Auto insurance can be a necessary expense if you want to drive your car safely and legally. These costs can vary by state, which means where you live can impact your decision to be a motorist or to rely on other forms of transportation. Understanding how much auto insurance in your state is likely to cost can help you decide about insurance policies and coverage.
Why Do Auto Insurance Rates Vary?
States have different regulations and laws regarding auto insurance companies and their policies, which can affect how much you pay in your premiums. Insurance companies usually use aggregated information about how likely a motorist is to be in an accident to determine how much their premium should be. Your location affects these statistics and can impact your overall premium for the following reasons:
Legal Requirements
States can regulate insurance offerings within their jurisdiction. These regulations can positively impact your premium in terms of discounts or raise your premium, depending on how much financial burden the regulation presents to the insurance company, which they then pass onto you. For example, Louisiana requires all insurance companies to offer 25% off to active and honorable discharged military service members.
Traffic Conditions
Standard traffic conditions for your area can impact your insurance rates because places with higher traffic congestion can have a higher likelihood of accidents because of more drivers on the road. Larger cities can expect to pay higher rates than rural areas. Car owners in large cities are also more susceptible to break-ins and thefts, driving up their auto insurance rates.
Economic Factors
Insurance companies are a business, so like any other fluctuating market, the economic factors of your state can affect the rate you pay. The insurance company may adjust its rates to increase profit levels or provide discounts to increase client retention. If you live where drivers are more likely to be uninsured because of financial hardship, your insurance rates may increase to cover the higher possibility of protecting an uninsured motorist.
Weather
States with dramatic weather may have higher auto insurance rates because of the likelihood of weather-related damage to your vehicle. States up north that experience snowstorms or states in the south that are likely to experience flooding and hurricanes can have higher rates than states with milder climates. These events cause extensive damage to vehicles when they occur, increasing the standard insurance rate for that location.
Competition
Competition can drive down an insurance rate because the insurance company wants to incentivize motorists in that state to choose their services over those of their competitors. If you live in a state with multiple insurance providers that compete for shares of the auto insurance market, you may benefit from a lower rate than you would otherwise have based on your location.
Highest Auto Insurance Rates By State
If your state has a high auto insurance rate average, there are other factors that you may be able to take advantage of to lower your premium, like student discounts or a collision-free driving history. However, knowing your state’s average can help you prepare your expectations for how much you’re likely to pay in auto insurance before you begin shopping around. Here is a list of the highest auto insurance rates by state.
1. Delaware
Delaware has the highest average auto insurance premium at $2,703 per year. The higher rates may be related to the smaller size of the state, which can lead to more densely populated areas. Delaware also has a high percentage of drivers in its population, perhaps due to its lack of public transportation or large cities. It also has severe winter weather, which can impact prices.
2. Louisiana
Louisiana has an average annual auto insurance premium of $2,569, which is slightly lower than Delaware’s premium rate. Parts of Louisiana have hurricanes and flooding, which can wreak havoc on your car. It also has densely populated locations like New Orleans, with a low average income rate, which can cause average insurance rates to increase.
3. New York
New York is one of the biggest cities in the country and has an average auto insurance premium of $2,566 per year. The dense population and high traffic congestion are likely big factors in the high insurance premium average. New York can also have high crime rates, which can cause your insurance rate to increase as theft and vandalism are more likely.
4. Georgia
Georgia has similar weather to Louisiana, and Atlanta is an even more densely populated city than New Orleans. The average annual auto insurance premium for Georgia is $2,544. The weather and dense population in larger cities may also combine with a low statewide average income to result in a high insurance premium.
5. Maryland
Maryland has an average auto insurance premium of $2,511 per year. This high insurance premium could be the winter weather that Maryland experiences, which can cause accidents on icy roads and degradation of your car through extreme weather. The proximity to Washington D.C.’s dense population probably also plays a part in increasing the state’s insurance rate average.
6. Michigan
Michigan also has extreme winter weather, which may indicate why it has an average auto insurance premium of $2,497 per year. Michigan also has a similar population count per square mile as Georgia, so the population density can play a role in the insurance rates.
7. New Jersey
New Jersey has an average auto insurance premium of $2,350. New Jersey experiences cold winters and is very close to the densely populated New York City. Drivers commuting through New Jersey may increase the state’s overall insurance rate.
When shopping for insurance, look for insurance policies that offer coverage for each situation you deem likely to occur and that is within your price range so you can find the right policy for you and your family. Once you understand the average rate in your state, you may have a better idea of what your rate could be. You can contact insurance companies in your area to get quotes specific to your situation.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.
