Car insurance rates by state, 2016 edition
Michigan comes out on top for the third year in a row in a contest that no state wants to win: the most expensive car insurance rates in the nation. Insure.com’s 2016 state-by-state comparison of auto insurance premiums found that the Great Lakes State is still the most expensive state in the country to insure a car.
Michigan has been in the No. 1 or No. 2 spot for the six years that Insure.com has commissioned the annual report. Montana captured the No. 2 spot for the second year in a row. New Jersey broke into the top five for the first time ever, Louisiana was No. 4, and Oklahoma rounded out the top five.
On the flipside of the cost coin, Maine grabbed the No. 1 spot for the cheapest car insurance in the country. Maine has been in the top three for the least expensive car insurance for all six years of the study. This year, Ohio came in No. 2, Wisconsin was three, Idaho took fourth, and New Hampshire earned No. 5.
This year’s best-selling vehicles
The annual study compiles rates from six large insurance carriers in 10 ZIP codes in every state. Rates were for the same full-coverage policy for the same driver -- a 40-year-old man with a clean driving record and good credit.
The rates are an average for the 20 best-selling vehicles in the U.S. in order to present more accurate rates for the average driver – without high-end sports or luxury cars skewing the data. Each model was rated on its cheapest-to-insure trim level. This year’s 20 best-selling vehicles list included:
- Ford F-150 XL SFE
- Ford Fusion S
- Ford Escape S
- Ford Explorer XLT
- Chevrolet Silverado 1500 LT
- Chevrolet Malibu LS
- Dodge Ram 1500 Tradesman
- Toyota Camry LE
- Toyota Corolla L
- Toyota RAV4 LE
- Honda Civic LX
- Honda Accord LX
- Honda CR-V LX
- Chevrolet Equinox LS
- Nissan Altima 2.5 S
- Nissan Rogue S
- Nissan Sentra S
- Hyundai Sonata SE
- GMC Sierra 1500
- Jeep Cherokee Sport
The national average for a full-coverage policy as featured in the Insure.com report came in at $1,325 this year – a slight increase from last year’s average of $1,311. Rates varied from a low of $808 a year in Maine to a budget-busting $2,738 in Michigan. Insurance rates in Michigan are more than double (107 percent) the national average.
Insurance rates are influenced by a number of different factors. Everything from traffic, crime rates, state and local laws, the percentage of uninsured drivers, as well as the number of insurance companies competing in a market can all result in higher, or if you’re lucky, lower insurance premiums in your state.
States with highest car insurance
The reasons behind the highest state rates include everything from Personal Injury Protection (PIP) coverage (a big factor in two of the states) to high fatality rates and litigious-minded drivers.
Here are the top three most expensive states for car insurance and why they are so expensive:
#1 Michigan -- Michigan’s no-fault insurance structure is largely responsible for the high cost of car insurance in the state.
“Michigan auto consumers pay more than most states for car insurance due to the state’s high medical mandate. Michigan is the only state in the country that requires auto consumers to purchase unlimited, lifetime medical benefits as part of the auto insurance policy,” explains Lori Conarton with the Insurance Institute of Michigan.
“Unfortunately, it’s Michigan’s auto insurance consumers who pay the price for this unique auto insurance law,” continues Conarton.
Michigan, like most other no-fault states, requires its drivers to buy personal PIP insurance. PIP coverage will pay the medical bills of the policyholder as well as any passengers and family members that are in the vehicle at the time of the accident.
The big difference is in the amount of PIP coverage that Michigan requires of its drivers. Florida, for example, only requires drivers to carry $10,000 in PIP coverage, while Michigan’s no-fault policies must offer unlimited medical benefits, which pushes the price up dramatically.
Michigan requires insurers to cover medical claims up to $530,000. The nonprofit Michigan Catastrophic Claim Association (MCCA) covers damages above that amount. In addition to high insurance premiums, Michigan drivers must pay an annual assessment to the MCCA, which in 2016 is $150.
The high cost of car insurance pushes many drivers out of the market. According to the Insurance Information Institute (III), an estimated 21 percent of Michigan drivers were uninsured in 2012. High numbers of uninsured drivers raise rates because there are fewer drivers (and their premiums) to share the risk pool.
The high cost also leads to – while technically legal – unscrupulous behavior. Some Michigan drivers will purchase a seven-day policy (which insurers in Michigan sell) so they have proof of insurance when registering their vehicle and then let the policy expire after a week, leaving them uninsured.
Unfortunately, rates are probably not coming down anytime soon. Until the PIP requirement is changed or ditched altogether, insurance rates will remain high in Michigan.
#2 Montana -- Montana stayed in the No. 2 spot for the second year in a row with an average premium of $2,297, which is 73 percent higher than the national average and a whopping $411 increase over last year’s Insure.com Montana average.
