Louisiana is now the king of expensive car insurance, moving into first place this year as Michigan (the most expensive state for seven years in a row) slips into second, although there is a bit of a technicality.
In many states, average rates declined from 2020 to 2021 but in Louisiana, rates climbed 19% to an average premium of $2,839. That’s a whopping 99% more than the national average of $1,428 and 34% more than second-place Michigan. Car insurance in Louisiana is now three times more expensive than in Maine. Maine has the cheapest car insurance rate, where you will pay an average of $858 a year.
- One of the reasons car insurance rates vary by state is that each state has its own insurance laws.
- The average premium in Maine is $858, which is 40% less than the national average. Thus, making it the cheapest state for car insurance.
- Louisiana has an average insurance rate of $2,839 and it is 99% more expensive than the national average.
- A number of factors influence your car insurance rates such as your driving record, gender, age, location, credit score and the vehicle you drive.
The top three most expensive states stayed the same for the third year in a row, with Michigan and Louisiana switching spots and Florida finishing in third place. California moved up a spot to finish fourth this year. Missouri jumped up 25 spots to round out the top five most expensive states for auto insurance.
While Missouri moved into the big leagues this year, there is a $944 difference between the Show Me state and first place Louisiana. The reason these states come with sky-high premiums varies; everything from unique insurance schemes, high-density populations, tons of uninsured drivers and costly lawsuits will always push up premiums.
When it comes to low-priced states, the top two stayed the same, with Maine being the cheapest state in the country for auto insurance and New Hampshire coming in a close second. Wisconsin moved up one spot to third while Idaho and Ohio filled out the top five.
In Maine, the average premium is $858, which is 40% less than the national average. In a bit of an anomaly, the average premium dropped from last year in the top five least expensive states, which may indicate that the coronavirus drove down insurance prices last year as drivers stayed at home.
As the numbers clearly show, the difference between states can be huge. Louisiana drivers are paying $1,981 more on average than drivers in Maine. The national average this year came in at $1,428, which is a decrease of 6% from last year. In fact, rates dropped in almost every state (it rose or stayed the same in nine states), which illustrates how dramatically COVID-19 impacted car insurance rates.
A variety of factors impact your car insurance rates
While the state (as well as the neighborhood) you live in will always impact your insurance rates, it is not the only factor considered by insurers when calculating your rates. Many of these risk factors are under your control, but some fall beyond your sphere of influence.
Here are some of the factors insurance companies consider:
Driving record: This rating factor is entirely under your control and has a major impact on rates. Tickets, accidents, and claims will always increase rates. If you have multiple tickets over a short period, you will be looking at a significant increase or even a denial of coverage. Drive safely and stay ticket-free out on the road for the best rates.
Gender and age: These two factors are out of your control, but they can have a big impact on your premium. Teen drivers pay the highest premium of all drivers because statistics show that young drivers are involved in more accidents and file more claims than experienced drivers. All of that leads to higher insurance rates.
Teen males are hit with a double whammy; their young age and gender push their rates up dramatically. Studies show that males are more likely to act immature behind the wheel, leading to tickets, accidents, and claims.
Location: It’s not just the state you live in that can raise or lower your insurance rates. Insurers will look at neighborhood data as well. High crime or claim rates will result in a higher premium. Weather is also considered and if you park your vehicle in a garage at night your rate could be lower than if you must leave it on the street.
Credit score: Insurers absolutely consider your credit score. It is a major rating factor for many insurers. Currently, California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, and Utah prohibit insurers to consider your credit score.
“Statistical evidence shows a strong link between low credit scores and a high likelihood of making a claim, this higher risk for insurers results in higher rates for drivers,” advises Penny Gusner, senior consumer analyst at Insure.com.
Vehicle you drive: As always, the car you drive will impact your insurance premium. A minivan will always be cheaper to insure than a luxury vehicle loaded with luxury appointments and a giant engine under the hood.
“Sports cars and high-end luxury vehicles are almost always much more expensive to insure because of repair costs. The finishes in these vehicles are usually high-end and much pricier than the materials used in more moderately priced vehicles,” says Carole Walker, executive director with the Rocky Mountain Insurance Information Association.
