In 15% of metropolitan areas, a minimum coverage auto insurance policy costs 3% of that area's per capita income, which we have defined informally in this study as "breaking the budget".
Our research finds that, on average, city-dwellers in 33 metropolitan areas in Michigan and Florida pay in excess of 3% of their income on a minimum coverage auto insurance policy. And although cities in these two states dominate our rankings of auto insurance unaffordability, multiple cities in states such as Louisiana, Texas and New Jersey also make the list.
Auto insurance costs also make up a bigger share of income for drivers in cities with lower income levels. Although auto insurance costs are actually lower in metro areas with lower incomes, a much bigger share of drivers' paychecks are going toward these policies.
The states with cities where auto insurance breaks drivers' budgets
Auto insurance prices for minimum coverage — the lowest cost insurance available — made up 3% or more of drivers' budgets in 54 of the 364 metro areas with data available. And the following states have at least one metro area, and in some cases many more than one, where average drivers pay 3% or more of their income on car insurance.
Florida and Michigan lead the pack, but Louisiana, Texas and New Jersey also have multiple cities where the cost of a minimum policy makes up a sizable share of average incomes.
# of metro areas breaking budget
Most expensive metro area
Insurance costs as a % of income
|2||New Jersey||Atlantic City-Hammonton||3.4%|
|1||New York||New York-Newark-Jersey City||3.4%|
When metro areas crossed state lines, data was used for the most populated city.
Below, we break down data in the five states with multiple metro areas where car insurance weighs on drivers' budget. In Florida and Michigan, the unaffordability of car insurance policies is driven by high prices at a state level. In others, such as Louisiana, Texas and New Jersey, a combination of lower income levels and higher rates is driving the story.
- 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 metro areas, the average cost of a minimum car insurance policy is more than 3% of the average income.
The Tampa-St. Petersburg-Clearwater metro area leads the pack. Its per capita income levels were $47,240 per year in 2018, near the national average for income. But car insurance costs in Tampa were $3,348 for a minimum policy, more than 31% more than the state average.
High costs as a share of the budget are a result of high state-wide insurance costs in Florida. Our data found it is the second most expensive state for a minimum coverage policy after Michigan. The inclusion of personal injury protection in minimum coverage policies contributes to the higher costs, and a population that skews both old and young is likely a contributing factor in increasing the number of claims in the state.
- 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 with data available had extremely expensive insurance in Michigan. This is because Michigan has extensive requirements for minimum coverage policies, including unlimited personal injury protection.
The most extreme example is Detroit, where the highest car insurance costs in the nation — $13,404 for a minimum coverage policy — result in a minimum coverage policy making up 25% of average income. This number represents an average, and our sample driver found much cheaper rates by shopping around, but it illustrates the elevated rates being charged by some of the biggest insurers in the state.
Even in areas with higher income levels, auto insurance takes up a big 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, 6.7% of per capita income.
- Number of cities where car insurance breaks the budget: Six
- Average auto insurance costs as a share of income in those cities: 3.6%
Among states, Louisiana is the fifth most expensive for minimum car insurance. And in the nine metro areas where per capita income data was available, seven of them had per capita income levels below the national average. The result is car insurance policies that eat up drivers' incomes.
In metro areas such as Monroe and Hammond, per capita income levels are around $40,000 per year or less. But minimum car insurance still costs around $1,400 per year in these cities, meaning costs are more than 3% of incomes.
- 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. The state as a whole ranks as the 19th most expensive. But it has several metro areas that have the lowest per capita income levels in the country, making car insurance an exorbitant expense.
McAllen-Edinburg-Mission, Brownsville-Harlingen and Laredo have the three lowest per capita income levels of all 364 metro areas used in this study. With income levels of approximately $30,000 (or even less) and car insurance rates of just over $1,000, drivers in these areas could be paying 3% to 5% of their budget on a policy.
- 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 around the country's average, $48,668 per year, but car insurance rates are very high: 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. And with car insurance rates of $1,335 per year, drivers would pay an average of 3.3% of their income for a minimum policy.
The share of city-dwellers' budgets going toward auto insurance across the country
The average per capita income in United States metro areas is $48,292 per year, according to data from the Bureau of Economic Analysis. And the average cost of minimum coverage car insurance in these metro areas is $1,078 per year, 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. The most expensive metropolitan areas are ranked at the top.
The high cost of minimum car insurance in Michigan and Florida means their cities dominate the top of the list, but 13 other states have cities with car insurance costs exceeding 3% of income.
Per capita income (2018)
Minimum coverage policy cost
Car insurance cost as a share of income
Low-income areas pay more than twice the share of their budget on car insurance than high-income areas
The share of income drivers spend on car insurance is driven by two factors: their income and their 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, incomes are low enough that car insurance makes up a much bigger share of their budget.
Average per capita income
Average cost of car insurance
Share of budget
|The 10 poorest metro areas||$33,001||$1,085||3.3%|
|The 10 richest metro areas||$92,237||$1,259||1.4 %|
Across all metropolitan areas, minimum coverage car insurance makes up approximately 2.2% of driver income.
This data represents rates for the same hypothetical driver in two different locations, but the truth is that no two drivers will be exactly alike, and other factors may result in areas with lower income levels spending an even bigger share of their income on car insurance.
For instance, our sample driver has an identical credit score across all the locations in this study. But in reality, those with lower income levels may be more likely to have a poor credit score, resulting in auto insurance rates 58% higher than if they had excellent credit.
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.