Most Expensive Cities for Car Insurance

Do you live in a no-fault state? Your rates might be higher than average.

Feb 23, 2014 at 9:00AM

Drivers in some U.S. cities will face higher car insurance premiums in 2014. Car insurance rates vary significantly across the country, and some citizens will pay significantly more depending on where they live.

NerdWallet found the most expensive car insurance premiums in the country, because high car insurance premiums can have a large financial and political impact on people's lives. Drivers, for the most part, cannot control the major factors causing high car insurance premiums. Bad weather, traffic conditions, high crime rates, local laws, and congestion all contribute to high car insurance costs. Even so, drivers can lower their rates by comparing insurance carriers and searching for discounts. We have found that, on average, drivers overpay $368 for car insurance every year.

Methodology
To find the average car insurance rates of the 125 largest cities in the United States, we used the profile of a 26-year-old male without any history of accidents, insuring a 2012 Toyota Camry with extended coverage ($100/$300/$50 with a $500 deductible). In calculating averages for each city, we used ZIP codes only within city limits and not in the city's metro area.

Key findings

  • Detroit's average car insurance rates are more than 10 times that of Winston-Salem, N.C., the city with the lowest average.
  • State laws play a key role in a city's car insurance rates.
  • Car insurance rates vary greatly from one ZIP code to another.

Detroit has the most expensive average car insurance premiums in the country. At $10,723.22, Detroit's average rates are more than twice as much as the second most expensive city, New Orleans. The city's rates are so high that Mike Duggan, Detroit's newly elected mayor, made lowering car insurance premiums a major part of his campaign platform.

Politics and law play a major role in a city's car insurance rates. All of the most expensive cities for car insurance were in states with no-fault car insurance laws. Large cities such as New York and Los Angeles have cheaper average premiums than small cities such as Grand Rapids and Baton Rouge, which are in no-fault states. 

(Interested in your area's car insurance costs? Check out NerdWallet's car insurance tool here.)

Cities with the most expensive car insurance

1. Detroit
Average annual premium: $10,723.22

The Motor City is known for its cars, but its car insurance premiums are the highest in the nation. In Detroit, drivers face high rates because of the city's high crime rate and Michigan's no-fault insurance system. Under state law, insurance companies must pay medical expenses, lost wages, and property damage regardless of who caused an accident. The system is intended to reduce litigation costs and ensure prompt claim repayment, but many complain that costs have ballooned because lawmakers have not set a cap on claim awards.

Detroit's annual insurance premiums are not uniformly high. We found that even within neighborhoods, Detroit's annual insurance premiums varied greatly. In the Rosedale Park neighborhood, State Farm offers a policy for $25,300 a year, while Hanover offers insurance for a fraction of the price at $4,854.

2. New Orleans
Average annual premium: $4,309.61

Annual premiums in New Orleans might look cheap compared with Detroit, but the average annual cost still equals about 12% of the city's median household income, according to census figures. Residents commute 22.8 minutes to work on average, and New Orleans has some of the worst maintained roads in the country. Also contributing to high rates is a state law that also allows drivers to directly sue insurance companies after an accident. In Louisiana, juries decide only claims exceeding $50,000. The rest go before a judge or are settled.

3. Grand Rapids, Mich.
Average annual premium: $4,042.42

With 189,813 residents, Grand Rapids is much smaller than Detroit. However, Grand Rapids drivers still suffer from Michigan's no-fault insurance laws and bad weather. Bad weather often exacerbates road deterioration. Grand Rapids' potholes are estimated to cost motorists $1,027 a year.

4. Newark, N.J.
Average annual premium: $3,525.43

Like Michigan, New Jersey also has a no-fault insurance. In addition to state law, Newark's high insurance rates may result from its proximity to New York and from New Jersey's snowy winters. Newark drivers have an average commute of 31.3 minutes to work, which is a bit higher than the national average, 25.4 minutes.

New Jersey residents enrolled in Medicaid can save money under the state's special Automobile Insurance Policy, or SAIP. SAIP provides low-cost car insurance to those who might not be able to afford it, though it covers only post-accident medical costs.