Weather factors: States that are prone to severe weather will usually have higher insurance costs. Hail, flooding and even wind can do serious damage to a vehicle, and your insurer will be on the hook to repair or replace it if you have comprehensive coverage. “If you live in a state where storms are frequent, Florida, Oklahoma and Texas are great examples, insurance companies have to charge more because they receive more claims,” says Gusner.
In addition to your individual driver profile, state-specific issues will also push rates up or down. Here are a few state factors that influence car insurance costs:
Insurance laws: Each state sets its own insurance requirements and regulations, and both can impact rates in the state. Michigan uses a very unique no-fault system that has resulted in sky-high rates for years. Recent changes to their system are responsible for their drop to second place this year.
State-required insurance minimums can also raise or lower insurance costs. “States that require more coverages, such as personal injury protection that Michigan and Florida (this may be changing soon in Florida) require, end up costing drivers more in terms of insurance premiums,” notes Gusner.
Uninsured drivers are always a problem: Uninsured drivers raise rates for everyone as insurance companies tend to pass the cost of uninsured drivers onto insured drivers. States with high rates of uninsured drivers will often have higher insurance costs than states where most drivers are insured.
As an example, Florida, the number three state on our most expensive list, has an estimated uninsured driver rate of 20.4% in 2019, according to the Insurance Information Institute (III).
State statistics matter: Insurers love breaking down statistics, and most take a very close look at the claim, crash and crime rates in your state and neighborhood. Urban areas are usually more expensive as many drivers packed into a small space lead to more auto accidents, which leads to more claims.
Insurers also consider the claim rates of the vehicle you are driving. This means that if your car is a favorite of car thieves or ends up in more crashes, you will pay more for car insurance regardless of whether you’ve ever made a claim.
When it comes to expensive car insurance, these states top the list. Reasons for the high premiums vary but include a unique insurance system in Michigan, high-density cities, uninsured drivers and expensive lawsuits. Here are the top three most expensive states for car insurance:
#1 Louisiana: Help may be on the way
This year, Louisiana moved into the top position, dethroning Michigan as the long-term king of high car insurance rates. The Pelican State is no stranger to our list; it has been in the top five nearly every year we’ve done the study and in the top three since 2017.
The average premium in Louisiana is $2,839 this year, making it 99% more expensive than the national average. In a year when most states saw rate declines, the cost of car insurance in Louisiana bumped up 19%.
In Louisiana, uninsured and underinsured drivers combined with easy lawsuits are the major factors in pushing up rates. According to the III, it is estimated that 11.7% of drivers in the state are cruising the roads uninsured.
Even when carrying insurance, many drivers only have minimum required coverage levels, which is usually not enough to cover the damage in anything more than a minor fender bender. According to Louisiana Insurance Commissioner Jim Donelon, almost 40% of drivers are carrying the absolute minimum coverage levels.
Carrying the minimum amount of insurance is never a good idea because even a minor accident can easily exceed those limits. State-required minimum coverage levels in Louisiana are:
- Bodily injury liability: The minimum is $15,000 per person and $30,000 per accident
- Property damage liability coverage: The minimum is $25,000
Low minimums can lead drivers to the legal system for a bigger payout. According to Louisiana Watchdog, Louisiana lawsuit costs are the highest in the U.S., with annual expenses nearly hitting $7 billion. This is roughly 20.6% higher than the national average.
Drivers with little to no insurance get into accidents and then sue each other in front of elected judges who are more than happy to side with drivers over insurance companies; the big loser is auto insurance rates. This legal situation can lead to large accident settlements and insurers pass those costs onto all drivers via higher premiums.
Recent legislation may help lower costs, but it hasn’t had time to impact rates yet; it went into effect on Jan. 1, 2021.
While the changes impact a variety of factors in Louisiana’s insurance market, the following are the two that may have the biggest impact on rates:
- Jury trial: Allows jury trials if damages sought exceed $10,000. The prior rule required $50,000 in damages. This will take the award amount out of a judge’s hands and lets a jury decide damages.
- Collateral source rule: This change limits the plaintiff’s damages to the amount of medical expenses that are actually paid, not the amount billed. The law used to allow a plaintiff to recover the total amount billed and ignore any discount negotiated by an insurance company.
