15 States That Have the Cheapest Auto Insurance

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Nationally, the average auto insurance policy runs $3,017. However, these 15 states have managed to retain much lower rates. Read on to learn the details.

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Nationwide, insuring a vehicle costs an average of $3,017 annually. That works out to $251 per month. While some states average much higher rates (we’re looking at you, Michigan, Louisiana, and Florida), these 15 states have managed to keep the lid on auto insurance rates.

Rank State Average rate 1 Hawaii $1,619 2 Washington $1,803 3 Alaska $1,897 4 Idaho $2,010 5 Indiana $2,065 6 Maine $2,201 7 Ohio $2,238 8 Iowa $2,286 9 Massachusetts $2,315 10 Wisconsin $2,346 11 Tennessee $2,348 12 Vermont $2,379 13 Wyoming $2,393 14 Oregon $2,421 15 Illinois $2,498

Data source: Quadrant Data.

Why are rates more (or less) expensive in some states?

Auto insurance is regulated at the state level, meaning state legislators play a role. Once regulations are in place, insurance companies set prices based on ZIP code. ZIP code matters because some areas are more prone to events like flooding and car theft than others.

To illustrate, here’s a look at three states where rates are highest.

Michigan

The average cost to insure a car in Michigan is $5,766 annually, a number sure to put a dent in anyone’s checking account. There are three major reasons:

Michigan drivers are required to carry no-fault insurance with unlimited Personal Injury Protection (PIP). Additional coverage inflates policy costs.Issues like insurance fraud, lawyer fees, and healthcare bills further drive up auto insurance costs in the Great Lake State.Claims are expensive, and if they want to turn a profit, insurers in Michigan must charge higher rates.

Louisiana

Louisiana has a high rate of natural disasters like hurricanes and flooding. As a result, car insurance rates in Louisiana average $4,280 annually.

Florida

Like in Louisiana, insurance companies know to expect natural disasters in the Sunshine State. And like Michigan, Florida requires drivers to carry no-fault coverage. In addition, auto insurance companies pay out losses on a regular enough basis to hike rates to an average of $3,766 per year.

Factors that determine your personal rate

If you’re paying much more or much less than a friend, it’s likely due to one of the following factors:

The type of car you drive: Certain types of cars are more expensive to insure because they’re more expensive to repair or replace. On the other hand, certain cars are less expensive to insure.Your driving habits: If you’ve been in an accident or have speeding tickets, your rate is likely to reflect an increased level of risk.How much you drive: All things being equal, a person with a long commute to work may pay higher auto insurance premiums than someone who works closer to home.Where you park your car: This is where ZIP code comes into play. Where you live and park your vehicle overnight may impact your premium. If theft and vandalism are common in your neighborhood, you’re likely to pay a higher rate.Your age: Statistically, younger, less experienced drivers are more likely to get into accidents and make claims. According to the Centers for Disease Control (CDC), the risk of motor vehicle accidents among 16- to 19-year-olds is almost three times higher than any other age groupYour coverage: As demonstrated by Michigan and Florida, adding more coverage increases policy costs.Your deductible: Generally, the lower your deductible (the amount you must pay out of pocket toward a claim), the more expensive your premium.

You may not be able to control the insurance decisions made by legislators in your state, but you can control how carefully you drive, the kind of vehicle you purchase, and how large a deductible you’re able to pay.

If you’re interested in learning more about how to keep your auto insurance rates low, here are 13 solid tips.

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15 States That Have the Cheapest Auto Insurance