5. Baton Rouge, La.
Average annual premium: $3,363.73

Louisiana's capital is smaller than New Orleans by 130,000 residents, and drivers save nearly $1,000 yearly on their average premium. But locals endure traffic congestion and roads in disrepair, and the average cost still accounts for about 8.6% of the city's median household income, according to the U.S. Census.

6. Hialeah, Fla.
Average annual premium: $3,271.86

Hialeah is a major commercial center in Miami-Dade County, and its drivers pay the highest premiums in Florida. One reason for Hialeah's high premiums is that Florida has no-fault insurance laws and frequent hurricanes. Since Hurricane Andrew in 1992, Florida has been hit by seven major hurricanes.

7. Jersey City, N.J.
Average annual premium: $3,266.63

Nestled between Newark and New York City is Jersey City. Drivers must deal with many of the same traffic issues -- notably high congestion -- and often face icy winters. The city, however, is much wealthier than Newark, and the average premium accounts for only 5.6% of the median household income in Jersey City. On average, residents travel 35 minutes to work.

8. Louisville, Ky.
Average annual premium: $3,255.99

Although Louisville has mild winters compared with Detroit and Newark, Louisville, like all of the other cities on this list, resides in a state with no-fault car insurance laws. Louisville, according to Neighborhoodscout.com, is more dangerous than 83% of U.S. cities and has an especially high number of auto thefts.

9. Miami
Average annual premium: $3,168.75

Miami is in a state with no-fault insurance, and it is also victim to hurricanes, but according to a few studies, Miami also seems to have bad drivers. Miami suffers from extreme congestion and was ranked as the city with the rudest drivers in the United States. According to an Allstate study, Miami has the ninth worst drivers in the U.S., meaning that they have a 58.4% greater-than-average accident frequency.

10. Philadelphia
Average annual premium: $2,930.53

Philadelphia drivers deal with many factors contributing to high car insurance costs. They face unfavorable car insurance laws because Pennsylvania is a no-fault state. Philadelphia also faces cold winters and year-round congestion. Drivers who have trouble finding affordable car insurance can apply to the Pennsylvania Assigned Risk Plan.

Rank

City

State

Population

Average Car Insurance Price

1

Detroit

MI

706,640

$10,723.22

2

New Orleans

LA

360,740

$4,309.61

3

Grand Rapids

MI

189,813

$4,042.42

4

Newark

NJ

277,545

$3,525.43

5

Baton Rouge

LA

230,148

$3,363.73

6

Hialeah

FL

229,967

$3,271.86

7

Jersey City

NJ

250,317

$3,266.63

8

Louisville

KY

602,037

$3,255.99

9

Miami

FL

408,760

$3,168.75

10

Philadelphia

PA

1,536,471

$2,930.53

11

Shreveport city

LA

201,871

$2,901.23

12

Chicago

IL

2,707,123

$2,859.36

13

New York City

NY

8,244,910

$2,712.43

14

Boston

MA

624,969

$2,681.00

15

Tampa

FL

346,064

$2,663.43

16

Lexington

KY

301,569

$2,652.11

17

Las Vegas

NV

589,340

$2,618.59

18

Minneapolis

MN

387,736

$2,602.06

19

St. Paul

MN

288,437

$2,554.29

20

Honolulu

HI

340,931

$2,515.38

21

North Las Vegas

NV

219,017

$2,504.10

22

Los Angeles

CA

3,819,708

$2,307.57

23

Henderson

NE

260,072

$2,301.29

24

Glendale

CA

193,113

$2,276.11

25

St. Louis

MO

318,069

$2,271.58

26

Atlanta

GA

432,425

$2,224.76

27

St. Petersburg

FL

244,995

$2,218.35

28

Houston

TX

2,145,933

$2,211.62

29

Yonkers

NY

197,397

$2,194.56

30

Baltimore

MD

619,493

$2,172.23

NerdWallet also found the cities with the cheapest average car insurance.

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