Where You Live Has a Huge Effect on Car Insurance Rates
Laws, court rulings and driver behavior mean that someone across a state line might pay double (or half) of what you do.
When it comes to the cost of your car insurance, there are things you can control fairly easily, such as what you drive and how you drive it. And things you can't, such as where you live. In fact, differences in state laws, court rulings and driver behavior mean the insurance bill in one state could be more than double the bill on the same vehicle in another state.
Based on Insure.com data.
This is the fifth year of the study, which gathers quotes from six major insurers in multiple zip codes in all 50 states and Washington, D.C., averaging rates for the 20 best-selling vehicles nationwide. Those models, led by the Ford F-series pickup, represented 40% of the new-car market in the U.S. in 2014.
Subscribe to Kiplinger’s Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Rates are based on full coverage for a single, 40-year-old man who commutes 12 miles to work each day. The hypothetical driver has a clean record and good credit. The policy has limits of 100/300/50 ($100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage. The rate includes uninsured motorist coverage.
For the second year in a row, Michigan tops the list of the most expensive states, with rates nearly 89% above the national average. It's basically in a class of its own, with an average that’s 31% more expensive than that of the second-costliest state, Montana.
Penny Gusner, consumer analyst for Insure.com, says the main culprit is the Great Lakes State’s no-fault personal injury system, which provides unlimited lifetime medical benefits to injured motorists. "If someone is seriously injured, these auto insurance benefits could be paying out for decades," she said. Those generous benefits also attract fraudsters who file false injury claims, raising costs even more. And Michigan has a lot of uninsured drivers: 21% (versus a national average of 12.6%), according to the Insurance Research Council. Those free riders raise costs for everyone else.
Second-place Montana has insurance rates that are 44% above the national average. According to statistics from the Insurance Institute for Highway Safety, the Treasure State has the highest rate of fatal accidents in the country. "Auto accidents so severe that they result in fatalities are expensive to car insurance companies, and thus lead to higher premiums for motorists," says Gusner.
At the other end of the cost spectrum is Maine, where the average insurance premium is 39% less than the national average (and a whopping 57% less than in Montana). Although they are both relatively rural states, Maine’s fatality rate is roughly half that of Montana. And only 4.7% of Maine’s drivers are on the road without insurance, according to Insurance Research Council statistics.
Zip codes matter a lot, too. In some cases, the difference between two zip codes in the same state is bigger than between two states with sharply different average rates. Take New York, for example. It's actually a fairly low-cost state, 42nd in the nation with an average annual cost of $1,013. But in Brooklyn (zip code 11226), the average car insurance premium is $3,877, almost four times the state average, according to Insure.com,. If you want to dig into that kind of detail, check out CarInsurance.com ’s Average Car Insurance Rates calculator.
|Ranking the States: Average Car Insurance Premiums|
|3||Washington, D.C.||$1,799||28||New Mexico||$1,237|
|6||West Virginia||$1,716||31||South Carolina||$1,210|
|19||North Dakota||$1,377||44||North Carolina||$986|
|Row 22 - Cell 0||National Average||$1,311||48||Iowa||$886|
In his former role as Senior Online Editor, David edited and wrote a wide range of content for Kiplinger.com. With more than 20 years of experience with Kiplinger, David worked on numerous Kiplinger publications, including The Kiplinger Letter and Kiplinger’s Personal Finance magazine. He co-hosted Your Money's Worth, Kiplinger's podcast and helped develop the Economic Forecasts feature.
Is Chevron Stock Set for a Rebound?
Chevron stock received its second analyst upgrade in as many days, boosting hopes for a recovery in the lagging energy major.
By Dan Burrows • Published
Where Americans Most Use Deals and Coupons
While you may not be an extreme couponer, you’ve probably had deals on your radar. Here's where shoppers practice the most savings strategies.
By Erin Bendig • Published
Ford and Honda Recall Nearly 2 Million Vehicles. Is Yours Affected?
Ford and Honda have recalled models including the popular F-150, CR-V and Accord for issues with brakes, wipers and more.
By Ben Demers • Published
Top 10 Electric Cars in the U.S. — Most Popular EVs
Electric car sales have skyrocketed, even during a market slump. We list the top-selling EVs in the U.S. Who knows, you might be driving one in years to come.
By Quincy Williamson • Published
Best Cash Back Credit Cards June 2023
Smart Buying Looking for the credit card that pays the most cash back? These lenders may pay hundreds of dollars, with minimum hassle.
By Lisa Gerstner • Last updated
Will the Gas Engine Soon Be Obsolete?
As the popularity of electric vehicles grows, what will happen to the gas engine?
By Rivan V. Stinson • Published
I-Bond Rate Is 4.30% for Next Six Months
Investing for Income Bonds issued May 1 to October 31 will have a rate of 4.30%.
By David Muhlbaum • Last updated
What Are I-Bonds?
savings bonds Inflation has made Series I savings bonds enormously popular with risk-averse investors. So how do they work?
By Lisa Gerstner • Last updated
Your Guide to Open Enrollment 2023
Employee Benefits Health care costs continue to climb, but subsidies will make some plans more affordable.
By Rivan V. Stinson • Published
Watch Out for Flood-Damaged Cars from Hurricane Ian
Buying & Leasing a Car In the wake of Hurricane Ian, more flood-damaged cars may hit the market. Car prices may rise further because of increased demand as well.
By Bob Niedt • Last updated