States With Cheapest Car Insurance in 2021

Matthew Lloyd
February 19, 2021
Matthew Lloyd

states with cheapest car insurance

Owning a car comes with certain responsibilities, with car insurance being the most important. Various factors contribute to the costs of car insurance, and the location is one of them. A fixed price across the United States doesn't exist; costs vary from one state to another. But you're probably wondering which states have the cheapest car insurance, and this post is going to answer that question. Scroll down to see the states with the cheapest car insurance.

Why do car insurance costs differ from state to state?

If you take a look at the costs of auto insurance across the country, you’ll notice one thing – the costs vary from one state to another. Why do these price-related differences happen? Various factors play a role here, such as:

  • Legal requirements – the required levels of insurance coverage may be different from one state to another. The insurance premiums depend greatly on the coverage requirements.
  • Weather – premiums are higher in states with a history of severe weather conditions. On the flip side, states with milder weather tend to have lower car insurance premiums.
  • Economy – the financial status of the state is a major contributor to the costs of auto insurance. For instance, states and areas within the states with high poverty rates, low wages, and high unemployment rates tend to have higher premiums than their more prosperous counterparts. A common belief is that premiums are lower in areas with poorer economic status. But that's a misconception because these areas often have higher crime rates. At the same time (or as a result of high prices and lower-income), drivers in those areas may be more likely to be uninsured or underinsured.
  • Traffic congestion – increased traffic congestion leads to higher premium rates. For that reason, drivers in urban areas or more densely populated states tend to pay more for car insurance.
  • Competition – annual average car insurance rates are lower in the state with a lot of competition among insurance companies. Keep in mind that not all car insurers operate in all states.
  • Taxation rates – no state openly taxes car insurance That being said, most of them do in some form. They usually refer to those taxes as fees and surcharges. In states with high taxation rates, car insurance premiums are higher. On the other hand, in states with lower tax rates, these premiums tend to be lower too.

Cheapest states for car insurance

Now that you know the factors that influence the amount of car insurance premiums let’s see the cheapest states. They are presented in the table below.

Rank

low-to-high

State

State minimum liability only

Full coverage average premium

Minimum coverage requirements

1

Maine

$312

$831

50/100/25

2

Ohio

$320

$998

25/50/25

3

Wisconsin

$330

$1,049

25/50/10

4

Idaho

$337

$1,055

25/50/15

5

Iowa

$274

$1,122

20/40/15

6

Vermont

$314

$1,123

25/50/10

7

Virginia

$398

$1,136

25/50/20

8

New Hampshire

$427

$1,137

25/50/25

9

Indiana

$372

$1,187

25/50/25

10

North Dakota

$349

$1,211

25/50/25

Now, we’ll go through each of these states in more detail.

1. Maine

Maine has the lowest car insurance premiums in the United States. As seen in the table, the full coverage insurance premium is $831 on average, which is $1,274 cheaper than full coverage in Michigan. Michigan happens to be the most expensive state for car insurance, where average full coverage costs $2,105.

Maine would be even cheaper if it weren’t for the high minimum coverage requirements. Besides the higher-than-average liability limits, Maine requires drivers to have uninsured motorist protection and MedPay coverage. Several reasons are behind low car insurance premium rates in Maine. For example, Maine is one of the least traffic-congested states in the U.S. For that reason, it’s considered a safer place to drive with a lower risk of accidents. Additionally, Maine has the lowest number of uninsured drivers at only 4.5%.

Historically low auto insurance losses in Maine have helped to keep premiums low. The car insurance market in this state is competitive, and it also contributes to low costs of coverage.

2. Ohio

The average costs of full auto insurance coverage in Ohio are around $998, which places this state among the cheapest in the country. Favorable rates of auto insurance in Ohio are down to the huge insurance industry and thereby tight competitiveness. What many people don’t know is that Ohio ranks sixth for insurance sector employment in the country. Drivers in Ohio can choose from about 250 insurers. That way, it is easier to find the most affordable insurance for your budget. Yet another factor that contributes to low premiums includes favorable minimum coverage requirements, which tend to be quite costly in Maine.

3. Wisconsin

Wisconsin is a largely rural state, and it's a major reason behind its position on the list of the cheapest states for car insurance. With an average cost of $1,049 for a full coverage premium, Wisconsin is more affordable than one of its neighbors Illinois where the average full coverage premium is around $1,400.

Being a primarily rural state, Wisconsin has fewer drivers on the road and a lower risk of accidents. However, it's also important to mention Wisconsin does have a relatively high number of uninsured drivers. About 14.3% of uninsured drivers mean Wisconsin ranks 15th in the country. This means the car insurance premiums could have been lower otherwise.

We can easily say Wisconsin is a peculiar state in terms of auto insurance premiums. We have low congestion on one side and a high rate of uninsured drivers on the other side. At the same time, Wisconsin is no stranger to serious weather conditions such as snow, flooding, and occasional tornadoes. Despite these facts, premiums for car insurance are still more affordable than in many other states. Besides low population density, the competitive car insurance industry could also contribute to affordable premiums.

4. Idaho

The primary reason behind cheap auto insurance premiums in Idaho is the age of the population. You see, men and women over 65 account for the largest section of drivers in this state. Several cities in Idaho are less populated than others, thus making commute time shorter. All this reduces the risk of accidents. And, as seen above, the risk of accidents plays a role in the costs of auto insurance premiums.

