Car insurance rates can vary so much by area that they seem almost random. However, they are very carefully calculated based on the likelihood of paying out a claim and how much that claim is likely to be on average. In addition, auto insurance is regulated at the state level, and with local rules and risk factors thrown into the mix, it is easy to see how rates can vary wildly across the country.
Have you always wondered how your state compares? Wonder no more, InsuranceQuotes.com has created a color-coded interactive map showing each state and how much each state varies from the national average rate. You may find that the results are surprising.
The highest-cost state is not in the Northeast as you might expect; it is in Michigan, where the average car insurance cost is 125% greater than the national average and far above second-place Rhode Island (44% above the average). While Michigan does have plenty of riskier metropolitan areas, the reason for the high rates is not the increased risk — it is the payout amount.
Michigan is a no-fault insurance state; therefore, each insurance company involved covers their own policyholders regardless of who caused an accident. No-fault insurance is not unique, but Michigan's is the only one that has no limit on the medical expense coverage. Insurance companies in Michigan must provide unlimited lifetime coverage for the medical expenses from auto accidents. That makes the average claim in Michigan quite expensive ($46,000 in 2013), and therefore rates are high to compensate.
Residents of North Carolina are at the opposite end of this spectrum, with rates 42% below the national average. Not only does North Carolina have significant rural areas, it also has a state-mandated cap on rates that auto insurers can charge. The insurance companies have to compete via discounts. This system keeps competition intense, and as a result, drivers in North Carolina have a dual benefit — capped rates and a greater number of available discounts.
The remaining top five cheapest states for car insurance are Idaho and Maine at 31% below the national average, Ohio at 30% below, and Wisconsin at 28% below.
Variation within a state can be significant as well, generally between sparsely populated rural counties and metropolitan areas. The largest differential within a state can be found in New York, between Chemung County (including Elmira in the south-central part of the state) and Kings County (Brooklyn). Rates in Chemung County are 23% below the New York State average, while Kings County residents pay rates 145% higher than the state average. As you might expect, the collective hazards are far greater in Brooklyn than in Elmira.
The interactive map at InsuranceQuotes.com allows you to drill down to county levels and even to zip codes to look at the differences relative to local averages. The county guide shows differences relative to the state average; the zip code map shows differences relative to the county average. In a way, these are more insightful than the state maps. Since Michigan is such a massive outlier in cost, it skews the rest of the map to make most of America look below average (the only "above-average" cost states aside from Michigan are Rhode Island, Connecticut, Delaware, New Jersey, New York, and Louisiana.
You are probably not going to move based on where you can find cheaper car insurance — but it is nice to see how your area compares locally and nationally. Regardless of the result, do not hesitate to shop around and ask for discounts to keep your auto insurance rates as low as you possibly can.