10 cheapest US states to buy auto insurance

When it comes to auto insurance rates, where you live matters.

The difference between the highest and lowest average annual premiums in the United States is $2,120, according to a recent Bankrate study that ranks states based on the “true cost” of auto insurance.

The study’s true cost ranking is derived from the average total percentage of income spent on auto insurance, based on the average income in each state, not just the average amount spent on premiums. Since average income varies by tens of thousands of dollars between states, the ranking is intended to be a better reflection of the burden on a driver’s overall budgets.

Using this metric, the average cost of auto insurance in the United States is 2.57% of an American driver’s annual income, with an average annual premium of $1,771 per year.

Below, check out the 10 cheapest states for annual auto insurance rates, ranked based on “true cost.”

10. Wisconsin

  • average ratio Income spent: 1.87%
  • Average annual cost: $1249

9. Utah

  • average ratio Income spent: 1.85%
  • Average annual cost: $1,449

8. Idaho

  • average ratio Income spent: 1.68%
  • Average annual cost $1065

7. Washington

  • average ratio Income spent: 1.60%
  • Average annual cost: 1313 USD

6. Vermont

  • average ratio Income spent: 1.48%
  • Average annual cost: 1000 dollars

5. New Hampshire

  • average ratio Income spent: 1.47%
  • Average annual cost: USD 1182

4. Virginia

  • average ratio Income spent: 1.46%
  • Average annual cost: $1340

3. Massachusetts

  • average ratio Income spent: 1.45%
  • Average annual cost: $1,296

2. Min

  • average ratio Income spent: 1.44%
  • Average annual cost: $876

1. Hawaii

  • average ratio Income spent: 1.41%
  • Average annual cost: 1,206 USD

The ranking also reflects many factors that contribute to auto insurance rates in each state, including your age, the car you drive, your driving history, your credit score (in most states), the length of your commute, and even local weather conditions.

Drivers in Louisiana and Florida spend the largest share of their income on auto insurance: 5.26% and 4.42%, respectively. These rates are relatively higher because these states have a relatively low average income compared to other states. Weather can also be a factor, because tornadoes and floods are common in both states, says Lizzie Nealon, the report’s author.

Other factors come into play to varying degrees as well.

On average, American drivers with excellent credit scores pay nearly $1,500 less than drivers with poor credits, according to Bankrate data, but this can vary by state. In California, Hawaii, and Massachusetts, insurance companies are not allowed to use credit scores to set their rates.

Bad driving has a widespread effect, too. Drivers who cause a car accident pay an average annual premium of $2,521 in the US, but that can be much higher depending on where you live. In New York, for example, the average annual rate is $3,239 for drivers who cause accidents.

What you can do to keep rates low

“If you’re a driver in Louisiana, you live there, you probably work there — it’s going to be very hard to uproot and move to Hawaii, as it’s the cheapest,” says Sarah Foster, Bankrate analyst. who worked on the study.

Since some of the cost is out of your control, the best way to keep rates low is to maintain good driving habits and keep your credit score as high as possible, especially in the majority of states where it is used to determine your auto insurance rate, Foster says.

It’s also worth considering a new policy every now and then. Drivers often forget to shop periodically for new rates, especially if their credit score has improved, Foster says. But insurers won’t necessarily adjust their rates before the renewal date, so it’s up to drivers to stay on top of their own policy.

“Even if the credit score is absent of any kind of change, it’s always a good idea to shop around and make sure you don’t pay extra for insurance that you might get hundreds of dollars less elsewhere,” Foster says. “No one likes to pay more than anything when inflation is at its highest level in 40 years.”

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