The state where you reside will be a determining factor in how much you pay for car insurance. Each state has its requirements when it comes to insuring your vehicle and this accounts for the differences in policy costs.
If your state has a competitive market in which multiple insurance providers sell policies, you will probably have more opportunities to shop around and land a better price. An example is Washington car insurance rates that are on a par or less than the national average at approximately $952.10 with U.S. News citing the national average for 2023 at $1,553.
State Auto Insurance Minimum Requirements
Every state has minimum coverage requirements and limits. The principal kinds of insurance coverage that are generally required include
- Liability insurance to cover any harm you may cause to others as well as property damage due to a car accident, with a limit per accident. Liability coverage is expressed in 3 numbers like 30/60/25 indicating $30,000 for bodily injury, $60,000 for injury per accident, and $25,000 property damage coverage per accident.
- PIP – Personal Injury protection or medical expenses coverage protects you and your passengers in an accident even if the accident is not your fault. PIP includes rehabilitation, lost wages, and services like childcare or house cleaning. 15 states make this coverage mandatory.
- UMBI – Uninsured Motorist Insurance insures you if you are injured by an uninsured driver. Underinsured motor insurance UIM is also mandatory in some states and will pay your expenses if the diver at fault for an accident does not have sufficient coverage for your injuries.
Why Does Location Matter?
Several factors influence individual state auto insurance costs. These include:
- Minimum required auto insurance with limits
A few states will only require you to acquire liability coverage for physical injury and property damage to others involved in the accident. Other states require drivers to have insurance covering medical payments, uninsured or underinsured motorist insurance, and PIP-personal injury protection.
If a state requires more coverage, your costs are going to increase. PIP coverage generally pushes up the cost significantly. A few of the more costly states like Michigan, Florida, New York, and New Jersey all require PIP coverage.
Another consideration is mandated coverage limits. Neighboring states Texas and Oklahoma are great examples of coverage limits with Texas mandating $60,000 per car accident, $30,000 for injury, and $25,000 for property, and Oklahoma requiring $50,000 per accident and $25,000 each for injury and property damage. The result is Oklahoma’s minimum insurance costs approximately $456 while Texas’s increases to $650.
- The number of total auto claims in the state and causes
The number of claims that providers must deal with can also influence the price. If your state has more claims, prices will rise. Things that influence the number of claims might include congested cities rather than rural roads, severe weather like hurricanes, flooding, tornadoes, hail, or snowstorms, and high crime rates.
- The provider’s expense of paying out claims in the state
Insurance providers also take into account how much they have to pay out for claims in specific states. Claims costs are influenced by both how much it costs to repair a car after an accident and how high medical costs are in your state of residence in the event of bodily injuries. Expensive medical care will contribute to higher insurance premiums.
If an insurance provider receives more claims in the state where you reside, you’ll most likely see higher premiums.
- Number of lawsuits
Lawsuits generally translate into higher settlements for claims filed. If your state of residence has a high number of lawsuits connected to auto insurance claims, this may result in more expensive premiums.
Car insurance by state can vary tremendously. For example, Alabama has the cheapest car insurance averaging about $79 per month while New York averages $120 monthly.
If your state is a no-fault state, your insurance company will be required to cover any damages you suffer while “tort” states permit lawsuits for damages. Other states are a mix of the two. Every state has its own rules, so you need to know what your state mandates in terms of car insurance requirements.
Fault or No-Fault?
Twelve states have no-fault insurance laws. No-fault insurance states obligate drivers to have PIP coverage and for those involved in accidents to file injury claims first with their own insurance companies. They also limit lawsuits against at-fault drivers.
States that require PIP coverage with no-fault laws include Florida, Kansas, Massachusetts, Minnesota, New York, Pennsylvania, Hawaii, Kentucky, Michigan, New Jersey, North Dakota, and Utah. Several states require PIP but do not have no-fault state laws.
Are There States that Do Not Require Auto Insurance Coverage?
Yes, but you can count them on one hand. New Hampshire only requires that you prove you can pay for damages from a car accident while Virginia gives you the option of paying an uninsured motorist fee instead of purchasing insurance. But you will be responsible for damages in the event of an accident.
Some states also permit self-insurance with a cash deposit or bond.
Save Money in Any State
While many factors that influence your car insurance premiums are beyond your control, there are some things you can do to keep your premiums down. Bundle insurance policies, improve your credit score, improve your driving record, and ask about discounts that you may be eligible for. Finally, do the homework involved in comparative shopping to find the best deal.