Car insurance premiums are part of the lives of nearly 230 million American drivers. The cost of car premiums can vary a lot, not just from person to person, but also much more broadly, such as the state in which you are driving. Six of the 10 most expensive states in terms of auto insurance premiums were also among the 10 most densely populated. Only Louisiana was a state with a higher premium cost and a population density in the lower half of the Census Bureau's density classification.
We also found that the opposite was true with most low-cost states for auto insurance. According to the Census Bureau's definition, 81% of Americans live in urban areas. Average disposable income wasn't such an obvious factor, at least at the state level. Only four of the 10 most expensive states in terms of auto insurance premiums, all in the Northeast Corridor, were states with average incomes above the national average.
States with the lowest average incomes, such as Georgia, Louisiana, Michigan and South Carolina, also have some of the highest premium costs. When you buy car insurance with minimal coverage, you get cheaper rates but less protection. Minimum coverage: Car insurance can only include liability coverage that pays the injured if you are at fault for a car accident. Car insurance with full coverage includes all risks and collisions, protecting your vehicle from a variety of problems, such as theft, fire, vandalism, adverse weather conditions, or damage caused by a car accident, regardless of fault.
Some states only require liability coverage (for bodily injuries and property damage that you may cause to others in a car accident), while others require you to purchase additional coverages, such as coverage for uninsured drivers, medical payments (MedPay), or personal injury protection (PIP). States that require more types of coverage as part of an auto insurance policy may result in higher auto insurance costs. For example, states that require PIP coverage typically have higher car insurance prices. As for the minimum coverage required, Florida, Michigan, New Jersey, New York and Delaware are the five most expensive states and all require PIP.
Other factors can also affect that rate, in addition to state coverage and differences in limits. Each state has its own car insurance laws that dictate the minimum car insurance coverage and the limits a driver can purchase. Here are the main types of coverage that states may require. The liability coverage portion of auto liability insurance covers the medical expenses of injured people and has limits per person and per accident.
The property damage portion of liability coverage covers damage that you have caused to someone else's car or other property, such as a fence, and there is a limit per accident. Uninsured motorist coverage (UMBI) covers your injuries if an uninsured driver hits you. UMBI has limits that generally coincide with the limits of liability for bodily injury per person and per accident. Underinsured motorist coverage (UIM) is also mandatory in some states and can be combined with UM coverage.
Underinsured motorist coverage pays you if the at-fault driver doesn't have enough coverage to pay for your injuries. There is also the Uninsured Motorist Property Damage (UMPD) option to cover damage to your car caused by an uninsured driver. The UMPD is only mandatory in seven states. Personal injury protection covers injuries that you and your passengers receive in a car accident, regardless of fault.
It also pays for lost wages, rehabilitation services, and replacement services for tasks you can't do because of your injuries, such as child care. PIP is mandatory in 15 states. Medical payment coverage is mandatory in three states and covers medical expenses related to the accident for you and your passengers, regardless of fault. It generally has low limits and doesn't offer the additional benefits of PIP.
Liability insurance is the foundation of all state car insurance policies because states want drivers to be able to pay for the damages they cause to other people in a car accident. However, not all states require drivers to purchase an auto insurance policy. Personal injury protection (PIP) is mandatory in 12 states as part of “no-fault insurance” laws. These laws require that you first file auto accident injury claims in your car insurance PIP coverage and limit your ability to sue the at-fault driver for your injuries.
The PIP covers medical expenses for injuries that you or your passengers have suffered in a car accident, regardless of fault. The PIP also covers lost wages and replacement services if you are unable to work or perform household chores due to your injury. Personal injury protection may also cover your health insurance deductible if you use your own medical plan for your medical treatment. Most states are “at-fault states,” meaning that you can file an insurance claim against bodily injury liability coverage for an at-fault driver and sue the person who hurt you without the limitations imposed by no-fault states.
