People who are moving to the USA for permanent residency often wonder, "How much does car insurance cost in the USA?" Walking everywhere is not always an option, so many newcomers rent a car upon arrival, and those who have the means often buy a car since car prices here are quite affordable. Car insurance rates in the USA directly depend on the state of residence. The difference between the highest and lowest average annual premiums in America can reach up to $2,000. The rating of expenses is based on the average percentage of income spent on insurance and the average income in each state. It reflects the burden on the overall budget of drivers.
According to a Bankrate study, car insurance in the USA averages 2.57% of a driver's annual income, with the average annual premium being $1,771. Based on this, the following states are the most cost-effective in terms of auto insurance:
Wisconsin (1.87% / $1,249)
Utah (1.85% / $1,449)
Idaho (1.68% / $1,065)
Washington (1.60% / $1,313)
Vermont (1.48% / $1,000)
New Hampshire (1.47% / $1,182)
Virginia (1.46% / $1,340)
Massachusetts (1.45% / $1,296)
Maine (1.44% / $876)
Hawaii (1.41% / $1,206)
The rating takes into account numerous factors that influence car insurance rates in each state. For instance, the car's make, the driver's age, their driving experience, credit rating, travel frequency, and even local weather conditions all play a role. Residents of Louisiana and Florida spend the largest portion of their income on car insurance, at 5.26% and 4.42%, respectively. This is due to their relatively low average incomes compared to other states, as well as their vulnerability to hurricanes and floods.
According to Bankrate, drivers with a good credit history pay about $1,500 less than those with poor credit, although the amount varies from state to state. In Massachusetts, California, and Hawaii, insurers don't consider credit scores when determining rates. However, involvement in accidents leads to a range of consequences. Such drivers pay an average of $2,521 per year, and this amount can be even higher depending on the location. In New York, for example, drivers with a history of accidents are required to pay $3,239 annually.
The following three main factors can influence the cost of car insurance:
Driver's experience: This is perhaps the most significant factor that determines the cost of auto insurance. Insurance is more expensive for an 18-year-old driver than for an adult driver with extensive experience. For an insurance company, the driver's age is often more important than their driving experience; the older the driver, the cheaper their insurance.
Location: The price of insurance is also determined by the location, as different areas have varying statistics on road accidents. Moreover, the driver's exact address, down to the zip code, plays a crucial role. Even moving to a different house on the same street can affect insurance rates.
Vehicle: In this regard, the cost of the car is not as important as its safety features. For example, a car with pre-collision sensors, which can warn of potential collisions, may have a high purchase price but will have lower insurance costs. Additional factors that affect auto insurance costs include marital status, the number of people and cars covered by the policy, coverage limits, and the frequency of vehicle use.
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