The States with the Cheapest, Costliest Car Insurance Rates

Jared Kaltwasser

A new survey takes a state-by-state look at car insurance rates. The results show dramatic differences between the states.

As with almost anything, it pays to shop around for car insurance. However, there are some things you can’t control when purchasing insurance — such as the way your state of residence affects your rates.

CarInsurance.com looked at car insurance rates and found huge differences between the most expensive and most inexpensive states. The average annual premium for state minimum coverage was more than six times higher in the most expensive state (Michigan) versus the least expensive state (North Carolina).

Michelle Megna, managing editor of CarInsurance.com, says the wide gap is due to a number of reasons. For one, the minimum amount of coverage required varies from state to state.

“Also, some states have more urban areas and more accidents, or more uninsured drivers than others, so the risk to the insurer is higher in those states. That means rates would generally be higher in those states, too,” she said, in a press release.

She also noted that each company uses its own formula to set rates, which causes variance in rates and creates an incentive to shop around.

Nationally, about 1 in every 8 drivers is uninsured, though the “savings” gleaned from breaking the law disappear fast when an uninsured driver gets in an accident. CarInsurance.com says the average accident claim costs the driver about $17,000.

And while going uninsured is a bad idea, buying the state minimum coverage can also be a bad idea.

“Buying minimum car insurance coverage isn’t usually a wise strategy because the amount of protection is very low,” she said. “Even a minor accident can put your home and savings at risk because you will have to pay for out-of-pocket damages beyond what your insurer pays out.”

Megna said there are only a few scenarios in which minimum coverage makes sense, such as when your car is old and not very valuable, or when you don’t drive much.

What follows are the five least expensive and five most expenses states to purchase car insurance. The data are based on the average cost of a state minimum policy for a 2015 Honda Accord in each state. The premiums listed are annual premiums.

The 5 Least Expensive States for Car Insurance

1. North Carolina: $385

2. Hawaii: $386

3. Iowa: $403

4. Wyoming: $410

5. Alaska: $426

The 5 Most Expensive States for Car Insurance

1. Michigan: $2,446 per year

2. Delaware: $1,520 per year

3. Connecticut: $1,097 per year

4. New Jersey: $1,086 per year

5. Florida: $1,058 per year

For a full list, click here.