an accident with an uninsured driver, your rates are unlikely to change if you live in a state with a higher number of uninsured drivers. The states with the highest rates of uninsured drivers include:
Although uninsured motorist coverage isn’t required in any of these states (and is only required in 20 states total), it is a no-brainer in areas with higher rates of uninsured drivers. Plus, it usually only adds a few bucks to your monthly premium.
Climate and Weather
You may love the mountains of Montana or the unique culture of Texas — that’s why you live there. However, weather and climate can play a major role in the price of your car insurance coverage policy.
Areas prone to heavy snow — such as Montana — can result in higher car insurance rates. In addition, places more at risk for natural disasters like flooding, hurricanes, or tornadoes — like Texas — can also cause a spike in rates.
Due to the higher chances of filing claims and the higher potential payout for a total loss in the event of a disaster, you may find higher rates in these areas compared to somewhere with mild weather, such as Michigan or Indiana.
Minimum Insurance Requirements in Your State
One of the foremost factors in car insurance rates by state deals directly with the minimum insurance requirements in your state. Other than New Hampshire — where car insurance is optional — and Virginia — where drivers can opt out of car insurance for $500 annually — every other state requires a minimum level of coverage on all car insurance policies.
Aside from these two states, you must have liability coverage levels (bodily injury liability and property damage liability) that meet the state-mandated requirement. Some states also require you to carry medical payments coverage, known as Med Pay.
However, every state has different minimum coverage limits, which means that insurance providers have to insure your vehicle to a higher level in some states than others. So if you’re in a state with high insurance requirements, like Vermont, you may pay higher insurance rates than in a place with lower state minimums, such as Arizona.
The No-Fault vs. At-Fault State Debacle
Twelve states around the country are no-fault states. As the name implies, no-fault states are states where you file a claim with your insurance company, regardless of who was at fault in a car accident. The idea behind this insurance law is that you can get the medical care you need without waiting for insurance companies to decide who was at fault.
However, no-fault states require additional coverage compared to at-fault states. This is known as personal injury protection insurance or PIP. It pays for your medical bills and lost wages, but it also causes your auto insurance policy rates to increase. Drivers still need PIP to drive legally, which showcases why car insurance rates by state vary.
What Are the Cheapest States for Car Insurance?
After factoring in minimum coverage requirements, crime, population density, and other factors, car insurance companies finally put together prices for car insurance premiums. So if you’ve wondered about where you could go to find the cheapest car insurance, these states and their annual insurance costs just might make sense:
- Maine: $696.37
- North Dakota: $703.73
- Iowa: $714.864
- Idaho: $738.10
- North Carolina: $741.70
- South Dakota: $745.33
- Wisconsin: $767.42
- Wyoming: $776.229
- Indiana: $777.05
- Vermont: $785.37
What Are the Most Expensive States for Car Insurance?
Conversely, high population density, increased crime, and more accidents can lead to inflated premiums. As a result, these expensive car insurance rates by state may not shock you all that much:
- Louisiana: $1,557.221
- Michigan: $1,495.94
- New York: $1,445.30
- District of Columbia: $1,440.58
- Florida: $1,414.17
- New Jersey: $1,395.53
- Rhode Island: $1,382.64
- Nevada: $1,292.52
- Delaware: $1,289.93
- Georgia: $1,259.49
How You Can Lower Your Car Insurance Rates Regardless of Your State
By regularly comparing quotes from top providers, you can get a fair idea of how the average cost of car insurance fluctuates, what companies routinely offer affordable insurance, and how much you can save.
Enter your ZIP code below to browse car insurance rates by state or in your area. It just might be the best money-saving idea you have at your disposal.
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Get the Best Car Insurance Rate in Your State
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