5 Best and Worst States for Car Insurance Costs

Source: Thinkstock
Source: Thinkstock

Your car insurance policy is one of the biggest expenses you haul around when driving. You may already know that factors such as accident history, age, gender, and marital status can affect how much you pay in auto premiums, but you may be surprised to learn that location is just as important.

A road trip might be needed for some Americans to receive cheaper auto insurance. A recent report from insuranceQuotes.com reveals the average cost of auto insurance in all 50 states, based on the nationwide annual average, is $815. Overall, 14 states are above the national average, with the five most expensive states carrying premiums at least 33% above average. On the positive side, 19 states offer auto insurance premiums that are at least 20% below the national average.

Several factors can influence geographical insurance pricing, including population density, natural disasters, and cost of living. For example, Ohio is the third cheapest state with the help of rural areas that lower the number of accidents and crime rates. However, Louisiana, which has no shortage of rural areas, is one of the most expensive states due to natural disasters like hurricanes causing vehicle damage. New York is the third most expensive as states with a higher cost of living will also likely have a higher cost for things like medical care and auto mechanics, causing insurers to price their policies accordingly.

The table below lists the five most expensive and cheapest states for auto insurance. Michigan has the most expensive average rate in the nation at 136% above the nationwide average, with Rhode Island and New York a distant second and third. North Carolina is the cheapest with its state average 41% below the nationwide average.

Car insurance costs
Source: insuranceQuotes.com

Why is Michigan so expensive? Michigan is a no-fault auto insurance state, so each insurance company compensates its own policyholders for the cost of injuries no matter who’s at fault in the accident. It’s also the only state with unlimited lifetime personal injury protection. Interestingly, the average personal injury claim in Michigan more than doubled from $20,000 in 2003 to $46,000 in 2013. Over a lifetime, medical expenses for severely injured drivers could easily total over a million dollars.

Uninsured motorists are particularly prevalent in Detroit, where the uninsured population may be as high as 50%, according to some estimates. Wayne County, where Detroit is located, is the most expensive county in the most expensive state. Premiums in the county are 45% above the state average.

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