What Are the Cheapest States For Car Insurance?

The average American pays $2,008 per year or $167 per month for full-coverage car insurance. For minimum-liability coverage, the average cost is $627 per year or $52 per month. Car insurance costs vary widely by location due to each different state’s minimum insurance requirements and laws, local risk factors, and more. What are the cheapest states for car insurance? 

Below we will show the average full-coverage car insurance for drivers who live in 10 states that are considered to have the cheapest car insurance. The reason these states have the cheapest auto insurance has a lot to do with the makeup of the state. The cheapest states often have a large number of rural areas, which helps keep car insurance costs down compared to states with several congested metropolitan areas.

Maine

Maine has the lowest auto insurance rates in the nation, on average. Our data shows that the average annual car insurance rate for Maine drivers is $949, which is $594 less than the national average of $1,543. Auto-Owners Insurance has the cheapest sample rate in Maine: $620 per year on average.

Idaho

Idaho’s average annual rate of $992 is $551 lower than the national average of $1,543. Sentry has the cheapest average annual rate in Idaho at $474.

Vermont

The average annual rate for car insurance coverage in Vermont is $1,053. Compared to the national average of $1,543, Vermont drivers pay $490 less per year than the average U.S. driver.

USAA, which is exclusive to the military community, has the lowest sample rate in our study at $705 per year. Most drivers will find the lowest rate with Auto-Owners Insurance, which has an average annual rate of $784.

Ohio

Ohio drivers will find average car insurance rates to be around $1,083 per year, according to our analysis, $460 less than the national average rate of $1,543. Grange has the cheapest sample rate we found for Ohio drivers: $720 per year, on average.

The average American pays $2,008 per year or $167 per month for full-coverage car insurance. Share on X

Wisconsin

The state average is $1,145, $398 less than the national average rate of $1,543. The cheapest sample rate in our study of Wisconsin auto insurers is $730 from USAA. Since USAA policies are exclusive to the military community, most drivers will find the lowest prices with Geico. Its average annual rate is $857.

North Carolina

According to our data, the average car insurance rate in North Carolina is $1,165 per year, $378 less than the national average rate of $1,543. Erie has the cheapest average annual rate in North Carolina at $770 per year.

Indiana

The state’s average annual car insurance rate is $1,190, $353 less than the national average of $1,543. USAA’s sample rate, $677, is the cheapest in our study. Most Indiana motorists will find the lowest rate with Geico, at $877 per year on average.

Iowa

With an average annual rate of $1,215, drivers in Iowa pay $328 less than the national average. The cheapest sample rate we found for Iowa is $780 per year, on average, from State Farm.

Hawaii

The average rate drivers in Hawaii can expect is $1,241 annually. When compared to the national average of $1,543, Hawaii drivers pay $302 less. Geico has the cheapest average 

Tennessee

The average annual rate is $1,264, which is $279 cheaper than the national average of $1,543. Most drivers in Tennessee will find the lowest price with Auto-Owners Insurance, which has a sample rate of $999 per year on average. The only insurer cheaper is USAA, at $840 per year, but its policies are exclusive to the military community.

Why Do Auto Insurance Rates Vary From State to State?

Each state has its own regulations and requirements for insurance coverage, which impact the rates and coverage options available to drivers. Below are some of main reasons auto insurance varies from state to state:

State Regulations: Each state has its own set of insurance regulations, requirements, and laws that can impact insurance rates. These regulations may include minimum coverage requirements, insurance fraud laws, and legal frameworks for resolving disputes.

Population Density: States with higher population densities tend to have more traffic congestion and higher accident rates, which can result in higher insurance premiums. Urban areas often have more vehicles on the road and increased risk of accidents compared to rural areas.

Frequency of Accidents and Claims: States with higher frequencies of accidents and insurance claims typically have higher insurance premiums. Factors contributing to higher accident rates include traffic congestion, weather conditions, road quality, and driver behavior.

Cost of Living: The cost of living in a particular state can influence insurance rates. States with higher costs of living, such as those with expensive medical care or higher repair costs, may have higher insurance premiums to cover these expenses.

Weather and Climate: States prone to severe weather events such as hurricanes, tornadoes, or hail storms may experience higher insurance rates due to increased risks of vehicle damage and insurance claims.

State Laws: State laws regarding liability, personal injury protection (PIP), and tort systems can influence insurance rates. States with no-fault insurance systems or strict liability laws may have different insurance cost structures compared to states with traditional tort systems.

Insurance Market Competition: The level of competition among insurance companies in a particular state can affect insurance rates. States with more competition among insurers may have lower premiums as companies compete for customers.

Demographic Factors: Demographic factors such as age, gender, marital status, and credit history can also impact insurance rates. States with higher average ages, lower rates of accidents among certain demographic groups, or better credit scores may have lower insurance premiums.

Traffic Laws and Enforcement: State traffic laws, enforcement practices, and penalties for traffic violations can influence insurance rates. States with strict enforcement of traffic laws may have lower accident rates and, consequently, lower insurance premiums.

Bottom Line

Car insurance rates can vary within each state based on individual factors such as age, driving record, type of vehicle, coverage limits, and deductible choices. Additionally, car insurance rates may change over time due to factors such as changes in state regulations, insurance company policies, and economic conditions.

Additionally, taking steps to maintain a clean driving record and qualify for discounts can help reduce insurance premiums regardless of location.