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State Laws Make a Big Difference in Car Insurance Rates

The difference in car insurance rates between two states can be as high as $1,546 even for the same car, driving habits and history. While it may seem extreme to consider moving from a state because of high car insurance rates in California or Florida, differences in state laws can have an extreme impact on policy rates per year.

The Cheapest Places to Insure Your Car

Some of the least expensive car insurance policies are available in places like Vermont, Maine and Wisconsin. The reasons are that most drivers are insured to the state's requirements for coverage. Another important factor is the number of rural roads and lower-speed driving. Car insurance companies value lower speeds because they reduce accidents.

It's odd but true that the driving record doesn't always matter nearly as much. Rather, the vagaries of laws in the state mean that driving and owning an insured vehicle in South Carolina is much less expensive than in other states, just like Tennessee and Ohio.

Conversely, more expensive states have heavy congestion and loads of freeway use, like Washington, D.C. (not technically a state), and California. Note that most states have an annual average premium of below $2,000. Just five, including the District of Columbia are more expensive. And only Vermont costs less than $1,000 for the representative driver.

Factors that Influence a State's Rates

The factors of how a state is laid out and demographics play a large role, as was noted previously. But another factor that influences car insurance rates in Florida, for example, is the inspection, registration and insurance regulations. If you've driven in the state, you understand that many cars just get abandoned on the side of the road. The lack of a strict inspection policy means that insurance companies worry about the quality of cars on the road.

The other factor that influences costs in places like Oklahoma and Florida are the number of uninsured drivers. In both states, roughly one in four drivers operates a vehicle without a policy. Both states are also at risk for major weather events like tornadoes in Oklahoma and hurricanes in Florida.

Another good example is Michigan, where the state has a $500,000+ cap on personal injury claims related to automotive accidents, which insurers have to pay before the state covers any incidents. Friendly court systems in Louisiana impact premiums there as well.