The 5 Cheapest States for Car Insurance
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Driving can be a lot of fun, but, as the saying goes, accidents happen. Thankfully, your auto insurance saves the day by reimbursing you for repairs and medical expenses in the event of a collision or other incident, helping to make you whole again and back on the road.
Though car insurance provides peace of mind for many unforeseen situations you encounter on the road, it does have a cost.
Whether you pay monthly or annually, insurance premiums vary depending on the specific plan chosen, your driving record, and your location in the U.S.
Knowing where your state stands regarding the average cost of insurance coverage could help prepare you for what to expect to pay.
What are some states with the lowest full coverage car insurance rates? What state has the cheapest car insurance?
Let's look at the five states with the cheapest car insurance.
Auto insurance basics
Auto insurance provides a financial safeguard in the event of a traffic collision or other incident, as it helps reimburse you for needed vehicle repairs and medical payments, as well as liability coverage if you're at fault.
However, not every car insurance policy is the same. Specific levels of collision coverage, comprehensive coverage, property damage liability, bodily injury liability, personal injury protection, and deductible amount all increase or decrease your premiums depending on the ones you choose.
Other factors considered in determining car insurance quotes are your driving history, the specific coverage options you choose, and where you live. Someone with a clean driving record may pay less for insurance than someone who has a history of accidents or moving violations.
Wherever you reside in the U.S., more than likely, state law requires you to have car insurance, and each has its own rules regarding state minimum coverage. The exclusions are New Hampshire, New Jersey, Texas, Florida, Massachusetts, and Virginia, where differing insurance requirements give drivers other options.
Drivers purchase car insurance policies with a selected carrier and pay monthly or annual premiums to maintain coverage.
Accident forgiveness discounts exist for safe drivers who exhibit safe driving habits.
When you buy an auto insurance policy, your carrier provides you with an insurance card to keep inside the vehicle in case of an accident. While an insurance card is a traditional method of showing proof of insurance, today, some companies provide digital versions.
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Why are there different average car insurance rates by state?
It may not make sense that insurance rates vary from driver to driver simply because they live in different states.
But several factors decide car insurance rates from state to state, and knowing them helps explain the difference in premiums.
States across the country have varying requirements for car insurance, with some not mandating coverage at all. These rules regarding levels of coverage affect how much carriers charge from one state to the next. One example where regulations cause higher premiums is Michigan, where auto insurance must provide unlimited medical benefits for injuries resulting from a collision.
The amount of traffic in a unique location also plays a part in deciding car insurance premiums. With more drivers on the road come higher accident rates, driving up the cost of car insurance in highly populated areas. Also, inner cities have higher theft and vandalism rates, further increasing car insurance pricing. Conversely, those living in rural, less-populated areas can expect to pay less for car insurance.
Some expensive states for car insurance routinely experience severe weather. If your state has a history of flooding, hurricanes, or winter weather, these weather events go into raising the cost of auto insurance. And in states with more mild conditions, insurance premiums trend lower due to less likelihood of accidents or vehicle damage.
You may also experience expensive car insurance if you live in a state with a challenging economic climate. In areas with high unemployment or increased poverty, crime increases, and there tend to be more uninsured drivers. These factors lead to increased rates in regions with poorer economic conditions.
Depending on which state you live in, the competition level between car insurance companies varies. If you live in a state with a high competition rate between carriers, you may end up paying some of the cheapest car insurance rates.
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Maine features the lowest average car insurance premiums in the U.S. At a median yearly cost of $865, Maine's insurance premiums are $456 below the national average.
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2. New Hampshire
Though car insurance isn't mandatory in New Hampshire, the state still has the country's second-lowest car insurance rates. New Hampshire comes in a close second to Maine with an average yearly car insurance cost of $850.
When ranking states with the most affordable car insurance, Ohio comes in third place. The median cost for an annual auto insurance premium in Ohio is $886.
Virginia is a highly competitive market for insurance companies, with more than 300 providers vying for drivers' business. Consequently, Virginia drivers pay the fourth-lowest insurance rates in the U.S., at an average of $991 per year.
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Coming in at fifth in the lowest auto insurance rates by state, Wisconsin drivers pay an average annual premium of $998.
Cheapest states for car insurance in summary
Remember, several factors go into deciding your car insurance premiums, like driving history and coverage limits. But the state in which you live also plays a role.
Whether you live in a state that experiences severe weather or one with congested roadways, insurance carriers charge different rates depending on the traits of your specific location.
If you live in a state that features many insurance companies competing for people's business, you can expect to pay lower rates compared to other areas. Or, if you live somewhere rural with fewer people on the road and subsequently a lower accident rate, your insurance premiums will be correspondingly lower.
However, residents of Louisiana, Michigan, Florida, California, and Missouri can expect to pay among the highest insurance premiums in the country.
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All prices are based on vehicle availability and pricing as of
April 15, 2022
Pricing shown is not guaranteed and does not include taxes or other product fees.