Where does your state rank on the list?
Whether you live in sunbaked Arizona or windy Oklahoma, you could easily overpay for car insurance. What makes car insurance prices vary so wildly from state to state? Leading insurance comparison site Insurify analyzed data from over 25 million car insurance premiums to determine which states have the highest and lowest average car insurance costs.
And if you’re ready to jump right to the best car insurance quote for you, try Insurify to find the cheap car insurance and customized coverage you deserve.
Why do car insurance costs vary from state to state?
Before people move from one state to another, they tally up the cost of living. Among the house prices, property taxes, and sales taxes, auto insurance rates also find their way onto the checklist. There are four main reasons that car insurance rates differ between states:
State Regulations
Every state but New Hampshire requires car insurance, but no standards exist on set coverages. Generally, the more coverage an individual state requires for its minimum limits, the higher the cost to its drivers.
Regulations that affect your bill break down to a few key points:
Rating Factors and Rules
States decide which methodology insurance companies can use to set their rates. For example, Hawaii doesn’t factor in age, gender, or credit history. With no established guidelines across the states, it’s no wonder that rates differ.
Also, 13 states require state approval before rates can increase. These states have seen their rates increase by 45 percent between 1989 and 2019, while others without prior approval regulations have seen rates rise more than 80 percent for the same period.
Personal Injury Protection (PIP)
PIP, also called no-fault insurance, covers medical expenses for you and your passengers after an accident, regardless of who caused it. It may also pay for lost wages, rehabilitation, or funeral expenses. Your insurer pays PIP claims, and you still must buy bodily injury liability and property damage liability to protect you from claims from another driver.
Since you must pay for both liability coverage and PIP, many no-fault states have higher insurance costs than at-fault states requiring liability only. You must have PIP coverage in the following 12 no-fault states: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.
Uninsured Motorist and Underinsured Motorist Coverage
Uninsured motorist (UM) bodily injury coverage pays your medical expenses if you’re injured by a hit-and-run driver or one who has no insurance. Underinsured motorist (UIM) bodily injury takes care of your medical expenses if you’re hit by someone who does not have high enough policy limits to cover your costs.
According to the Insurance Information Institute (III), 13 percent of American drivers are uninsured, or about one in eight. Though not without an added cost, 19 states and the District of Columbia require UM alone or both UM and UIM coverage to protect drivers.
Number of Uninsured Drivers
Uninsured drivers hurt everyone on the road. They’re more likely to commit hit-and-runs. And insurers must pay claims when uninsured drivers cause accidents. Those payments are spread among the insured public and push up the cost for everyone.
Also, the uninsured have hatched a chicken-and-egg problem. As insurance prices increase, fewer people can afford it, and therefore more people go without it. States create more stringent penalties to combat this issue. Even with efforts to curb driving without insurance, you can guess that a state like Florida, where over one in four drivers has no insurance, would set drastically different rates than Maine, where less than one out of every 20 drivers has no insurance.
Population Density
Insurance companies charge more for greater risk. Urban areas have a higher population density, and more cars mean more accidents.
Along with the increased risk, dense areas have a higher incidence of crimes such as car theft, break-ins, and vandalism. Prices increase with population density, so you can expect people in urban states to pay more than in rural states.
Population density isn’t the only factor in car insurance costs, however. South Dakota, one of the least populated U.S. states, doesn’t even crack the top 10 states for least expensive car insurance.
Age of Drivers
States with the highest percentages of drivers either under 25 or over 65 will see higher rates. Teenage drivers and young adults have the least driving experience. While seniors have plenty of years behind the wheel, aging makes accidents while driving more statistically likely.
