Yikes! 20 States Where Car Insurance Costs Over $3,000 a Year

Car insurance rates continue to creep up, and in some states, drivers could buy a used vehicle for less than it'll cost them to insure it for a year. Right now, there are 20 states with average annual premiums over $3,000 -- and drivers in one state pay close to double that.

This isn't always due to factors that residents can control. No one has the power to stop natural disasters or reduce the population density of their city. But with smart shopping behavior, it's still possible to get affordable car insurance, even in the most expensive states.

Twenty states with the highest average auto insurance premiums

The following 20 states have the highest average annual car insurance premiums:

A lot of the states here are concentrated in New England and the eastern seaboard. These tend to be more densely populated states, and more drivers in a small area leads to an increased risk of accidents as well as theft and vandalism. Close proximity to the coast also increases the risk of loss from natural disasters, like flooding or hurricanes.

But other factors influence auto insurance rates as well. Michigan tops the list in part because it has a no-fault system. This means that all drivers bill their own insurance for injuries following a crash, regardless of who was at fault. Michigan is the only no-fault state that requires its drivers to carry coverage that provides unlimited lifetime medical benefits, which raises bills significantly. To make matters worse, the high costs lead many to skip insurance. That increases the risk of getting into accidents with uninsured drivers, which raises average premiums even more.

It's also worth pointing out that rates vary considerably even within the above states. Urban areas tend to have higher rates than rural areas, largely due to population density and the risks it brings.

How drivers can save

There are three important steps drivers can take to reduce their auto insurance costs, whether they live in one of the 20 above states or not.

1. Shop around

Each insurer evaluates risk differently and that leads to different rates. Some companies penalize drivers more harshly for accidents or DUIs, while others put more weight on a driver's age and experience behind the wheel. These formulas are proprietary, so the only way to know which companies offer the best deals to a specific person is to get quotes.

Most car insurance companies have online quote tools, so it's possible to get a rate estimate in just a few minutes. Compare prices, coverage, and customer service from at least three to five insurers before settling on one.

2. Claim discounts

Nearly all auto insurers have discounts to help select drivers save, but they vary in terms of which discounts they offer. Those belonging to specific groups, like veterans or EV owners, could do better by seeking out insurers that have car insurance discounts tailored to them.

Companies usually apply discounts automatically, though there are a few discounts drivers may need to apply for. Driver monitoring programs, for example, require policyholders to opt in for an immediate discount and a chance at future savings. This is an option worth considering for those comfortable with these programs.

3. Raise the deductible

Car insurance deductibles affect premiums. A lower deductible leads to a higher premium while a high deductible lowers premiums. Raising the policy's collision and comprehensive deductible to $1,000 can lower premiums by 40% or more, according to the Insurance Information Institute.

The downside to this is that drivers will have to pay more out of pocket in the event of an accident. But this might not be a problem for those able to save for this deductible in an emergency fund.

Taking the above steps will almost certainly help drivers find cheaper car insurance, but every person's mileage will vary. Factors like the driver's age, vehicle make and model, and accident history still have a big influence on the final rate.