One of the most important financial decisions a person can make in his or her life is buying a new or new-to-you car. But investing tens of thousands of dollars on wheels for a hunk of metal is just the beginning of what can sometimes be a long – and expensive – experience of ownership.
Car insurance is one of the costliest recurring costs of owning an automobile. Many who first shop for insurance will be surprised at the rates.
The reality is, there are a host of variables that go into insurance costs and prices. Some are under your influence or are unique to you: your age, gender, driving record, coverage level, credit rating, and what sort of car you are driving.
Another big factor that is going into how much you’re going to pay is where you live. Insurance rates vary from one state to another, and often by thousands of dollars.
In this article, we will disclose why there is a difference in the auto insurance prices in each state and which are the cheapest states for car insurance.
States With The Cheapest Auto Insurance Price
Below are the states with the cheapest auto insurance in the nation.
- Maine: $875
- New Hampshire: $886
- Idaho: $975
- Ohio: $987
- Wisconsin: $1,010
- Indiana: $1,017
- Washington: $1,090
- Alaska: $1,113
- North Dakota: $1,138
- Vermont: $1,143
According to a study of a representative group of consumers Maine has the lowest average auto insurance rates in the country. Maine’s average annual auto insurance agent premium is $876, which is down $540 from the national average.
Unlike most other states, if you live in New Hampshire, auto insurance is not mandatory. However, you are also responsible for the harm that you do in an accident.
New Hampshire has on average the second-lowest representative cost available. An annual research premium will be $887 for our representative profiles which are $529 more than the national average for the same category of driver profiles.
Idaho state residents can also enjoy some of the cheapest insurance rates in the nation. Our representative driver profiles will pay for their coverage an average of $976 a year which is around $440 more than the national average for the same profiles.
Ohio has one of the affordable auto insurance premium rates in the country. On average drivers can expect to pay $988, which according to our research is $428 below the national average.
In Wisconsin, drivers will pay for the same driver profiles with an average insurance premium of $1,011 a year, or $405 less than the national average.
Indiana State has the country’s sixth-lowest official premium for auto insurance. On average, our study’s consumer profiles will pay $1,017 a year which is around $400 lower than the national average insurance cost nationwide.
Washington offers one of the cheapest auto insurance rates in the country. In Washington state on average, it costs as low as $740 per year for insurance coverage for your car.
Alaska has a population density of just over one person per square mile, which is lowest among all the states. On average a drive pays an annual premium of $1,114, and $302 below the national average, which makes Alaska one of the most affordable states.
On average, the total auto insurance premium paid by the drivers in North Dakota is $1,139.
In Vermont, the average auto insurance cost just goes over $1,000.
Why Do Auto Insurance Rates Differ From State to State?
There are several reasons why some states make car insurance premiums higher or lower than others. Legal requirements, congestion of traffic, economic conditions, weather, and competition are some of the most significant factors that contribute to different prices.
Various states require varying types of insurance coverage. Varying coverage standards in some states result in higher or lower premiums. For example, Michigan has the highest rates in the country mainly because it needs limitless medical advantages to cover crash injuries.
Consumers in urban areas should usually expect to pay higher insurance premiums than those in rural areas, as increased congestion results in higher accident rates. Urban areas are also more likely to experience vehicle break-ins, robbery, and vandalism. Because of these reasons insurance premiums are seen by states with lower population densities. Within jurisdictions, auto insurance consumers should expect to see much lower premiums in rural zip codes than those in metropolitan areas.
States with high poverty rates, low incomes, or high unemployment should expect higher insurance rates than more prosperous regions. In deprived areas, crime is not only usually higher but more drivers are likely to be uninsured or underinsured. If someone can’t afford to buy insurance, or just decide not to yet drive anyway, insured drivers will bear the cost burden of their accidents.
Drivers in states with a history of extreme weather would possibly have higher auto insurance rates than drivers in milder climates. For example, states such as Louisiana, which often experience both minor and major floods, plus the effects of hurricanes, see the costs of such disasters reflected in their insurance rates. In Michigan, the cost of winter weather and its effects on roads is what causes harm to automobiles and leads to high insurance rates.
States with milder weather will see lower prices, as there is less risk of severe weather and hazardous road conditions.
Car insurance customers in states where there is lots of competition among car insurers are in a great position to see lower annual average car insurance rates than those in areas where only a few firms are competing. Not all insurance companies do business in all fifty states and the District of Columbia.