A driver with accidents or traffic violations on their driving record will pay more for car insurance than a good driver with a clean record. For example, our analysis reveals that drivers pay 24% more, on average, for car insurance after receiving a speeding ticket. When determining car insurance costs, auto insurance companies review the last three to five years of your driving record, depending on your state. Young, inexperienced drivers pay the most because they pose a greater risk as drivers for car insurance companies.
As drivers age, mature and gain more experience behind the wheel, car insurance rates are getting cheaper. Some states have prohibited insurance companies from using age as a qualifying factor in Hawaii. In Massachusetts, car insurance companies can't use age, except for drivers age 65 and older. And while it's not directly prohibited, California lists the qualifying factors that auto insurance companies can use, and age isn't on the approved list.
California and Massachusetts allow years of driving experience as a qualifying factor. Hawaii prohibits the length of driving experience as a qualifying factor, so neither age nor driving experience should affect auto insurance costs in Hawaii. How age and gender affect car insurance go hand in hand. Young men are more likely to engage in risky driving behavior, so car insurance costs are higher than women.
As both genders age, car insurance costs become similar between ages 30 and 60. Around age 70, men are once again at greater risk as drivers, so they pay higher prices on car insurance. The vehicle you drive is important to auto insurance companies, especially if you purchase collision coverage and comprehensive coverage. These types of coverage pay for repairs to your own vehicle or pay the value of the vehicle if it is full.
The types of coverage and limits you choose will affect your car insurance costs. If you buy more coverage and higher limits, you'll pay more. For example, auto insurance with only liability will be cheaper than even the cheapest full-coverage car insurance policy, but with a liability only policy, you won't get comprehensive and collision coverage that protects your vehicle. Unless the only thing you can really afford is minimum state car insurance, you should focus on your coverage needs and then compare with several insurance companies to find the best car insurance price.
You'll pay lower car insurance prices if you've had ongoing car insurance coverage. A coverage gap will make it riskier to insure you. If you have a clear claim history, your car insurance costs will be lower than those of someone with one or two claims. Car insurance costs after an accident increase by 45% on average after property damage claims and 47% on average after a bodily injury claim.
Being in a liability state means that you can recover damages from the at-fault party after a car accident. There are 38 tort states, and you can choose between limited or full tort in three of those states. Car insurance costs after an accident can increase by 45% on average after property damage claims and 47% on average after an injury claim. These cost increases can last three to five years, so a year without claims will help you build trust in your car insurance company again, but it will take longer to get the reduced prices that good drivers with a clean driving record get.
Penny Gusner is an insurance analyst for Forbes Advisor. For nearly two decades, it has been helping consumers learn how insurance laws, data, trends and coverage affect them. He likes to translate the complexities of insurance into easy-to-understand tips and advice to help consumers make the best decisions for their needs. The NAIC numbers show the average amount that state residents spend on car insurance, regardless of the type of car they insure or the amount of coverage they buy.
For example, Louisiana has a much higher rate of auto insurance bodily injury claims and lawsuits than the national average. Where you live is just one factor that auto insurance companies consider when determining the price of car insurance. If you get notified about higher premiums, you can compare prices to find out if your current company offers the best rates or if you can save by switching to another car insurance company. However, the high cost of car insurance may depend on the state in which you live (see the table below for average premiums by state), with Maine often the cheapest and Louisiana the most expensive.
Many of the cheaper states also have competitive auto insurance markets, allowing drivers to compare car insurance quotes from several companies. If you move out of state, you should let your auto insurance company know, even if they offer auto insurance nationwide. The differences between states affect the cost of car insurance depending on the car insurance required, the amount of repair costs, and more. Auto insurance companies have been filing documents with state insurance regulators to increase rates due to problems such as rising claim costs.
Keeping car insurance rates low by improving your driving habits and credit score, seeking discounts and using usage-based insurance (pay-per-mile) are all options. There are several ways to compare car insurance prices, for example using a quote comparison tool, searching for quotes directly online, or finally with an auto insurance broker, since they can offer quotes from several companies. In terms of average car insurance premiums, Idaho drivers only spend a few dollars more than Maineans each year. .
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