10 cheapest U.S. states to buy auto insurance
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Where you live is crucial when it comes to your auto insurance rate.
According to recent research, the difference in annual average premiums between the U.S.’ highest and lowest is $2,120. Bankrate studyThis ranking is based upon the “true price” of auto insurance.
Study’s real cost ranking derives from average income per capita. This is not the amount that was spent on premiums, but the total income for each state. Because the average income can differ by thousands of dollars among states, this ranking attempts to better reflect the driver’s burden.
This means that car insurance costs in America are 2.57% of an American’s average income. An average American driver pays $1,771 annually.
Check out these 10 states with the lowest annual auto insurance rates. Rankings are based on “true cost”.
10. Wisconsin
- Average percent of income spent: 1.87%
- Cost per year: $1,249
9. Utah
- Average percent of income spent: 1.85%
- Cost per year: $1,449
8. Idaho
- Average percent of income spent: 1.68%
- Cost per year average $1,065
7. Washington
- Average percent of income spent: 1.60%
- Cost per year: $1,313
6. Vermont
- Average percent of income spent: 1.48%
- Cost per year: $1,000
5. New Hampshire
- Average percent of income spent: 1.47%
- Cost per year: $1,182
4. Virginia
- Average percent of income spent: 1.46%
- Cost per year: $1,340
3. Massachusetts
- Average percent of income spent: 1.45%
- Cost per year: $1,296
2. Maine
- Assimilation of the average percent income spent: 1.44%
- Cost per year: $876
1. Hawaii
- Average percent of income spent: 1.41%
- Cost per year: $1,206
It also considers the various factors that influence auto insurance rates, such as age, car, driving record, credit score, length of commute, local weather, and other variables.
The highest percentage of income spent on auto insurance by drivers in Louisiana and Florida is 5.26% and 4.2% respectively. The rates in these two states are significantly higher because they have lower median incomes than the rest. According to Lizzie Nealon (author of the report), weather can also play a role in the rates. Both states are prone to flooding and hurricanes.
There are other factors that can also play a role, in varying degrees.
Bankrate data shows that drivers who have excellent credit scores in America pay $1,500 less than drivers with lower scores. But, it can vary from state to state. California, Hawaii, and Massachusetts don’t allow insurers to use credit scores for determining their rates.
Bad driving also has a broad impact. In the United States, drivers who cause an accident in a vehicle are subject to an annual average premium of $2.5221, although it can vary depending on your location. Drivers who cause accidents are subject to an average annual premium of $3,239 in New York.
How to lower rates
“If you’re a driver in Louisiana, you’re living there, you’re probably working there — it’d be pretty hard to just uproot and move to Hawaii, where it’s the cheapest,” says Sarah Foster, a Bankrate analyst who worked on the study.
Foster notes that some costs are out of your hands. The best way to reduce your rate is to drive safely and maintain a high credit rating, especially for the most states in which it is used to calculate your auto insurance rate.
You should also consider obtaining a new policy from time to time. Foster says drivers forget to compare rates regularly, especially when their credit scores have improved. However, insurance companies won’t always adjust rates prior to renewal. It’s up drivers to make sure they do.
Foster says, “Even if your credit score has not changed in any way it’s a good idea for you to shop around for insurance that could cost hundreds less elsewhere.” When inflation has reached a high of 40 years, no one enjoys overpaying for anything.
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