There are a number of factors that increase rates in Big Sky country, but one of the biggest is the accident rate. Wide-open spaces and lonely roads lead to a lot of car accidents and fatalities. According to the Insurance Institute for Highway Safety, Montana has the highest vehicle accident fatality rate in the country with 22.6 deaths per 100,000 people – twice the national average.
#3 New Jersey --The Garden State makes the top five for the first time. The average premium in New Jersey came in at $1,905, which is 44 percent higher than the national average.
According to Kacy Campion Renna, vice president of the Professional Insurance Agents of New Jersey, high accident rates may have something to do with New Jersey’s costly insurance. “New Jersey ranks No. 1 when it comes to population density, which means there’s a greater chance of having an auto incident here.”
Renna also cites other factors that can impact rates in New Jersey. “Other factors to consider are high medical costs, high rates of auto and medical fraud combined with the fact that the New Jersey residents tend to be pretty litigious.”
Fraud has become a fact in New Jersey’s PIP coverage. New Jersey allows PIP coverage levels up to $250,000, which is the second highest in the country, behind Michigan. Unfortunately, PIP fraud has shot up which raises the cost of insurance for everyone in the state.
States with the cheapest car insurance
The low cost of car insurance in the least expensive insurance premium states can be attributed to a number of factors, including fierce insurer competition and low numbers of uninsured drivers.
#49 Wisconsin – The Badger State is No. 3 when it comes to inexpensive insurance. A yearly premium of $912 makes car insurance a bargain in Wisconsin. Wisconsin benefits from a pretty rural environment and a very competitive insurance market. A lack of major cities helps keep accident rates down.
According to numbers from Highway Loss Data Institute (HLDI), Wisconsin has 1 death per 100 million vehicle miles traveled in 2013. Montana, the second-most expensive state on the list, recorded 1.96, which was the highest on the list in the same year.
In addition, Wisconsin residents are not particularly litigious, which makes insurance companies happy and leads to lower rates across the state.
#50 Ohio – With an average annual premium of $899, Ohio is No. 2 for affordable car insurance for the second year in a row, and the state has spent quite a bit of time in the top five over the last six years.
“Ohio is home to many national and regional insurers because of its stable legal and regulatory environment. This creates a competitive marketplace for consumers, leading to great rates and a variety of products and services from which to choose,” explains Perk Reichley, President of Reichley Insurance Agency.
According to the Ohio Insurance Institute, there are currently more than 650 insurance carriers writing policies in the state. Compare that number to the approximately 134 in California and just over 40 in New Jersey, and it’s plain to see how competition has positively affected the rates.
#51 Maine – Maine has hit the No. 1 spot for two years running, and it’s finished in the top three every year of the Insure.com study. The average premium came in at $807 per year, which was a tiny $2 increase over last year.
Maine is a convergence of favorable factors; they have very few large urban areas so traffic is usually not a problem, which in turn keeps down accident rates. In addition, though Maine gets a lot of snow, the state doesn’t usually suffer from major weather incidents like tornadoes and hailstorms, which can do serious and expensive damage to a car.
Maine drivers take their insurance responsibility seriously with a mere 4.7 percent of uninsured drivers, according to the Insurance Information Institute. This makes them No. 2 in the country for uninsured drivers with only Massachusetts beating them out. When everyone is insured, prices go down.
Providing real cost estimates
The Insure.com study differs from other studies, such as the National Association of Insurance Commissioners (NAIC) rankings, in that it compares how much it would cost a driver to buy the same coverage in each state. The NAIC rankings calculate the average amount drivers spend on auto insurance -- regardless of what coverages and levels of coverage are purchased.
How much does car insurance cost?
It’s important to remember that these numbers are averages and will not reflect your actual policy price. Insurance prices are highly personalized, and many factors will affect your rates, including the type of vehicle you drive, the coverages you choose to carry, your specific neighborhood and, in certain states, even your credit rating.
Insure.com’s study of the most and least expensive vehicles for 2016 includes easy-to use tool for viewing nationwide car insurance rates for 2016 vehicles or looking at state specific average rates, and allows you to compare up to 10 vehicles at once.
Shop your coverage annually to make sure you are getting the best car insurance rates available, ask for discounts and consider bundling your coverages to save money.
Insure.com commissioned Quadrant Information Services to calculate auto insurance rates from six large carriers (Allstate, Farmers, GEICO, Nationwide, Progressive and State Farm) in 10 ZIP codes per state. Rates were compiled in February 2016.
We averaged rates in each state for the cheapest-to-insure 2016 model-year versions of America’s 20 best-selling vehicles and ranked each state by that average. Rates are for comparative purposes only within the same model year.
Rates are based on full coverage for a single, 40-year-old male who commutes 12 miles to work each day, with policy 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 hypothetical driver has a clean record and good credit. The rate includes uninsured motorist coverage. Actual rates will depend on individual driver factors.