10 States With The Cheapest Car Insurance

Nationwide, the average cost of full coverage car insurance sits at $2,244 per year while liability only coverage averages $1,176, according to insurance — comparison marketplace Insurify. But depending on which state you happen to live in, you could be paying as much as $1,300 more than that.

However, if you happen to live in one of these 10 states, your car insurance policy could cost you less than half the national average — even for full coverage.

Curious to see if your state ranks among those with the most expensive car insurance or the cheapest car insurance? Check the list below to see if you're in the lucky 10. While moving to one of these states just to save on car insurance may not make sense, if you've already been considering a move to one of these states, this could be one more thing to add to the "pro" column.

The 10 states with the cheapest car insurance

Based on the latest data from Insurify, the 10 states where car insurance premiums were lowest as of August are largely in the midwest and northern reaches of the country (with a few exceptions like Hawaii and North Carolina).

Of this list, three also boast the cheapest home insurance in the country: New Hampshire, Alaska, and Hawaii. For residents of these states, lower premiums for both home and auto insurance could help keep two major household expenses more manageable.

Whether you live in one of the cheapest states already or not, it's still a good idea to shop around ahead of every renewal to make sure you're always getting the best deal possible. To start, use the Bankrate-powered car insurance tool below:

Why is car insurance cheaper in some states?

If you don't live in any of the states above, you might be feeling like you are being unfairly overcharged for your premiums just because of where you live. But there are a few reasons that the state and even city that you live in can influence the premiums you pay to drive there.

Here are some of the factors that could be making it cheaper to insure drivers in the states listed above:

• Population density: Many of the states with the cheapest car insurance are also more sparsely populated (especially compared to the states with more expensive rates). Wyoming, for example, has the smallest population of any state while North Dakota and Alaska aren't far behind. With fewer drivers on the road, there are fewer chances for car accidents so insurers view these states as less risky.
• Coverage requirements: Some states have stricter minimum coverage requirements than others. This would primarily influence the cost of liability only car insurance, which is also generally cheaper than the national average in the states above.
• Cost of living: It's no coincidence that the states with the cheapest car insurance also tend to have a lower cost of living overall. Part of what goes into the rates insurance companies set is the cost of repairs. In lower cost of living areas, the labor costs for repairs can also be lower.
• Legal costs: Another factor companies consider is how likely they are to have to pay for legal fees and larger court-ordered payouts after serious accidents. Two of the states above are no-fault car insurance states which tends to result in fewer lawsuits — but also means you'll usually have to file a claim with your own insurance, regardless of who is at fault.

If you do live in one of these states but notice your bill is a little higher or lower than the numbers listed, that's because rates can be extremely localized. For example, someone inside Cheyenne, Wyoming — the state's largest city — might pay more than someone in a town an hour outside of the city because they're in the most densely populated part of the state.

You can use this information to make decisions about where you want to live if you're downsizing, finding the right balance between the lifestyle you want and the cost of living your retirement savings can comfortably bear.

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