Idaho ranks fourth on the scale of the cheapest states for car insurance, with average costs of $1,055 for full coverage. Just like Wisconsin, Idaho is rural, and it is the seventh least densely populated state in the country, with about 20 people for every square mile. Costs of car insurance tend to be lower in rural and less densely populated areas than in urban places with a lot of people.

Similar to Maine, Idaho is a state which doesn’t have a lot of uninsured drivers. Idaho is in 39th place on the list of states with a number of uninsured drivers. About 8.2% of drivers on roads in Idaho are uninsured. This could also contribute to a more favorable auto insurance coverage premium.

5. Iowa

The average full coverage auto insurance premium in Iowa is $1,122, which places the state on the list of the most affordable costs for this kind of insurance. This may seem odd because Iowa is no stranger to extreme weather conditions like tornadoes. However, keep in mind that tornadoes may be a problem during certain months only while the remainder of the year has pretty low weather risks. Iowa is the 38th place on the list of states with uninsured drivers. The low uninsured drivers' rate of 8.7% is one of the other reasons behind affordable premium costs.

6. Vermont

Vermont has the second-lowest population of any state in the U.S. That means a relatively small number of drivers is on the road. Traffic is less congested, and the risk of accidents is quite low. Alongside Maine, Vermont also happens to be one of the most rural states in the country. For these reasons, the costs of full auto insurance coverage in Vermont are affordable, with $1,123 on average.

Additionally, Vermont has a low rate of uninsured drivers on the road. This state is in 45th place on the list of uninsured drivers. In other words, it’s in the top five states with the lowest number of uninsured drivers on the road. Only about 6.8% of drivers on Vermont roads are uninsured.

7. Virginia

The average cost of full coverage for car insurance in Virginia is $1,136, which is still significantly lower than premiums in Michigan ($2,105) or Florida ($2,587). That being said, Virginia stands out on this list for many reasons. For instance, Virginia is a highly populated state. That means millions of drivers are on the roads every day and the risk of accidents is higher. It also has an uninsured driver rate of 9.9%.

On the other hand, there are numerous car insurance companies in Virginia that contribute to competitiveness in this field. The competitive car insurance industry can contribute to lower premiums. Additionally, Virginia has favorable weather conditions, and it is generally not inclined to extreme conditions. That's also a good reason for lower costs of full insurance coverage. Interestingly, Virginia doesn’t require its residents to buy car insurance.

8. New Hampshire

New Hampshire is an interesting case here. Just like Virginia, New Hampshire doesn't require residents to buy auto insurance. In fact, only these two states don't have this requirement. However, while New Hampshire as a state doesn't specifically require drivers to carry car insurance, it does mandate that a driver is able to show sufficient funds to adhere to the state financial responsibility requirements. Or they can have their license suspended. Of course, the easiest and most effective way to prove financial responsibility for drivers is to get car insurance.

The average premium for full coverage of auto insurance in New Hampshire is $1,137, similar to Virginia. These costs are favorable for several reasons. New Hampshire is a competitive market that contributes to lower premiums. In terms of population density, this state is somewhere in the middle, which is a good thing for them. Since many residents live in rural areas, the roads are less congested, and the risk of accidents is quite low compared to more urban places.

Another reason behind low insurance rates is an effort to incentivize drivers to get insurance in the first place. It’s also useful to mention that 9.9% of drivers on the roads of New Hampshire are uninsured. 

9. Indiana

Indiana is, like many states on this list, primarily rural. The population density of low, which leads to less congested traffic, low risk of accidents, and thereby more affordable car insurance premiums. The average cost of full coverage auto insurance in Indiana is $1,187.

In addition to the rural population and low density, Indiana is a competitive auto insurance market. What’s more, almost 180 car insurance companies operate in Indiana. That’s quite impressive if we take into consideration its rural nature.

The costs of car insurance coverage in Indiana could have been even lower. This state has 16.7% of its drivers uninsured, which is a significant number that drives up the average cost somewhat. 

10. North Dakota

North Dakota is another sparsely populated state, and it works to its advantage with car insurance costs. Lower population density means the car insurance companies assume less risk and thereby charge less for the insurance premiums.

The average premium for full car insurance in North Dakota is $1,211, which is still more affordable than costs in neighboring states such as Montana ($1,365), Minnesota ($1,622), and South Dakota ($1,597).

On the table of states with uninsured drivers, North Dakota is in 47th place. That means it is among states with the lowest number of these cases. More precisely, only about 6.8% of drivers in North Dakota are uninsured.

How to get affordable car insurance

A wide range of car insurance companies is available to drivers across the United States. If your goal is to find the most affordable insurance coverage, you need to do a little research. First, you need to acknowledge the fact that price doesn’t always dictate quality. What you need to do is to look for insurance companies that provide the most benefits for a lower price. There needs to be a balance between the quality of service/coverage and the costs.

You may want to check with the current insurance provider to see whether they have a loyalty program. Many companies do. That way, you can get cheaper coverage or more perks just to stay with them.

It’s not always down to the prices offered by the company. You also need a clean record that shows you’re not a danger to yourself or others on the road.

The easiest way to find affordable insurance coverage is to use tools such as OfficialCarInsurance, where you can apply for quotes from multiple insurance companies. Thanks to tools like this, you get precise prices without wasting time browsing.

Conclusion

The costs of auto insurance vary from one state to another. Different factors contribute to the price, such as weather, population density, and the competitiveness of the market, among others. This post focused on the cheapest states. Use our platform to apply and get quotes for more precise info regarding your particular case.