In most cases, there is a dramatic difference between the amount a hospital charges and what an insurance company actually pays for medical bills due to negotiated discounts. The new law instructs judges to award the claimant 40% of the difference between the amount billed by a hospital or other medical provider and the amount that is actually paid by a plaintiff’s health insurer or Medicare.
“These reforms have just gone into force in Louisiana,” says Gusner. “It may take a few years for rates to come down with current insurers as they see claim settlement amounts lowered. Also, the hope is more insurers will want to sell policies in Louisiana now. This would make the car insurance market more competitive and should result in lower rates offered to drivers.”
#2 Michigan: Despite recent changes, car insurance is still expensive
This is the first time in eight years that Michigan has not been at the top of the list, and its move to second place is based on a technicality. The average premium in Michigan dropped 27% this year to a still shocking $2,112, 48% more expensive than the national average.
Changes to the no-fault auto insurance laws in Michigan now let drivers choose the amount of Personal Injury Protection(PIP) coverage they want to carry. In the past, drivers were required to carry PIP coverage that guaranteed unlimited, lifetime medical benefits to auto accident victims. This dramatically increases an insurer’s risk. That risk was passed on to customers via higher premiums.
Changes to car insurance laws went into effect in July 2020, which allows drivers to choose between the following No-Fault medical benefit coverage levels: $50,000 (if a driver is enrolled in Medicaid), $250,000; $500,000; or continue with “no limit” coverage.
The $2,112 premium in our rankings reflects a PIP coverage level of $250,000. When we ran the numbers on “no limit” coverage, the premium jumped to $2,840, which would put it back in first place by $1.
The rate savings vary depending on the coverage levels drivers end up choosing. The following savings levels on the No-Fault PIP portion of an insurance premium are a part of the new law:
- 45% savings for drivers who opt for the $50,000 cap on No-Fault PIP
- 35% savings for drivers who opt for the $250,000 cap
- 20% savings for drivers who choose the $500,000 cap
- 10% savings for drivers who keep “no limit” unlimited No-Fault medical benefits
“The reforms went into effect last year, but it took time to make changes when their policy came up for renewal. Thus, we do not yet see the big reductions in rates the state had hoped for,” says Gusner. “We did see nearly a 30% reduction in rates for changing from unlimited PIP to a cap of $250,000, but I would hope by next year to see the rates fall even more as the savings go up.”
#3 Florida: Older drivers, lots of colleges, and tons of uninsured drivers
Florida stayed in third place for the fifth year in a row. The average premium in the Sunshine state hit $2,082, a 7% decline from last year. A very recent change to car insurance laws impact future costs, but some worry it may push some rates even higher.
Uninsured drivers have always been an issue in Florida. According to the III, roughly 20.4% of drivers in Florida are out on the road without coverage which is one of the highest rates in the country. As always, more uninsured drivers mean higher insurance costs for everyone.
In addition to tons of uninsured drivers, Florida is also packed with older drivers, students (dozens of colleges in Florida) as well as plenty of tourists. All of these are considered higher-risk drivers, which leads to accidents, claims and higher premiums for residents.
Another factor is the weather. Hurricanes and hailstorms can cause major vehicle damage and insurers have to repair or replace those vehicles. Higher weather risks will always lead to higher premiums for everyone, particularly for comprehensive insurance.
Comprehensive is the insurance coverage that handles when your vehicle is damaged by something other than a collision. This includes weather damage as well as fire, animals and even vandalism. One last factor that may be changing soon is the personal injury protection (PIP) system.
Currently, Florida uses a PIP system similar to Michigan’s but doesn’t include the lifetime payouts. PIP coverage is almost always more expensive, and Florida is no exception. Roughly 20% of a car insurance premium in Florida goes to PIP coverage.
Recently, Florida legislators voted to repeal Florida’s no-fault insurance (PIP) system, which required drivers in Florida to only carry $10,000 for medical, disability, and funeral expenses. While low limits, one of the issues with the system is the amount of fraud that takes place.
