Top 10 States With the Cheapest Auto Insurance

Ten states with the cheapest auto insurance rates are Utah, Iowa, Virginia, Ohio, North Carolina, Tennessee, Wisconsin, South Carolina, Maine, and Vermont. Read more to learn how this list was compiled.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 17, 2020

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It is no secret that some states charge more, on average, for car insurance than other states. Every year or so, certain car insurance-related websites or businesses put out a list ranking the states from highest to lowest price for car insurance. The ten states that are regularly listed as the least expensive for car insurance are Utah, Iowa, Virginia, Ohio, North Carolina, Tennessee, Wisconsin, South Carolina, Maine, and Vermont.

Use the FREE online tool located above to compare car insurance rates today by just entering your ZIP code now!

It is important to fully understand how car insurance works before deciding which company to go with. You can learn more about insurance by reading through other articles on our site.

Why Some States Cost Less than Others

There are a lot of factors that determine how much car insurance costs in any given state. Some factors, like population, do not play as big of a role in determining price as one might think.

The number of insured drivers in a state does not matter nearly as much as the number of uninsured drivers.

States with a higher percentage of uninsured drivers tend to charge more for car insurance as a way to cover the cost of accidents involving uninsured drivers.

Even though some less populated states have very high insurance, Vermont is consistently the lowest priced state for car insurance. One of the things that makes this state the best deal in the country is its very low traffic volume and the fact that Vermont is not as urban as other areas. Car insurance tends to cost more in urban settings because they are more crowded, which increases the possibility for accidents. Additionally, there is a greater chance for car theft.

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The Formula Used to Make the List

The websites and companies that create these lists to determine which states have the lowest annual car insurance premium use a more complex process than people might think. The first step is to create a fictional customer. This made-up person is given all the same traits as a real customer. Some of these traits are gender, age, credit standing, and marital status, as well as how much the person drives and in what type of area.

After the person is created, a sample policy is fashioned. This is typically a well-rounded policy that includes personal injury liability coverage, property damage liability coverage, collision coverage, comprehensive coverage, and uninsured motorist coverage.

The companies making the list typically use the national average amount when deciding on the amount of each of these coverage options for the sample policy.

After the sample policy and customer are determined, their information is submitted to national leading car insurance providers for quotes.

The company that creates the list uses more well-known car insurance companies for quotes. Companies like State Farm, Nationwide, Allstate, Progressive, Geico, and Farmers are used for quotes because they are more likely to be in every state. This does not mean that there is not a better-priced agency that is a little lesser known in one of the more expensive states.

After the car insurance providers used for the quotes are chosen, the company making the list submits their customer and coverage profile in different regions throughout the states. These regions are chosen by zip code.

The made-up profile is submitted using multiple types of vehicles for each quote. After all of the quotes are received, they are averaged to determine where the states rank from most to least expensive.

How the Policyholder Affects the Premium

While the state a policyholder lives in does affect how much they will pay annually for car insurance, there are many other factors in the policyholder’s life that can affect the amount more. The two most significant are credit score and driving history.

It does not matter which state a person lives in if they have a poor driving record they will be classified as a high-risk driver and have to pay a higher amount in car insurance.

To be classified as a high-risk driver, a person usually has either a lot of accidents or moving violations on their driving record. Another way a person is classified as a high-risk driver is to have formerly defaulted on payments with another car insurance provider.

Having a good credit score is always a good way to make sure to get the best car insurance rate possible. As with many other situations, a good credit score is the best thing to have to get the best price.

Enter your ZIP code in the box below now to start comparing car insurance rates!

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