Auto insurance is mandatory in all states except Vermont, and low-to-moderate income drivers often find the premiums difficult to afford, according to the Consumer Federation of America.
Since insurance carriers are not often transparent about their rates or how they set them, MoneyGeek commissioned insurance industry data from Quadrant Information Services to analyze and figure out ways that consumers can find the best quotes.
Compare Auto Rates in Your State
For this study, MoneyGeek requested Quadrant data on annual car insurance premiums across 50 states and the District of Columbia, which the MoneyGeek team used to run a series of analyses across different driver profiles, vehicle types, coverage limits and other policy variations. Quadrant’s data covers 4 to 6 of the largest providers in each state.
Among the findings:
- Choosing the lowest cost carrier can save drivers thousands of dollars on their annual premium. In California, for example, the highest minimum policy for a married couple with a teen driver is a $4,089 policy from Farmers Insurance. The lowest minimum policy is a $1,664 policy from Mercury – a savings of more than $2,300 a year
- The highest yearly auto insurance premiums for a family can be more than some families’ entire income. In California, the highest maximum yearly premium for a married couple with a teen driver is $29, 873 (from Farmers). The lowest maximum premium for a family with a teen driver is $10, 040 (from Mercury). Compared to Farmers, that’s a savings of nearly $20,000 a year.
- One of the poorest states in the country, Louisiana, has unusually high auto insurance premiums. The median income for Louisiana is just over $40,000 a year, but the lowest premium for a Louisiana family with a teen driver is $2,175 – more than twice as much as drivers pay in states such as Texas, Wisconsin and Iowa.
- And that’s not all – the average jump in a family’s premium when adding a teen driver in Louisiana is $3,790 – a more than 159 percent hike.
- Parents can save if their teen earns a B-plus average at school or takes a defensive driving class — that will knock $328 off the yearly premium in New York and nearly $900 off in Louisiana, for example — but that’s not where the biggest savings lie.
- Flashy cars mean skyrocketing insurance premiums. The insurance data showed that in every state, owning a sports car drove up auto insurance premiums by hundreds to thousands of dollars. The reason, according to insurance experts we interviewed: Insurers associate sports cars with speeding and reckless driving.
- The year and make matter, too. In Texas, if you own two 2008 Town and Country minivans instead of two 2014 Mustang GTs, you’ll save an average of $2,600 a year on your car insurance premiums.
- Keeping a clean driving record will help keep costs down, especially for males. If a male teen, for example, gets even one speeding ticket in California, MoneyGeek found that the family premium will jump by an average of $1,242 a year. DUIs and distracted driving tickets can drive it up still more.
- Some relief for families is in sight. When teens go to college, premiums often drop significantly. In Florida, for example, parents of a teen driver see an average decrease of $1,044 – a 26 percent reduction.
- It pays to comparison shop, even if you’re in the military. In California, for example, Allstate, State Farm and Mercury all have lower minimum rates than the military carrier CSAA.
- Drivers can compare rates among the 4 to 6 leading carriers in their own state.
Look for your state here.
MoneyGeek analyzed insurance premiums for each of the 5 leading insurance providers in the 25 most populous cities and towns in each state and the District of Columbia. The top 5 insurance providers were determined by the total premiums written in each state and Washington, DC.
In this study, Quadrant Information Services provided data on annual car insurance premiums across 50 states and the District of Columbia, which the MoneyGeek team used to run a series of analyses across different driver profiles, vehicle types, coverage limits and other policy variations. Quadrant’s data covers the 4-6 largest providers in each state.
All told, MoneyGeek analyzed more than 2.7 million car insurance policies across the United States. Policy variations were kept consistent across cities and states, and the demographic mix as well as the distribution of policies throughout the population were held constant to enable direct comparisons.
Teens/High School Drivers
In this section, we compared specific policies for a 50-year-old married couple against the same policy choices for a 50-year-old married couple with a 16-year-old driver on their policy. All totaled, we examined 24 specific policy choices that might increase or lower the annual premium for the couple with the 16-year-old teen, such as speeding tickets, the age and gender of the drivers, the vehicle model and year and driving discounts.
For a married couple with a 19-year-old driver, we examined 384 unique policy variations, including deductibles and vehicle model and year. We compared two different sets of policies – one for a 50-year-old married couple with a 16-year-old driver and another for a 50-year-old married couple with a 19-year-old driver. We also analyzed annual premium increases and decreases across policy variations for the married couple with the 19-year-old driver, such as distance from home, deductibles and vehicle model and year.
For a single driver employed by the military, we looked at 16 unique policy variations, including age and gender. We compared policies for a single driver with standard civilian employment against policies for a single driver employed by the military. We also evaluated annual premium increases and decreases for both male and female military drivers across different age groups and looked at how vehicle model and model year affected premiums.
For more on auto insurance, visit MoneyGeek’s car insurance hub.