10 cheapest U.S. states to buy auto insurance

When it comes to auto insurance rates, where you live matters.

The difference between the highest and lowest average annual premiums in the U.S. is $2,120, according to a recent Bankrate study that ranks states based on the “true cost” of car insurance.

The study’s true cost ranking is derived from the average total percentage of income spent on car insurance, based on the average income in each state, not just the average amount spent on premiums. Since average income varies by tens of thousands of dollars between states, the ranking aims to be a better reflection of the burden to driver’s overall budgets.

Using this metric, the average cost of car insurance in the United States is 2.57% of an American driver’s annual income, with an average annual premium of $1,771 per year.

Below, check out the 10 cheapest states for annual auto insurance rates, with rankings based on their “true cost.”

10. Wisconsin

  • Average percentage of income spent: 1.87%
  • Average annual cost: $1,249

9. Utah

  • Average percentage of income spent: 1.85%
  • Average annual cost: $1,449

8. Idaho

  • Average percentage of income spent: 1.68%
  • Average annual cost $1,065

7. Washington

  • Average percentage of income spent: 1.60%
  • Average annual cost: $1,313

6. Vermont

  • Average percentage of income spent: 1.48%
  • Average annual cost: $1,000

5. New Hampshire

  • Average percentage of income spent: 1.47%
  • Average annual cost: $1,182

4. Virginia

  • Average percentage of income spent: 1.46%
  • Average annual cost: $1,340

3. Massachusetts

  • Average percentage of income spent: 1.45%
  • Average annual cost: $1,296

2. Maine

  • Average percentage of income spent: 1.44%
  • Average annual cost: $876

1. Hawaii

  • Average percentage of income spent: 1.41%
  • Average annual cost: $1,206

The ranking also reflects the many factors that contribute to auto insurance rates in each state, including your age, the car you drive, your driving record, your credit score (in most states), the length of your commute and even local weather conditions. 

Drivers in Louisiana and Florida spend the highest share of their income on auto insurance: 5.26% and 4.42%, respectively. These rates are comparatively higher since these states have relatively low median incomes compared to other states. Weather could also be a factor, since hurricanes and flooding are common in both states, says Lizzie Nealon, the author of the report.

Other factors are at play, to varying degrees, as well. 

On average, U.S. drivers with excellent credit scores pay almost $1,500 less compared to those with poor scores, according to Bankrate’s data, but that can vary by state. In California, Hawaii and Massachusetts, insurers aren’t allowed to use credit scores to determine their rates.

Bad driving has wide-ranging impact too. Drivers that cause a car accident pay an average annual premium of $2,521 in the U.S., but that can be much higher depending on where you live. In New York, for instance, the average annual rate is $3,239 for drivers who have caused accidents.

What you can do to keep rates down

Next Post

A sense of pessimism rises as inflation becomes the main concern for small-business owners

Tue Apr 12 , 2022
Small-business owners are more pessimistic about the economy than they have been in decades, according to the Small Business Optimism Index released Tuesday by the National Federation of Independent Business. The index was down by 2.4 points in March, the third monthly drop in a row. And the percentage of […]
A sense of pessimism rises as inflation becomes the main concern for small-business owners

You May Like