Auto Insurance Makes up 2.2% of Drivers' Budgets, but City-Dwellers in Florida and Michigan Are Really Feeling the Squeeze

Auto Insurance Makes up 2.2% of Drivers' Budgets, but City-Dwellers in Florida and Michigan Are Really Feeling the Squeeze

Drivers in densely populated areas tend to pay more than other drivers for their car insurance, so city-dwellers face some of the nation's highest rates.

In 15% of U.S. metropolitan areas, an auto insurance policy with minimum coverage costs residents 3% of their incomes. For the sake of this study, we define that cost as being high enough to "break the budget."

But our research finds that, on average, city-dwellers in 33 metropolitan areas throughout Michigan and Florida pay even more than 3%. Other cities that feel the crunch of high premiums include Louisiana, Texas and New Jersey.

Of course for drivers with lower income, auto insurance premiums take up an even bigger portion of what they earn. Even though auto insurance costs are actually lower in metro areas with lower incomes, a much bigger share of drivers' paychecks are going toward their policies.

States where auto insurance is least affordable

We analyzed 364 metro areas and discovered that the cheapest insurance available. — also referred to as minimum coverage — makes up 3% or more of drivers' budgets in 54 metro areas.

Some drivers in Florida and Michigan pay more than 3% of their incomes toward auto insurance.

# of metro areas breaking budget
State
Most expensive metro area
Insurance costs as a % of income
19FloridaTampa-St. Petersburg-Clearwater7.1%
14MichiganDetroit-Warren-Dearborn25.2%
6LouisianaNew Orleans-Metairie4.0%
3TexasMcAllen-Edinburg-Mission4.5%
2New JerseyAtlantic City-Hammonton3.4%
1NevadaLas Vegas-Henderson-Paradise4.0%
1Rhode IslandProvidence-Warwick3.9%
1New YorkNew York-Newark-Jersey City3.4%
1KentuckyLouisville/Jefferson County3.4%
1ColoradoPueblo3.2%
1ConnecticutNew Haven-Milford3.1%
1OregonSalem3.1%
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When metro areas crossed state lines, data was used for the most populated city.

There are five states that have multiple metro areas where car insurance breaks the budget. In Florida and Michigan, the lack of affordability is driven by high state-wide prices. But in other states, including Louisiana, Texas and New Jersey, a combination of low income levels and high rates makes insurance harder to afford.

Florida

  • Number of cities where car insurance breaks the budget: 19
  • Average auto insurance costs as a share of income in those cities: 5.3%

Florida has a higher number of expensive metro areas than any other state. In 19 of Florida's metro areas, the average minimum car insurance policy is more than 3% of residents' income.

The Tampa-St. Petersburg-Clearwater metro area leads the pack. Per capita income in this area was $47,240 in 2018, which is near the national average, but car insurance in Tampa was $3,348 for a minimum policy. That's more than 31% above the state average.

The main cause of unaffordability here are the high state-wide insurance costs. Our data found that Florida is the second most expensive state for a minimum coverage policy, after Michigan. That's, in part, due to the fact that minimum coverage policies include personal injury protection in Florida. Additionally, the population skews both young and old, which could contribute to a high number of claims in the state.

Michigan

  • Number of cities where car insurance breaks the budget: 14
  • Average auto insurance costs as a share of income in those cities: 12.1%

Every metro area we analyzed in Michigan had extremely expensive insurance. This is because Michigan has extensive requirements for minimum coverage policies, including unlimited personal injury protection.

The most extreme example is Detroit, which has the highest car insurance costs in the nation. At $13,404, the average driver pays 25% of their income for minimum coverage. While the sample driver we used for our analysis found much cheaper rates by shopping around in Detroit, these average figures still illustrate the sky-high rates being charged by some of the biggest insurers in the state.

Even in areas with higher income levels, auto insurance takes up a large share of income. The Midland metro area has per capita income of $60,467 per year, but the average minimum auto insurance rate is $4,045 per year, or 6.7% of residents' income.

Louisiana

  • Number of cities where car insurance breaks the budget: Six
  • Average auto insurance costs as a share of income in those cities: 3.6%

Louisiana is the fifth most expensive state for minimum car insurance, and seven of the nine metro areas we examined had per capita income levels below the national average. The result is car insurance policies that break the bank for more drivers.

In the metro areas of Monroe and Hammond, per capita income levels are roughly $40,000 a year or less. But minimum car insurance still costs around $1,400 per year in these cities, meaning costs are more than 3% of income.

