Do you think you know the state where car insurance costs the most? You may think it’s the state where you live – and you might be right, if you live in one of these 10 most expensive states for auto insurance.
The data comes from recently released research from Bankrate. Data on median car insurance (collected in June 2012) and median household income (from the 2010 U.S. Census) was gathered from all 50 states and the District of Columbia.
1. Michigan – Leading the country with the most expensive insurance costs is Michigan, ironically the birthplace of the American car industry. In Michigan, a typical household pays an incredible eight percent of annual income just for car insurance. The median household income in Michigan is $56,101. At 8.000 percent, that means Michigan households shell out a median price of $4,490 toward car insurance each year. Why such high costs for car insurance? Michigan is a no-fault state, where each policyholder is required to buy personal injury protection (PIP). Also, Michigan is the only state where PIP coverage includes unlimited lifetime medical and rehab benefits for those injured in car accidents.
2. Louisiana – The Bayou State of Louisiana is next on the list of the 10 most expensive states for auto insurance. The state has a traditional fault-based system, known as a tort system. The state has the highest rate of bodily injury claims in the nation, even though it has a fairly average number of auto accidents relative to other states. And Louisiana policyholders are more likely to hire an attorney than in many other states. New Orleans actually skews the rates for the entire state, since the home of the Mardi Gras is known to be lawsuit-prone. In Louisiana, the median household income is $52,456, of which 5.500 percent or $2,912 goes to pay for annual auto insurance premiums.
3. Kentucky – The Bluegrass State of Kentucky has the dubious distinction, along with its reputation as the home of thoroughbred racing and the Kentucky Derby, of being the third most expensive state for car insurance. Kentucky residents pay 4.548 percent of their annual median household income of $50,392 just to cover car insurance premiums. That totals some $2,292 (median annual car insurance cost).
4. West Virginia – In West Virginia, residents have a median annual household income of $48,927. They also pay a median annual price of $2,074 to cover their car insurance premiums. That equates to 4.239 percent of their household income.
5. Mississippi – Median annual prices paid for car insurance in Mississippi aren’t much better than in West Virginia, although a few dollars less probably makes a big difference. In the state, residents have a median annual household income of $45,484 and pay $1,840 annually for car insurance. This is 4.045 percent of their household income.
6. Arkansas – The percent is 3.660 in Arkansas, amounting to a median annual price for car insurance of $1,722. Median annual household income in the state is $47,049.
7. Delaware – In “The First State” of Delaware, median annual household income is $68,746, the highest thus far on the list of 10 most expensive states for auto insurance (but quite a bit less than 30th place Maryland’s $83,137). In Delaware, residents pay 3.573 percent of median annual household income, or $2,456, for car insurance.
8. New York – Residents of New York, the Empire State, have a median annual household income of $65,897, and pay $2,334 (3.542 percent) of that each year for auto insurance coverage.
9. Nevada – The farthest West state in the 10 most expensive states for auto insurance is Nevada. In the Silver State, residents have an annual median household income of $60,192. Of that, they pay a median annual price of $2,070 (3.439 percent) for car insurance.
10. Florida – Rounding out the top 10 most expensive states for auto insurance is the Sunshine State. Florida’s median annual household income is $53,093. Residents there pay 3.360 percent of that for a median annual price of $1,784 for their car insurance.