The new law would require drivers to carry at least $25,000 in bodily injury coverage for the injury or death of one person, and $50,000 in coverage for the injury or death of two people. The insurance policy for the person at fault in the accident would payout for claims.
“While this may lower rates for Floridians already carrying the newly required amounts of bodily injury, for drivers who aren’t carrying this coverage, it could raise their insurance costs,” says Gusner. “And, for those who are already struggling to cover insurance costs, experts worry it may push them over the edge, creating more uninsured drivers in the state.”
The new law will go into effect on Jan. 1, 2022 if the governor signs it into law.
The majority of our cheapest states for car insurance are smaller and less populated. Lower population density leads to fewer accidents and claims, which lowers premiums for everyone. In addition, high rates of fully insured drivers help keep premiums low.
#1 Maine: Rural, low uninsured rate, competitive market
Maine grabbed the top spot again this year, making it the cheapest state for car insurance for the last three years in a row. The average premium in the Pine Tree state dropped 6% this year to $858.This is 40% less than the national average.
The car insurance situation in Maine is pretty much the same as last year, according to Judi Watters, consumer outreach specialist with the Maine Bureau of Insurance. “Maine’s historically low auto insurance losses have helped to keep premiums low, as has the state’s competitive auto insurance market.”
Low density and plenty of insured drivers help driver low insurance rates. Maine ranks 38th for population density, leading to fewer accidents and claims when compared to our most expensive states.
According to the III, only 4.9% of the drivers in Maine are uninsured. With fewer uninsured drivers on the road, rates are lower for everyone.
#2 New Hampshire: Competitive market, median density
New Hampshire stayed in second place for the second year in a row. The average premium in the Granite state dipped 10% this year to $885, 38% less than the national average.
New Hampshire also has a low rate of uninsured drivers, with only 6.1% of drivers out on the road without coverage. According to the Governor, New Hampshire also benefits from great drivers and safe roads.
“New Hampshire has some of the best drivers in America, and because our roads are so safe, consumers are enjoying the benefit with some of the lowest vehicle insurance rates in the country,” said Governor Chris Sununu in a recent press release. “We strongly encourage all Granite Staters to have car insurance and with rates this low, it should not be financially out of reach to have this commonsense protection.”
#3 Wisconsin: Semi-rural and competitive market keep rates low
Wisconsin moved up a spot this year to round out the top three. Auto insurance rates in Wisconsin dropped a whopping 11% from last year, with an average premium coming in at $938 this year.
Wisconsin benefits from a variety of factors while also having to deal with weather issues and a couple of large cities.
“Steady regulation and a competitive market are key to our state’s success. We do face unique challenges from changing road conditions with each season, and highly condensed traffic in places like Milwaukee and Madison. We work closely with other agencies to understand the risks facing drivers and insurers to keep our marketplace strong and consumer-friendly,” says Sarah Smith, Director of Public Affairs, Wisconsin Office of the Commissioner of Insurance.
Wisconsin does have a fairly high number of uninsured drivers, ranking 19th in the country; roughly 13.3% of drivers lack insurance. Fortunately, this factor doesn’t seem to result in sky-high car insurance rates. It could be because the state requires drivers to carry uninsured motorist coverage, so those premiums help alleviate that issue a bit.
Car insurance varies by state for a few reasons. One is that each state has its own insurance laws. These laws mandate the minimum car insurance coverages and limits a car owner must carry on their vehicle. Being required to have higher limits, or certain types of coverages, can make rates higher.
However, our study tried to make it more of an apples-to-apples comparison by looking at the same amount of coverage of liability in each state (100/300/50), having uninsured motorist of 100/300 plus comp and collision coverages.
This then highlights the extras some states require that push rates higher, like the PIP requirements in Michigan and Florida. It also can make other issues come to light, like Louisiana’s high claims-to-litigation ratio, which affects rates.
State laws also guide insurance companies on what they can and cannot rate drivers on and that affects rates. While all states allow for certain risk factors to be looked at, such as your driving record, there are some factors that some states have prohibited, such as credit score, gender and age. So, rates fluctuate based on what rating factors are used in different states.
Another important item that differs between states is weather and resulting car insurance claims. If you live in an area where there are more severe weather events there are more claims, which drive up car insurance costs for all drivers in your state.
