Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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: Jun 10, 2020

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There are many websites and organizations that like to make lists ranking how expensive car insurance is in each state. On average, the

Top Ten most expensive states are:

  • Michigan
  • Louisiana
  • Oklahoma
  • Montana
  • Washington, D. C.
  • California
  • Mississippi
  • New Mexico
  • Arkansas
  • Maryland

Start comparing car insurance rates today by typing your ZIP in the box above now!

There are many components considered when someone creates one of these lists. Some lists rank the most expensive states based on how much insurance coverage is actually bought in that state, but this is not an accurate method to determining which states actually charge more for insurance.

In some states, especially more rural states, people tend to buy less coverage, but it actually costs more than it would in a more urban area. To learn more go to the website of the National Association of Insurance Commissioners.

Table of Contents

How the List Is Made

When a company or website compiles one of these lists, they begin by creating a sample customer to use for the quoting process.

The sample customer is given a gender, age, marital status, and a good credit history, and assigned an average daily commute.

Once the sample customer is created a sample policy is made. An example of a well-rounded sample policy is injury liability coverage for one person in the amount of $100,000, $300,000 coverage for injuries to all other people, property damage liability coverage of $50,000 for each accident, uninsured motorist coverage, and collision and comprehensive coverage.

Once this pretend policy and policyholder are created, the information is then submitted to car insurance providers for a quote. Quotes are usually sought from the leading insurance companies since they tend to have a presence in all states, while many other car insurance providers can be limited by region.

Some of the leading car insurance providers used for quotes are Geico, Allstate, Nationwide, Farmers, Progressive, and State Farm.

Once the pretend policy and policyholder are made and the car insurance companies are chosen, the information is then submitted for quotes. Quotes are received from companies throughout the state, usually at least ten separate regions determined by zip code.

Quotes are submitted using multiple different cars, usually more than one thousand, so a clearer picture of insurance costs is made obvious. Once these quotes are averaged the states are ranked by their average annual premium cost.

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Why Car Insurance Rates Are Higher in Some States

A person might think that car insurance rates would always be higher in cities than in the country or states with a higher general population would charge more than less populated states, but this is not always the case.

A state such as Montana have a very low population compared to a state like California, but on average its car insurance costs more because it has a higher rate of uninsured drivers.

The insured drivers have to pay more on average to cover the costs caused by accidents involving uninsured drivers.

A rural town with only a few main roads has a higher chance of accidents than a moderately sized city with more roads, so the insurance there would be higher. The reason Michigan is ranked so high is because Michigan is the only state that does not have a cap on the personal injury protection payments made to people injured in car accidents.

A state agency starts to make these payments after the insurance company reaches its cap, which tends to be around $500,000 plus the damage costs and three years of lost wages payments. These extra payments are funded by car insurance premiums.

Louisiana has higher car insurance premiums because this state has, on average, more car-related litigation, which costs the car insurance companies more than in other states. Therefore, the companies charge more to offset the extra costs. Oklahoma has higher rates because of the more volatile weather. The constant windstorms, tornadoes, and ice storms cause more car damage-related costs than a state with more calm weather like Oregon.

How the Policyholder Influences Car Insurance Rates

While the state a policyholder lives in has an effect on their car insurance rates ultimately it is the policyholder themselves that determine how much the cost will be. Some of the factors are in the policyholder’s control, but some really are not.

While age, gender, location, and marital status are things that are not so much in the absolute power of the policyholder, the two main components of car insurance rates are. These two things are credit score and driving history. The best way to ensure that a policyholder will get the best prices available is by having great credit and very few accidents.

Use the FREE tool below now to compare car insurance rates! Just enter your ZIP!