Texas

  • Number of cities where car insurance breaks the budget: Three
  • Average auto insurance costs as a share of income in those cities: 3.8%

The average cost of minimum coverage car insurance in Texas isn't particularly high. In fact, the state as a whole ranks as the 19th most expensive. But Texas has several metro areas with the lowest per capita income in the country, making car insurance an exorbitant expense for residents.

Three of the metro areas in Texas — McAllen-Edinburg-Mission, Brownsville-Harlingen and Laredo — have the lowest per capita income levels of all the areas examined in this study. With per capita income at around $30,000 (or less) and car insurance rates just over $1,000, drivers in these areas could be paying 3% to 5% of their incomes on a policy.

New Jersey

  • Number of cities where car insurance breaks the budget: Two
  • Average auto insurance costs as a share of income in those cities: 3.4%

As a state with one of the densest populations in the country, New Jersey has relatively high car insurance rates. In particular, there are two areas where auto insurance makes up a large share of drivers' incomes: Atlantic City-Hammonton and Vineland-Bridgeton.

In the Atlantic City area, income levels are close to the national average, but car insurance rates are very high, especially when compared to the rest of the state: At $1,662 per year, they're 41% above the state average.

In Vineland, income is a bigger factor. Per capita income rates in Vineland are $40,289 per year, the lowest of the four major metro areas in the state. With car insurance rates at $1,335 per year, drivers would pay an average of 3.3% of their income for a minimum policy.

City-dwellers' auto insurance costs across the country

According to data from the Bureau of Economic Analysis (BEA) the average per capita income in U.S. metro areas is $48,292 per year, and the average cost of minimum coverage car insurance in these metro areas is $1,078 per year, or 2.2% of income.

But the cost of minimum car insurance as a share of average incomes varies widely, from as little as 0.5% in San Jose, California to 25.2% in the Detroit metropolitan area.

Below, we've ranked all 364 available metro areas by the highest car insurance costs as a share of average income, with the most expensive metropolitan areas at the top of the list.

The high cost of minimum car insurance in Michigan and Florida means their metro areas dominate the top of the list, but 13 other states have cities with car insurance costs exceeding 3% of income.

Metro area
State
Per capita income (2018)
Minimum coverage policy cost
Car insurance cost as a share of income
Rank
Detroit-Warren-DearbornMichigan$53,086$13,40425.2%1
FlintMichigan$41,068$7,29617.8%2
SaginawMichigan$38,754$5,55814.3%3
Lansing-East LansingMichigan$41,812$5,33512.8%4
MonroeMichigan$47,496$5,99812.6%5
MuskegonMichigan$39,072$4,89412.5%6
Bay CityMichigan$41,722$4,99712.0%7
Battle CreekMichigan$40,276$4,70211.7%8
JacksonMichigan$39,832$4,44311.2%9
NilesMichigan$47,430$4,5029.5%10
Grand Rapids-KentwoodMichigan$50,463$4,1488.2%11
Kalamazoo-PortageMichigan$48,723$3,9878.2%12
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Residents in low-income areas pay more than twice the share of their budgets on car insurance

The share of income spent on car insurance is driven by two factors: income levels and car insurance costs. We found that drivers in low-income areas actually tend to have lower car insurance costs than those in high-income areas, however car insurance makes up a much bigger share of each driver's budget.

Metropolitan area
Average per capita income
Average cost of car insurance
Share of budget
The 10 poorest metro areas$33,001$1,0853.3%
The 10 richest metro areas$92,237$1,2591.4 %

Across all metropolitan areas, minimum coverage car insurance makes up approximately 2.2% of driver income, but that number jumps to 3.3% in the ten poorest areas.

Of course these figures will vary based on each driver, and personal details like age, driving history and credit scores. The sample driver we used in our analysis has an identical credit score. across all the locations in this study. But in reality, some drivers who experience financial instability may have lower credit scores, resulting in insurance rates as much as $58% higher..

Methodology

Data for personal income by metropolitan area was taken from the Bureau of Economic Analysis and includes wages, proprietors' income, dividends, interest, rents and government benefits.

For auto insurance prices, ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes may be different. Data used minimum coverage policies for given states.

If a metropolitan area crossed state lines, it was assigned to the state with the biggest individual city. For example, auto insurance costs for New York City were used for the New York-Newark-Jersey City metropolitan area.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.