Save money on auto insurance rates in any state
Regardless of where you live, finding cheaper insurance is always a winning strategy. Here are a few tips to help lower your premium:
Shop your coverage: This is often the best way to lower your premium. Insurers rate risk differently, so there can be dramatic differences in premium quotes.
Shop at least three insurers and always make sure you’re comparing apples to apples when it comes to coverage levels and deductibles. You don’t need to wait until our state rankings come out to shop your coverage. Any life event is a good reason to shop around looking for a better deal on car insurance.
“Always shop around when there is a life event that would spark rate changes,” advises Gusner. “This could be a wedding, a teen going on your policy, adding a car, getting rid of a car or even having to file a claim on your policy. All of these incidents can make the current insurer you’re with not the best option for your latest needs,” she continues.
If you’re buying a new or used vehicle, remember to shop for cheap car insurance quotes as you look for the perfect car. You don’t want to fall in love with a car only to discover with the insurance cost will bust your budget. You can see annual car insurance rates for around 3,000 new vehicles with our average rates tool. We also have an average rates for used cars tool.
Consider usage-based driving plans: Many insurers offer to track your driving performance for a short period of time, and if you prove to be a safe driver, you will qualify for lower rates. Examples of usage-based driving include Progressive’s Snapshot, Allstate Drivewise and State Farm Drive Safe & Save.
“Drivers can often get lower rates by utilizing some of the new transparency tools that many insurers are putting in place to track driving behaviour and incentivize safe practices,” advises Smith.
Discounts: Insurers offer plenty of discounts that can help drive down your premium. Check with your insurer or agent to make sure all available discounts are being applied to your policy.
Raise your deductible: Doubling your deductible can be a great way to lower your premium if you can afford it. Always choose a deductible that you can easily afford in case you have to make a claim.
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 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.
We averaged rates in each state for the cheapest-to-insure 2021 model-year versions of America’s 20 best-selling vehicles as of Jan. 2021 and ranked each state by that average. Rates are for comparative purposes only within the same model year.
This apples-to-apples comparison is different than other research, such as the rate comparison conducted by the National Association of Insurance Commissioners (NAIC). The NAIC’s numbers display the average amount that state residents spend for auto insurance, regardless of the type of car they insure or amount of coverage they purchase.
Frequently asked questions
What states have the cheapest car insurance rates?
Our study shows that the top five cheapest states for car insurance in 2021 are:
- New Hampshire
Cheaper states for auto insurance tend to have lower population density and a competitive market for car insurance. Thus, even in cheap states it pays to shop around for the best rates.
What states have the highest car insurance rates?
Our data finds that the top five most expensive states for car insurance in 2021 are:
Expensive states for car insurance generally have high-density cities, more uninsured motorists (making those with insurance pay more) and claims that push up the rates. The top state is known for large accident settlements, but reforms that recently took place are trying to bring that down to reduce auto insurance costs.
What states have no car insurance?
A few states do not directly say in their laws you must buy car insurance, New Hampshire, Tennessee and Virginia are the main ones; however, all states require you to have means for financial responsibility if you are in an accident.
The easiest way to show financial responsibility is with a car insurance policy. Other ways accepted are typically bonds and that is a pain to set up and may require a cash deposit to obtain. Meanwhile, to get a car insurance policy, you can simply comparison shop online, find the best policy for your needs and purchase it.
What are the factors that affect the car insurance premium?
As we mentioned earlier, car insurance companies look at a variety of risk factors when determining your rates. The factors range from the type of car you drive and your driving record to your age and location. Review the 13 main car insurance rating factors to learn more on the topic.
How moving to a different state might impact your car insurance premium?
Location matters to car insurance companies, so if you move across the state or to a new state, be prepared for your premiums to change.
Each state has its own required coverages and limits (though buy higher liability limits if you can since they offer you better protection), so rates will vary due to this and other factors, such as the number of claims the insurer pays out in your new area. Higher claims in that area will result in higher rates.
You can check out our cost of living calculator tool to see how much rates may change if you move states. Also, remember to car insurance comparison shop with at least three companies to find out who in your area provides the best rates.