The Most & Least Affordable Auto Insurance In the US

As per a study conducted by the Insurance Research Council (IRC), the US state with the least affordable auto insurance has premiums that are three times higher than the state with the most affordable rates. 

 According to the IRC’s study, “State Variations in Auto Insurance Affordability,” the three least affordable states for personal auto insurance, based on expenditures as a percentage of median household income, are: 

• Louisiana (3.01%) 
• Florida (2.42%) 
• Michigan (2.33%) 

 Meanwhile, the states with the most affordable auto insurance according to the same metric are:

• Hawaii (0.95%) 
• New Hampshire (0.99%) 
• North Dakota (1.00%) 

It was noted that the affordability gap between Louisiana and Hawaii is threefold. 

The study also concentrated on the key cost drivers that influence insurance pricing. These costs include accident frequency, repair costs, injury claim frequency, medical utilization, attorney involvement, claim abuse, uninsured motorists, and litigation climate. 

According to IRC, auto insurance expenditures averaged 1.93% of household income in the 1990s. It fell to 1.70% in the 2000s, then to 1.60% in the 2010s. According to the Insurance Research Council (IRC), the onset of the pandemic in 2020, as well as the increasing frequency and severity of auto accidents in 2021 and 2022, “have changed the auto insurance market considerably since year-end 2019.” 

“The Insurance Research Council study shows improving personal auto insurance affordability, with expenditures as a percentage of median household income steadily declining between the 1990s and 2010s across the US and dropping to 1.56% in 2019, the most recent year for which data is available,” said IRC president and Triple-I chief insurance officer Dale Porfilio, FCAS, MAAA. “However, our research found a 3:1 disparity in affordability between the least and most affordable states.” 

“Our report seeks to illuminate these differences with a comprehensive state-by-state analysis that may help guide policymakers as they work to improve provision of affordable auto insurance in their market,” the president added.