Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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If you have ever moved from one state to another, you may have noticed your insurance premiums changing as a result of the move. In some situations, a new state can mean reduced premiums; other times, your rates may increase dramatically in your new home. Why does your geographic location make a difference to your car insurance rates? What affects the price of insurance where you live? There are dozens of factors involved in car insurance premiums that can be affected by the city, state or even ZIP code where you reside.

State Insurance Requirements

Every state has its own insurance laws and requirements. Some states require higher limits of liability coverage than other states. Some areas also have extra coverage that is not included in other places. For example, Michigan carries the most expensive car insurance in the country; this is because there are no limits to first-party medical coverage in Michigan, and also because Michigan is a no-fault state so everyone must carry full coverage if they expect their vehicle to be repaired.

Other states may have lower insurance costs because they do not offer uninsured motorist coverage. Uninsured motorist property damage (UMPD) pays for damage caused by an unknown driver or a driver who is uninsured. Because insurance companies have no way of recovering the funds they pay in these accidents in most cases, payments under UMPD cause higher rates.

Local Traffic

Some cities and states are notorious for bad traffic, and congested traffic leads to car accidents. For example, California is one of the top 10 most expensive states for car insurance, in part due to the high volume of commuters and busy city highways. The further a person must travel in one day, the higher the likelihood of being involved in an accident.

Rural states are less likely to have certain types of car accidents, and usually have fewer drivers on the road at any one time. States that have more public transportation options also may have lower car insurance rates as the public transportation reduces the number of people on the road at any given time.

Theft and Vandalism Rates

The crime rate of an area will affect insurance rates. Areas with a high incidence of theft and vandalism will lead to more claims being filed. Some states are worse for car theft than others. Border towns are especially prone to theft as they may be used for drug trafficking or other illegal operations. California has some of the highest incidence of car theft, as does Texas.

States that are further from borders or that have a lower incidence of drug-related crime will also tend to have fewer car thefts reported. This translates to lower insurance premiums in these areas.

Local Weather

Car insurance pays for losses related to weather, so states with a higher risk of catastrophic weather will have higher premiums than states with more mild climates. Hail is the most expensive weather event in regards to auto coverage; hail damage can quickly total out a vehicle. Other expensive weather events include windstorms and floods.

Heavy snows can also lead to car accidents due to people sliding off the road or otherwise losing control of their vehicles. Northern states with substantial snowfall can have higher insurance premiums than other areas.

How do I find the best car insurance rates?

Where you live plays a substantial role in your insurance premiums, but your own driving history ultimately has the greatest effect on your rates. You can maintain affordable car insurance by avoiding accidents and traffic violations; you can also save money on your rates by driving a vehicle with a high safety rating.

Whenever you move to a new area, be sure to ask your agent what changes you must make to your auto insurance in order to comply with the new state laws. Also ask if there are any state-specific laws that could influence your choice of coverage; for example, if you move to Alaska you may need to purchase more expensive rental reimbursement coverage in order to pay for the cost of a four-wheel-drive vehicle while your car is in the shop.

If you are preparing to move, you may be interested in obtaining car insurance quotes from multiple companies. Even if you already have car insurance, you may be able to get a cheaper rate through a different company. You an request a free quote online or talk to your agent for suggestions.