Live in One of These 5 States? You Pay the Most for Auto Insurance

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Auto insurance premiums vary widely by location. Here are the five states where drivers pay the most. 

Location plays a huge role in setting auto insurance premiums. It dictates how likely you are to have an accident with another vehicle or a wild animal, how frequently cars are stolen or destroyed in natural disasters, and even how likely it is that a lawsuit over a car accident results in a huge payout.

Insurance companies know this, which is why they charge drivers in some states more than others. Unfortunately, drivers in the five states listed below get the short end of the stick.

1. Michigan

Michigan has the highest auto insurance premiums in the nation by a mile. In 2023, the average driver paid $5,766 for auto insurance. Keep in mind, this includes drivers with accident histories and DUIs as well as those with clean records.

Part of the reason Michigan rates are so high has to do with the state’s no-fault system. Unlike the majority of states, which use an at-fault system, no-fault systems require each driver to bill their own insurer for medical expenses following an accident, regardless of who caused it. This increases the likelihood that insurers will have to pay out claims.

Michigan also has the second-highest rate of uninsured drivers in the nation. More than a quarter of drivers don’t have coverage, according to the Insurance Information Institute. This increases the risk that insurers could wind up paying for property damage claims that their drivers didn’t cause as well.

2. New Jersey

The average New Jersey annual auto insurance premium in 2023 is $4,316. Like Michigan, it’s a no-fault state, so this undoubtedly contributes to its above-average rates.

The state also has a high population density. More cars in a smaller area statistically increases the likelihood of accidents, and therefore, of auto insurance claims.

3. Louisiana

The typical Louisiana driver pays about $4,280 per year for auto insurance. This is due in part to its coastal position and the potential for severe hurricanes that could easily total a vehicle.

Many also blame Louisiana’s legal system. The state sees a high number of bodily injury lawsuits and awards significantly more damages than most other states. This increases the likelihood that insurers find themselves on the hook for large sums.

4. Kentucky

Kentucky is another no-fault state, with an average annual premium of $4,200 in 2023. The state has an above-average number of uninsured drivers at 13.9%.

In addition, it sees an unusual amount of traffic fatalities. This can lead to large bodily injury claims, which result in significant payouts.

5. New York

New York ties with Kentucky to take the last spot on this list. Its average annual premium also came in at $4,200 in 2023. It’s yet another no-fault state, but that’s not the only reason for its high rates.

They’re also due to the state’s population density, especially in the New York City area. Having that many drivers close together increases the risk of accidents and auto theft. Auto theft, in particular, is becoming a significant problem in the state, having risen by 23% from 2021 to 2022.

What drivers can do

While it’s true that drivers in the above states typically pay more than the $3,017 average annual auto insurance premium for the U.S., it’s possible to find rates significantly cheaper than those mentioned above.

Shopping around is crucial to finding the best possible deal. Compare rates from several companies to see which offers the most coverage for the lowest price. And consider choosing a higher deductible to lower monthly premiums.

If there aren’t any affordable rates at the moment, you might have to reduce coverage for a little while. But don’t forgo insurance and don’t give up. Keep shopping around every few months until something better comes up.

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