Insurance of Cheapest states for young drivers

Even a no-frills vehicle represents a huge expense for the 4 million or so Americans working a minimum-wage job.
But it represents a bigger challenge in some places than in others. Young drivers in Rhode Island will work nearly four times as long as their counterparts in Illinois to buy the legally required state-minimum liability coverage, according to a CarInsurance.com analysis.
We ranked states by the number of hours needed to buy coverage, comparing their cheapest car insurance for 18-year-olds with their minimum wage.
This is as cheap as insurance gets, and there are few trade-offs available to save further. For example, you can’t reduce your limits below the minimum amounts. And you can’t raise your deductible. There are no deductibles on liability insurance.

Where you live matters – a lot

The Bureau of Labor Statistics says the average hourly wage in the U.S. was $24.17 in December 2013. The average annual outlay on liability car insurance, says the Insurance Information Institute, was $492 as of 2011.
The means an average worker could buy a year of liability coverage with about 20 hours of work.
But consider an 18-year-old working an entry-level job. The average state minimum wage in 2014 is just $7.60 an hour. And teenagers pay much more for insurance: The average price of a year of bare-bones coverage was $841, using rates gathered from the national carriers in CarInsurance.com’s online quotes tool.
At those averages, a year of state minimum liability insurance would require 111 hours of work.
Because both wages and car insurance rates swing dramatically, we looked at affordability by comparing the cost of legal-minimum auto insurance with each state’s minimum wage. Young drivers in Rhode Island had it worst, with 196 hours required to buy the cheapest liability policy we found. A young driver finds not only much cheaper insurance in Illinois but higher wages as well; a year of liability insurance takes just 56 hours of work.

The cheapest states for young drivers

These are best-case scenario numbers.
We compared rates using the state’s cheapest ZIP code for a young driver with clean record, good credit and previous insurance on a parent’s policy. We chose the least expensive rate we found. Unless you’re 18, male, a resident of the particular addresses we used and proud owner of a 1997 Ford Taurus, your quotes probably won’t exactly match ours, which are only a snapshot of available rates.
They are, however, a good indicator of the financial hurdle confronting any teenager who depends on his own car to commute to school or work.

What an 18-year-old pays for state-minimum liability

Rank	State	ZIP code	Annual liability cost	Minimum wage	Hours to buy
1	Illinois	61761	$459	$8.25	56
2	North Carolina	28778	$419	$7.25	58
3	Iowa	50010	$419	$7.25	58
4	Nevada	89427	$492	$8.25	60
5	Missouri	65101	$458	$7.50	61
6	Indiana	47905	$462	$7.25	64
7	New Mexico	88310	$557	$7.50	74
8	California	93441	$602	$8.00	75
9	Montana	59602	$625	$7.90	79
10	New York	14580	$669	$8.00	84
11	Connecticut	06498	$728	$8.70	84
12	Pennsylvania	16823	$611	$7.25	84
13	Washington	99163	$795	$9.32	85
14	Kansas	67401	$625	$7.25	86
15	Nebraska	68504	$662	$7.25	91
16	Vermont	05446	$826	$8.73	95
17	Mississippi	39759	$688	$7.25	95
18	Florida	32669	$755	$7.93	95
19	Tennessee	37686	$721	$7.25	99
20	Wisconsin	53081	$727	$7.25	100
21	Wyoming	82007	$732	$7.25	101
22	Arizona	86426	$805	$7.90	102
23	Arkansas	72768	$751	$7.25	104
24	Alabama	36543	$759	$7.25	105
25	Georgia	31601	$763	$7.25	105
26	Virginia	22652	$787	$7.25	109
27	Idaho	83712	$791	$7.25	109
28	Texas	76306	$802	$7.25	111
29	Louisiana	71021	$811	$7.25	112
30	Colorado	80525	$916	$8.00	114
31	Oregon	97330	$1,060	$9.10	116
32	Utah	84772	$848	$7.25	117
33	Minnesota	56003	$939	$7.25	130
34	South Carolina	29692	$943	$7.25	130
35	Maine	04105	$1,039	$7.50	139
36	Oklahoma	74003	$1,019	$7.25	141
37	Maryland	21780	$1,049	$7.25	145
38	Michigan	49866	$1,204	$7.40	163
39	Ohio	44833	$1,330	$7.95	167
40	Kentucky	41075	$1,227	$7.25	169
41	New Hampshire	03303	$1,261	$7.25	174
42	New Jersey	07933	$1,446	$8.25	175
43	Delaware	19939	$1,327	$7.25	183
44	West Virginia	25427	$1,370	$7.25	189
45	Rhode Island	02842	$1,569	$8.00	196
*	Alaska	99829		$7.75
*	Hawaii	96722		$7.25
*	Massachusetts	01258		$8.00
*	North Dakota	58205		$7.25
*	South Dakota	57069		$7.25
*	Washington, D.C.	20006		$8.25
	National average		$841	$7.60	111

* Data missing or unavailable at time of publication
** States that have no minimum wage or a minimum wage lower than the federal wage are displayed at the federal minimum.

What you can do

The cost of liability insurance has more to do with the driver than the car. (The insurance company isn’t going to fix your car, just the person’s you hit.) In your search for affordable auto insurance, these are the factors you have some control over:

• Your driving record: More than one violation or accident is going to hurt.
• Your credit: If it’s dismal, you’re seen as a bigger risk of a claim and thus charged more in many states.
• Your mileage: The less you drive, the less risk of your hitting someone.
• Your insurance history: If you’ve let your policy lapse, even for a few days, you’ll pay about 5 percent more than you would have otherwise, according to Insurance.com.
• Your insurance company: No two insurers offer identical rates, and even on state-minimum policies, premiums can differ by hundreds of dollars a year.

Insurers do look at your car, and if it has a significantly higher rate of claims than most (because, say, it’s driven mostly by young drivers), your liability rates will reflect that risk.