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The top three states with the best car insurance rates this year are Maine, South Carolina, and Vermont. However, there is some variation in this list from year to year. Sometimes you will find Vermont, Iowa, Ohio, Wisconsin, or South Carolina in the top three spots for the lowest cost of coverage nationwide.
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Knowing the states with the best car insurance rates is interesting information. It helps you better understand the factors at play in car insurance rate setting. States with the lowest rates for coverage are often called the best car insurance rates, but in reality, the lowest rates are not always the best ones. Know why some states are cheaper than others are, but also know how to get the best rates for your insurance needs.
Why Some States are Cheaper for Insurance
There is a wide variety of reasons that some states are much cheaper than others for car insurance rates. Because there are so many different factors that are taken into consideration, you may find that the states listed with the best and worst car insurance rates are somewhat surprising. Those with similar costs of insurance are not in the same part of the country nor do they have similar demographics.
Yet, many of the cheapest states do have a variety of similarities. They are geographically sparsely populated, with most of the state being very rural. This means less crime and fewer cars on the roads causing accidents. Densely populated areas typically have higher car insurance rates.
Another factor is the incidence of extreme weather. If a state is rarely affected by extreme weather like hurricanes, tornadoes, flooding and earthquakes, it is less likely to have large-scale claims. Such states are commonly found amongst those with the best car insurance rates, unlike states like Louisiana, Oklahoma, California, Florida, and Mississippi.
The minimum limits of coverage mandated by the state will also affect the cost of insurance to some degree. However, there is a wide variation in the amount of coverage required in the top 10 states with the best car insurance rates, which downplays the importance of this factor. Other considerations include the cost of underwriting, the percentage of uninsured motorists, and the cost of auto repairs in that state.
Lawsuits and the Rise in Car Insurance Rates
Lawsuits over bodily injury from car insurance accidents are one of the leading factors that contribute to the high cost of car insurance rates. Michigan is often most expensive states for car insurance but it also guarantees unlimited personal injury protection for anyone hurt in a car accident.
In Louisiana, another of the most expensive states, lawsuits over bodily injury typically get high jury verdicts. States like Vermont, which are commonly amongst the cheapest for coverage, do not have high rates of lawsuits for car accidents.
Motor Vehicle Theft and Car Insurance Rates
Amongst the states with the lowest incidences of motor vehicle theft, according to the Insurance Information Institute, are Vermont, Wyoming, South Dakota, North Dakota, New Hampshire, and Maine. While this low number of car theft certainly contributes to keeping the cost of car insurance down in Maine and Vermont, it is not the only factor considered, because the other four states have much higher rates.
No-Fault Auto Insurance and Car Insurance Rates
Many states in the country have some version of no-fault auto insurance. This does not seem to adversely affect the cost of car insurance. The most expensive auto insurance state in the country has no-fault insurance and only one other no-fault state falls in the top 10 most expensive.
In the least expensive car insurance states there are three no-fault states, but none of these are the top three states for rates.
Personal Factors and Car Insurance Rates
While living in a state that has low car insurance rates is very helpful to getting a good deal on the coverage you need, your driving record is still a major factor for the actual price you will receive for your coverage. Tickets, driving felonies and traffic accidents add up and make your rates rise. If you are looking to keep the cost of car insurance low, break your bad driving habits and keep your driving record clean.
Other things that will impact your car insurance rate include your car and how much you use it. The make, model, and year of your vehicle are considered in the underwriting of your policy. Vehicles that are very expensive, rare or are considered sports cars will be much more costly to insure than others will. The annual mileage you put on your car affects the rate also so the fewer miles you drive, the better your rates should be. If your car is used for business instead of just personal use, you will also pay more.
Demographics like your age, gender, and marital status also affect your car insurance rates. Young, inexperienced drivers will pay much more for car insurance than older, experienced drivers. Males have higher rates than females. Married people pay less than single individuals do.
Your insurance history also influences your present rates. If you:
- Have had a period of time when you did not carry car insurance, your rates will be higher
- Have ever had a policy cancelled because you did not pay your premiums or you lied on an application, you will also encounter higher rates
- Make a higher than usual number of claims on your car insurance, you will also find that your rates are higher
Credit scores are one controversial area when it comes to car insurance rates. Some states have banned the use of this information in rate setting while others have not. Some insurers do indeed use it to set car insurance rates.
Check Out the Insurer
When you are looking around for your next car insurance policy, it is important to check out the companies that you are considering. While there are some big names in the insurance industry that are well-known, there are also many smaller, lesser-known companies out there. This is particularly true for states that have some of the best car insurance rates because competition is so greatly encouraged in those states.
When you shop around and get a variety of car insurance quotes to compare, it is important to do some homework. Once you have narrowed down your choices based on price and coverage, you will need to find out about the companies’ reputation in regards to customer service and how financially strong it is. Luckily, this information is readily available online for you.
To see how an insurance company treats its customers, you have several options. Your state’s department of insurance likely maintains a database containing information about complaints against each company and how they are resolved. This information is usually available to the public. You can also do an online search for reviews and complaints about a company by name, which will typically provide you with lots of data.
There are organizations that exist in order to compile information on other companies.
The Better Business Bureau is one of these and can provide you with the information you are looking for. In addition, J.D. Power and Associates puts together a yearly study of car insurance providers, based on information from actual clients. This is one of the most reliable sources of information out there when it comes to comparing insurance companies.
To learn about the financial strength of the insurer you are considering, get their rating from one of the independent insurance ratings companies, like A.M. Best or Moody’s. These organizations assign grades to insurers based on careful study of their financial data. Select companies with an A or better rating when possible in order to be confident in their abilities to meet their financial commitments.
When you have taken the time to compare coverage, cost, customer service reputation, and financial solidity, you can be sure that you are making a well-informed decision regarding your car insurance needs.
Regardless of whether your state is among the best or the worst for car insurance rates, your actions can insure that you have the best coverage possible for you.
No one factor can be accounted for when it comes to predicting the three top states with the best car insurance rates. It is a combination of:
- The cost of living for that state
- Its insurance laws
- Its incidence of loss
- The density of its population
- How often it gets extreme weather
While the information about where your state falls in terms of average rates is interesting, in reality, it is not enough to make people want to move for the savings. Do what you can to control your own car insurance costs.
Find out exactly how much your best car insurance rates cost by typing your ZIP code in the FREE tool on this page and begin your quote now!