Insurance Rate Comparison by State – How to calculate insurance rate?


Insurance Rate Comparison by State – Insurance rates vary depending on several factors, including the type of insurance you are seeking (e.g., auto insurance, health insurance, home insurance, life insurance, etc.). Additionally, the rates are determined by a combination of personal factors and risk assessment by the insurance company.

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Here are some common factors that can influence insurance rates:

  1. Type of Insurance: Different types of insurance come with different risk profiles and coverage levels, which affects the premium amount.
  2. Age and Gender: Younger individuals, especially teenage drivers, typically have higher insurance rates due to perceived higher risk. Gender can also be a factor, as statistically, some groups may have different risk levels.
  3. Driving Record: For auto insurance, a clean driving record with no accidents or traffic violations generally leads to lower premiums.
  4. Location: The area where you live can impact insurance rates. If you reside in an area with a high crime rate or a higher likelihood of accidents, your rates may be higher.
  5. Health History: When it comes to health insurance, your medical history and overall health can play a role in determining the premium.
  6. Coverage Amount: The higher the coverage amount you choose, the higher the premium will likely be.
  7. Deductible: For certain types of insurance (e.g., auto and health), a higher deductible means a lower premium, but you’ll have to pay more out-of-pocket if you need to make a claim.
  8. Occupation: Some professions may be associated with higher or lower risks, influencing insurance rates.
  9. Credit Score: In some regions, credit history can be a factor considered by insurance companies when determining rates.
  10. Claims History: If you have a history of making claims, especially frequent or high-value claims, insurers may see you as a higher risk.

It’s important to note that each insurance company has its own underwriting criteria and ways of calculating rates. It’s a good idea to shop around and compare quotes from different insurers to find the best rate for your specific circumstances.

Additionally, maintaining a good driving record, healthy lifestyle, and a positive credit history can often help you secure more favorable insurance rates.

Car insurance rates by state

The table below lists the average car insurance rates in each state for both the state’s minimum coverage levels and full coverage car insurance, which includes comprehensive and collision coverage.

Each state’s minimum liability car insurance limits are listed as three numbers separated by a slash, indicating the state’s liability coverage requirements for bodily injury liability per person, bodily injury liability per accident and property damage liability per accident. Some states, however, require additional coverage types, like uninsured and underinsured motorist coverage or personal injury protection.

Car insurance rates may vary by state and insurance carrier based on a number of rating factors. Factors might include road conditions, the number of drivers or traffic density in a city, cost of living as it relates to repair and labor costs, the percentage of uninsured drivers and any other factors impacting the overall risk of drivers, such as claims in the area from at-fault accidents and weather-related incidents.

StateMinimum liability coverage limits (in thousands)Average annual cost of full coverageAverage annual cost of minimum coverage
New Hampshire25/50/25$1,262$319
New Jersey25/50/25$1,754$782
New Mexico25/50/10$1,591$346
New York25/50/10$3,139$1,371
North Carolina30/60/25$1,446$432
North Dakota25/50/25$1,302$269
Rhode Island25/50/25$1,886$551
South Carolina25/50/25$1,532$524
South Dakota25/50/25$1,553$276
Washington, D.C.25/50/10$2,072$607
West Virginia25/50/25$1,580$421


How to calculate insurance rate?

Calculating insurance rates involves several factors and varies depending on the type of insurance you are interested in. Here are the general steps and key factors involved in calculating insurance rates:

  1. Identify the type of insurance: The first step is to determine the type of insurance you want to calculate the rate for, such as auto insurance, home insurance, health insurance, life insurance, etc.
  2. Gather relevant information: Insurance companies consider various factors to calculate rates. You’ll need to provide accurate and up-to-date information related to the insured entity. For example:
    • For auto insurance: Make and model of the vehicle, age of the driver, driving history, location, usage, etc.
    • For home insurance: Location, value of the property, type of construction, security features, coverage limits, etc.
    • For health insurance: Age, medical history, lifestyle habits, coverage options, etc.
    • For life insurance: Age, health condition, lifestyle, coverage amount, policy type, etc.
  3. Risk assessment: Insurance companies assess the risk associated with insuring the entity based on the information provided. The higher the risk, the higher the insurance rate is likely to be. For instance, a young and inexperienced driver with a history of accidents will be considered higher risk for auto insurance.
  4. Actuarial analysis: Actuaries are professionals who specialize in analyzing data and calculating insurance rates based on statistical probabilities and risk assessments. They use complex mathematical models to determine the appropriate rate for different levels of risk.
  5. Underwriting guidelines: Insurance companies have specific underwriting guidelines that help them decide the acceptance, coverage, and pricing of a policy. These guidelines can vary from one insurer to another.
  6. Deductibles and coverage limits: The amount of deductible (the out-of-pocket expense you pay before the insurance kicks in) and the coverage limits (the maximum amount the insurer will pay for a claim) also affect the insurance rate. Higher deductibles typically result in lower premiums, but you’ll have more financial responsibility in case of a claim.
  7. Discounts: Insurance companies often offer discounts based on certain factors like bundling multiple policies, having a good driving record, installing security devices, etc. These discounts can lower your insurance rate.
  8. Market competition: Insurance rates can also be influenced by the competitive landscape. Different insurance companies may offer different rates for similar coverage, so it’s essential to shop around and compare quotes.
  9. Regulatory factors: In some regions, insurance rates may be subject to regulatory approval or constraints, which can affect how rates are calculated.

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It’s important to note that while these are general guidelines, each insurance company may have its own proprietary algorithms and methods for calculating rates. The best way to get an accurate insurance rate is to contact insurance providers directly and provide them with the necessary information for a personalized quote.