Car insurance rates vary significantly by state and metropolitan area, according to a BankRate report.
The report ranks the “true cost” of insurance based on state. True cost is determined by the average total percentage of income spent on car insurance, the report said, and not average premiums.
As a result, the higher a state’s ranking, the higher its true cost of car insurance.
Nationally, the average annual premium is $1,771, according to the report, and the percentage of income spent is 2.57 percent.
Here are the 10 most affordable states for annual auto insurance rates, with their percentages of income spent:
- Hawaii: 1.41 percent
- Maine: 1.44 percent
- Massachusetts: 1.45 percent
- Virginia: 1.46 percent
- New Hampshire: 1.47 percent
- Vermont: 1.48 percent
- Washington: 1.60 percent
- Idaho: 1.68 percent
- Utah: 1.85 percent
- Wisconsin: 1.87 percent
Meanwhile, Florida ranked No. 49 and Louisiana was No. 50, with 5.26 percent and 4.42 percent, respectively.
According to the report, these states might experience such high costs because hurricanes and flooding are common, and they both have relatively low median incomes so more of their budget goes toward car insurance.
Individual car insurance rates depend on personal factors, including vehicle make and model, driving record, and credit score in some states.
In the states that do factor in credit score, drivers with excellent credit pay an average of $1,500 less than those with poor scores.
The report concluded that inflation may continue to push premiums higher, due to the higher prices of car repairs and replacements.
Additionally, supply chain issues are pushing car parts on backorder for weeks, experts say.
However, the way insurance companies are calculating premiums is evolving, according to the report, with some companies using artificial intelligence for better accuracy.
Experts say the main problem lies with prices increasing faster than incomes, but overall, consumers also have more control over their premiums than they might think.
Having a great driving record helps, experts say, but if someone is struggling in this area, they can ask their insurer for ways to earn discounts through driver safety courses or other programs.
According to experts, the bottom line is to chat with multiple agents to find the best rate, and to ask questions about potential discount options.
Additionally, experts say it’s important for drivers to stay on top of their improved credit scores or better driving habits, and shop around for a new rate periodically.