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Car insurance premiums are a part of life for nearly 230 million American drivers. The cost of auto premiums can vary widely, not only from person to person, but also much more broadly, such as the state where you drive.
While there are many other variables that affect an individual's insurance premium, according to the National Association of Insurance Commissioners (NAIC), there are three that are correlated with the state in which you drive. Those are:
- Percentage of total miles driven on highways: A higher percentage means less time on more accident-prone local roads. Nationwide, 86% of all driving miles are on highways and interstates.
- Average disposable income: In other words, what's left after taxes but before you start paying bills. Higher average disposable income tends to result in higher average premiums. Nationwide, as of the third quarter (Q3) of 2021, the average personal income is $62,866, according to the Bureau of Economic Analysis.
- Urban population: States with a higher percentage of urbanites tend to have higher traffic densities—which means more cars on the road at any given time—than more rural states. Higher density can mean more potential for accidents.
For this analysis, we looked at Q3 2021 personal income data from the Bureau of Economic Analysis and the most recent U.S. Census Bureau population density data from 2020. Auto insurance premiums were provided by insurance marketplace Gabi®, a part of Experian, which used actual insurance policies sold in the three years preceding September 2021 to calculate the average premium their customers paid in each state annually. Average FICO® Scores☉ are based on Experian data as of September 2021.
States With Higher Than Average Auto Premiums
Nationwide, according to data from Gabi, the average annual premium for policies they brokered cost drivers an average of $1,951 as of mid-2021. Using Gabi's data, we compared the rates the users paid on average for auto insurance premiums in states with the three variables above. Here's what we found.
Six of the 10 most expensive states for auto insurance premiums were also among the 10 highest in population density. Only Louisiana was a state with both a top-10 premium cost and a population density in the bottom half of the Census Bureau's density ranking. (We also found that the opposite held for most inexpensive states for auto insurance.)
Similarly, six of the 10 states have a high percentage of urbanites. As defined by the Census Bureau, 81% of Americans live in urban areas.
Average disposable income wasn't as obvious a factor, at least on the state level. Only four of the 10 most expensive states for auto insurance premiums—all in the Northeast Corridor—were states with average incomes higher than the national average. States with lower average incomes, like Georgia, Louisiana, Michigan and South Carolina, also have some of the highest premium costs.
The 10 Most Expensive States for Car Insurance
1. Delaware
- Average annual auto insurance premium: $2,703
- Average FICO® Score: 714
- Average personal income: $58,891
- Population per square mile rank: 7
2. Louisiana
- Average annual auto insurance premium: $2,569
- Average FICO® Score: 689
- Average personal income: $54,137
- Population per square mile rank: 27
3. New York
- Average annual auto insurance premium: $2,566
- Average FICO® Score: 722
- Average personal income: $78,817
- Population per square mile rank: 8
4. Georgia
- Average annual auto insurance premium: $2,544
- Average FICO® Score: 693
- Average personal income: $54,320
- Population per square mile rank: 18
5. Maryland
- Average annual auto insurance premium: $2,511
- Average FICO® Score: 716
- Average personal income: $69,934
- Population per square mile rank: 7
6. Michigan
- Average annual auto insurance premium: $2,497
- Average FICO® Score: 719
- Average personal income: $55,174
- Population per square mile rank: 19
7. New Jersey
- Average annual auto insurance premium: $2,350
- Average FICO® Score: 725
- Average personal income: $78,035
- Population per square mile rank: 2
8. Florida
- Average annual auto insurance premium: $2,343
- Average FICO® Score: 707
- Average personal income: $59,064
- Population per square mile rank: 9
9. Rhode Island
- Average annual auto insurance premium: $2,321
- Average FICO® Score: 723
- Average personal income: $64,020
- Population per square mile rank: 3
10. South Carolina
- Average annual auto insurance premium: $2,164
- Average FICO® Score: 693
- Average personal income: $49,792
- Population per square mile rank: 20
Other Factors to Consider
While auto insurers in many states can consider credit scores when determining when or if they'll insure your vehicle, they use a credit-based insurance score, rather than the FICO® Score or VantageScore® you may be familiar with. Instead of being designed to determine the likelihood you'll miss payments or default, these scores aim to determine how likely you are to file a claim. Rates policyholders pay depend in part on how well they manage their existing credit accounts.
Geography is certainly a factor when it comes to auto premium pricing. Indeed, your ZIP code may matter as much, if not more, than your state when purchasing auto coverage. Crime rates for theft and vandalism vary much more by ZIP code than they do by state, for example. Consequently, so may your auto premiums. However, an individual's driving experience, number of accidents, amount of coverage purchased, as well as type and age of the insured vehicle are at least as important when determining the premium you'll pay.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.