Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Content Writer & Entrepreneur Shuman Roy

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jun 28, 2022

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Insurance Q&A: “Is car insurance more expensive in California?”

Yes and No. You might expect to automatically pay more for insurance in California because everything seems to be more expensive. The truth is there’s no tax on Californians simply because of the state. With its size, rates vary wildly depending on what part of California you’re in. Even within the same city, you might see rates vary. These rates are based on set factors. They are not arbitrary in nature.

Perhaps surprisingly, Californians do not hold the top spot when it comes to auto insurance premiums. In fact, California just missed the top five with regard to the most expensive states for auto insurance. This does not mean some Californians don’t pay some of the highest rates. We’re looking at state averages.

As touched on in a previous post, Michigan drivers live with the pain of knowing they have the most expensive car insurance in the nation.

Did you say Michigan?

Let us guess. You weren’t thinking Michigan? Why Michigan? They must drive like maniacs, right? Wrong. State regulation and weather play a big part in the scheme of things up there. Crime rates also play a significant role in driving rates up. Insurance companies may pay out more on a break-in or when cars are stolen. So they adjust the rates accordingly.

Michigan is the only state that affords unlimited personal injury protection payments, which drives up costs. Basically, your car insurance acts as a health insurance policy would in most states.

Of course, rates in Michigan can vary based on what type and how much insurance you have. Some cities and zip codes also have lower rates due to lower crime rates, accident rates, etc. While the weather is largely the same, a city that takes care of its roads and clears snow regularly could prevent a lot of accidents and claims whereas areas that aren’t as well maintained would have more accidents and claims driving rates up.

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Which states have more expensive auto insurance rates than California?

There are some lists you don’t want to be at the top of…and this is certainly one of them. Here are the top six states by auto insurance cost, based on a recent survey from

1. Michigan – $2,541
2. Louisiana – $2,453
3. Oklahoma – $2,197
4. Montana – $2,190
5. Washington, D.C. – $2,146
6. California – $1,991

As you can see, car insurance is a full $500 cheaper in California than it is in places like Michigan and Louisiana, despite things like housing being much cheaper. Again, insurance companies are looking at the likelihood that you will file a claim. Anything from accident rates to frequency of natural disaster and crime rates can play a role.

But before you get too far ahead of yourself, note that these are average premiums. Not bare minimums, or necessarily the price you will receive when gathering insurance quotes.

There are several ways to get a lower insurance premium no matter where you live.

How can you lower your car insurance rates?

First off, there are multiple discounts available to drivers in every state, including on California car insurance rates.  Most insurers will review your credit history, known as an insurance score, to generate your final premium. Put simply, pay your bills on time and you’ll pay less for insurance. You can also get discounts based on your marital status. This is not to say you should run out and get married, just that if you are, you should make sure to take advantage of the insurance discounts available to you.

[Credit scores and car insurance rates.]

You can also raise your auto insurance deductible or opt for liability-only car insurance if you’ve got an older, inexpensive vehicle (see more ways to lower your car insurance premium.) While the replacement cost of your vehicle is a factor, the safety features of your car are much more important. Newer cars often cost less to insure because they have safety features to prevent at fault accidents and protect you from serious injuries. While the replacement cost of the car may be higher in a total loss, the car mitigates more costs than it causes.

High-risk drivers may not be able to get the lowest rates. But with telematics programs insurance companies use to track certain high-risk behaviors over 90 days, even high-risk drivers can get immediate gratification with discounted rates after that 90 day period as long as they stay with the same company. This may make additional coverages more affordable for some drivers.

Keep in mind, rates are not determined by state or even city. Within San Francisco, you may find different rates on your auto insurance policy based on zip code. Insurance companies including national brands like Liberty Mutual and local auto policies use a complex algorithm of factors for comparative purposes to come up with the rates we pay for minimum coverage, comprehensive insurance, or anything else. A clean driving record is a big factor, but it’s only one part of insurance prices.

And be sure to learn more about how car insurance rates are determined to get the jump on lowering your overall insurance costs. Whether you have a clean driving record or a few marks, the best way to find the best rates is by comparing your options. Get at least three quotes from different companies. Do this on a regular basis or at transition periods like when you add a less experienced driver to your policy for the first time or after a fault crash. You may be surprised at the cheap car insurance you can find even if you want more than just the minimum coverage for your car and family. The average premium could easily be lower than you think.

Read more: Top auto insurance companies in California.