Car insurance rates in most states continue to rise as claims, administrative costs, and advertising costs eat into insurers' bottom lines (find out which states are hit the hardest in The Top 5 States with the Highest Auto Insurance Rates). But they remain relatively low in some parts of the country.
We wanted to identify the lowest rates and while conducting our research we discovered that many organizations do not agree on which states have the most affordable auto insurance.
Where We Got Our Numbers
We reviewed rates from five organizations:
We found that two of them – Insure.com and Insurance Business America – arrived at very similar results. Insure.com is an aggregator that generates online leads to insurance agents and Insurance Business American is a national magazine that provides industry information for members of the industry.
Both organizations also posted similar figures for the average cost of an insurance policy across the nation: $1,325.
The States with the Lowest Car Insurance Rates
According to our two sources, here are the five states with the most affordable car insurance.
1. Maine: $808The state of Maine has remained in the number one spot for two consecutive years. It comes in toward the bottom of the pack for uninsured drivers, which helps keep claims costs spread appropriately.
The state is also low on the list for natural disasters because, while it does have winter storms, it doesn't have to deal with the likes of tornadoes, hurricanes, and hailstorms (to find
out more about how natural disasters can affect your premiums, see 5 Ways Climate Change Can Affect Your Home Insurance Policy).
Other favorable factors like a small number of large urban areas ensure that the number of claims are low and, as a result, so are the rates.
2. Ohio: $900
Drivers in Ohio continue to benefit from stiff competition between the 670 insurance carriers fighting for every insurance dollar available.
The Ohio Department of Insurance is considered "consumer friendly" and is an intense advocate for rate justification, which makes it difficult for insurers to file "knee-jerk" rate changes in reaction to perceived losses.
3. Wisconsin: $912
The state's primarily rural environment significantly contributes to better car insurance rates for Badger State drivers. States with few major cities, like Wisconsin, typically have a reduced number of car accidents.
Reports also indicate that Wisconsin residents are less litigious than other states, resulting in lower rates from grateful insurers which contributes to Wisconsin drivers paying 31% less than the national average (but if you do get sued, see Insurance and Lawsuits to find out what will happen next).
4. Idaho: $935
In the Western United States, Idaho drivers are getting the better bargain when it comes to their average cost for car insurance. Being a very rural state is one factor that keeps insurance rates low. Another is how responsible Idaho drivers are: only 7% of them are uninsured, compared to the national average of 13%.
5. New Hampshire: $941
New Hampshire drivers should certainly be delighted to be paying 29% less than the national average for car insurance.
It is one of only two states that doesn't require drivers to carry auto insurance. They do, however, require vehicle owners to provide proof that they have the financial means to cover the injuries and physical damage that could result from an at-fault accident within the state. This unusual rule, however, doesn't apply in other states so it could lead to serious problems when drivers cross state lines.
The methodology is certainly important when it comes to establishing insurance rates on a state-by-state basis. For those interested, here is the one that is behind the data discussed in this article.
We relied on information provided by Quadrant Information Services, rather than the National Association of Insurance Commissioners, to get a more typical picture of insurance policies sold in the US. The policy data is based on a 40-year-old single male with good credit and a clean driving record. The coverage is for liability limits of 100/300/50 and comprehensive and collision deductibles of $500. The policy also included uninsured motorist coverage and was based on the most popular sedans sold in the US.
Insurance rates across America differ significantly state by state. Some states require higher limits than others and states that have no-fault laws will require Personal Injury Protection (PIP), which can be expensive depending on the state where your vehicle is registered.