Depending on which state you reside in, the amount you pay for car insurance premiums varies.
According to Insure.com’s average annual premiums rate, Michigan was named the most expensive state for car insurance for the fourth consecutive year with an annual average of $2,394, making it $1,076 higher than the national average.
Following right behind The Wolverine State, Louisiana moved up to No. 2 nationally after being ranked fourth in 2016, averaging $1,921. Connecticut, Rhode Island, and Florida round out the remaining top five most expensive states for car insurance.
Car insurance rates are based on your age, driving record, claims history and credit score — some of which are things that are out your control.
However, you can control where you live and what kind of car you purchase.
Just like risk factors and location can affect your insurance premium, your state car insurance requirements can also vary from state to state based on the number of claims like weather-related items, state laws, crime, traffic and crash rates, etc.
How much competition there is amongst insurance companies in your state and the number of uninsured drivers can also affect car insurance rates. The more auto insurance providers there are in your state, the easier it will be to obtain cheaper auto insurance.
The Most Expensive States for Car Insurance
Per insure.com, Michigan was named the most expensive state for auto insurance five out of the last eight years. Michigan was also named the most expensive state in 2011 but came up in second place in 2010 and 2013. Its lowest ranking was in 2010. In 2017, Michigan’s average ranked 82 percent higher than the national average of $1,318.
The state of Michigan has a unique no-fault car insurance system that plays a role in its high annual car insurance rates.
Car owners in Michigan are required to purchase personal injury protection (PIP), which will pay all medical expenses with no maximum limit. PIP will also pay up to 85% of the income you would have earned for up to three years if you are forced to miss significant time for your injuries.
What sets Michigan’s PIP policy apart from other no-fault states that place a limit on their PIP amount, is that Michigan’s PIP guarantees unlimited lifetime medical benefits to those injured in an auto accident.
Insurance fraud — In Michigan, 10 percent of all no-fault claims are fraudulent — and the high cost of auto insurance helps push the auto insurance premiums higher. An estimated 21 percent of drivers in Michigan is operating a vehicle without car insurance. With fewer motorists paying premiums, lessening the opportunity for cheaper premiums.
Louisiana held the crown for the most expensive state to purchase auto insurance in 2010, 2012 and 2013 but dropped down to fourth place over the last few years before climbing back up to second place in 2017.
Many motorists residing in Louisiana only have bare-bones insurance and nearly 14 percent are driving without any insurance at all. And with an annual premium of $1,921, Louisiana is sitting at 46 percent higher than the national average.
According to Louisiana Insurance Commissioner Jim Donelon, 40 percent of drivers in Louisiana carry the minimum car insurance required by law and that litigation plays a role in high car insurance rates.
He also stated that distracted driving and cheaper gas is leading to rising rates worldwide.
With an average annual premium of $1,897 (44 percent more than the national average), Connecticut is ranked as the third highest state in the country for car insurance.
With a higher density of vehicles on the road per square miles than most states, cramming cars onto the highway can lead to more accidents due to road rage and frustration, which then leads to a spike in auto insurance rates.
According to the NAIC, Connecticut has the highest disposable income per capita of $58,747.
Katharine L. Wade, the Connecticut insurance commissioner, stated that with higher income in a cheaper state, residents are purchasing more expensive vehicles and end up paying higher amounts of liability coverage and full coverage for their cars.
In Connecticut, insurance companies can set rates with less state oversight regulations like larger states which leads to higher rates. Connecticut drivers also have more than 100 insurance companies for motorists to choose from, making it easier to find cheaper premiums.
The Cheapest States for Car Insurance
With less urban areas and congestion, car insurance rates in Maine are the lowest in the country. An average insurance premium in Maine costs $864, which is 34 percent less than the national average.
Maine Bureau of Insurance Superintendent Eric Cioppa said, “Thanks to a competitive market, Maine consumers are paying less for auto and home insurance than consumers in nearly every other state.”
Maine has ranked 3rd nationally in for lowest auto insurance premiums for the fifth consecutive year, largely due to the state’s auto insurance industry not being heavily regulated like other states.
There are also less uninsured motorists in Maine. The weather plays a big role in cheaper premium since there are typically no tornadoes or hail storms, which can cause insurance to spike.
Thanks to strong competition in the auto insurance market (close to 250 insurance companies), Ohio is able to contain low costs on car insurance.
With a 30 percent cheaper average than the national average, Ohio’s annual average premium is a very affordable $919.
Ohioans did see a two percent increase in their insurance rates, but Ohio Department of Insurance Director Jillian Froment says there are enough insurance companies in the state to find cheaper rates, for those searching.
In the western part of the United States, the cheapest car insurance belongs to Idaho. The state’s average annual premium of $942 makes it 29 percent cheaper than the national average.
Idaho is also the only state out west with insurance rates lower than $1,000.
Idaho benefits from a competitive marketplace (185 insurance companies in the state), moderate weather, and a rural population. A regulatory environment and very little auto accidents allow motorists in the state to pay for lower auto insurance premiums.
Learn More Auto Insurance News from American Auto!
Serving the state of Illinois, we at American Auto Insurance sure are grateful that the Land of Lincoln didn’t make the top 3 most expensive states. In fact, Illinois is 12% less than the national average!
Are you surprised that California or New York didn’t make the top 3? We are too.
Stay tuned for news and updates about all things car insurance-related. If you have any suggestions for our next article, contact us.