According to the Bureau of Labor Statistics, the average hourly wage was $25.89, up from $25.27 a year earlier. The average annual outlay for car insurance on a sedan was $1,222 in 2015, which means an average worker could buy a year of car insurance with about 47 hours of work.
The average teenager, however, is making far less than the average hourly wage. The average state minimum wage as of July 2015 was just $7.92 an hour. Teenagers pay much more for insurance because they’re considered higher risk than more experienced drivers. The average price of a year of bare-bones coverage was $841, according to rates gathered from national car insurance carriers. At those averages, a year of state minimum liability insurance would require 106 hours of work.
An inexpensive car is still a huge expense for the 4 million or so Americans working a minimum-wage job. But it represents a bigger challenge for young drivers in Rhode Island and New Hampshire, as they work nearly three times as long as their counterparts in Illinois to buy liability insurance that meets their state minimum car insurance requirements, according to a CarInsurance.com analysis.
Both wages and car insurance rates can drastically vary so affordability was calculated by comparing the cost of legal-minimum auto insurance with each state’s minimum wage. Young drivers in Rhode Island and New Hampshire have it the worst, with 174 hours required to buy the cheapest liability policy. A young driver finds much cheaper insurance in Illinois - a year of liability insurance takes just 56 hours of work.
The cost of car insurance for an 18 year old
States are ranked by the number of hours needed to buy coverage, comparing their cheapest car insurance for 18 year olds with their minimum wage.
Rates are compared using the state’s cheapest ZIP code for a young driver with a clean record, good credit, and previous insurance on a parent’s policy. The typical driver is 18, male, and owns a car similar to a 1997 Ford TaurusThis data is not exact for every 18 year old but does provide a good overview of the financial hurdle teenagers face who depend on their own car to commute to school or work.
| What An 18 Year Old Pays For State-Minimum Liability | |||||
|---|---|---|---|---|---|
| Rank | State | ZIP Code | Annual Liability Cost | Minimum Wage | Hours to Buy |
| 1 | Illinois | 61761 | $459 | $8.25 | 56 |
| 2 | North Carolina | 28778 | $419 | $7.25 | 58 |
| 3 | Iowa | 50010 | $419 | $7.25 | 58 |
| 4 | Nevada | 89427 | $492 | $8.25 | 60 |
| 5 | Missouri | 65101 | $458 | $7.65 | 60 |
| 6 | Indiana | 47905 | $462 | $7.25 | 64 |
| 7 | California | 93441 | $602 | $9.00 | 67 |
| 8 | New Mexico | 88310 | $557 | $7.50 | 74 |
| 9 | New York | 14580 | $669 | $8.75 | 76 |
| 10 | Montana | 59602 | $625 | $8.05 | 78 |
| 11 | Connecticut | 06498 | $728 | $9.15 | 80 |
| 12 | Nebraska | 68504 | $662 | $8.00 | 83 |
| 13 | Pennsylvania | 16823 | $611 | $7.25 | 84 |
| 14 | Washington | 99163 | $795 | $9.47 | 84 |
| 15 | Kansas | 67401 | $625 | $7.25 | 86 |
| 16 | Vermont | 05446 | $826 | $9.15 | 90 |
| 17 | Florida | 32669 | $755 | $8.05 | 94 |
| 18 | Mississippi | 39759 | $688 | $7.25 | 95 |
| 19 | Tennessee | 37686 | $721 | $7.25 | 99 |
| 20 | Wisconsin | 53081 | $727 | $7.25 | 100 |
| 21 | Arizona | 86426 | $805 | $7.25 | 100 |
| 22 | Arkansas | 72768 | $751 | $7.50 | 100 |
| 23 | Wyoming | 82007 | $732 | $7.25 | 101 |
| 24 | Alabama | 36543 | $759 | $7.25 | 105 |
| 25 | Georgia | 31601 | $763 | $7.25 | 105 |
| 26 | Virginia | 22652 | $787 | $7.25 | 109 |
| 27 | Idaho | 83712 | $791 | $7.25 | 109 |
| 28 | Texas | 76306 | $802 | $7.25 | 111 |
| 29 | Colorado | 80525 | $916 | $8.23 | 111 |
| 30 | Louisiana | 71021 | $811 | $7.25 | 112 |
| 31 | Oregon | 97330 | $1,060 | $9.25 | 115 |
| 32 | Utah | 84772 | $848 | $7.25 | 117 |
| 33 | Minnesota | 56003 | $939 | $8.00 | 117 |
| 34 | Maryland | 21780 | $1,049 | $8.25 | 127 |
| 35 | South Carolina | 29692 | $943 | $7.25 | 130 |
| 36 | Maine | 04105 | $1,039 | $7.50 | 139 |
| 37 | Oklahoma | 74003 | $1,019 | $7.25 | 141 |
| 38 | Michigan | 49866 | $1,204 | $8.15 | 148 |
| 39 | Delaware | 19939 | $1,327 | $8.25 | 161 |
| 40 | Ohio | 44833 | $1,330 | $8.10 | 164 |
| 41 | Kentucky | 41075 | $1,227 | $7.25 | 169 |
| 42 | West Virginia | 25427 | $1,370 | $8.00 | 171 |
| 43 | New Jersey | 07933 | $1,446 | $8.38 | 173 |
| 44 | New Hampshire | 03303 | $1,261 | $7.25 | 174 |
| 45 | Rhode Island | 02842 | $1,569 | $9.00 | 174 |
| * | Alaska | 99829 | $8.75 | ||
| * | Hawaii | 96722 | $7.75 | ||
| * | Massachusetts | 02158 | $9.00 | ||
| * | North Dakota | 58285 | $7.25 | ||
| * | South Dakota | 57069 | $8.50 | ||
| * | Washington, D.C. | 20006 | $10.50 | ||
| National average | $841 | $7.92 | 106 | ||
| * Data missing or unavailable at time of publication All data taken from http://www.carinsurance.com/state/Illinois-car-insurance.aspx |
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Is cheaper car insurance available for young drivers?
C insurance quotes have more to do with the driver than the car and the perceived risk they pose. These are the relevant factors that insurance companies consider before offering you a quote:
Your driving record: More than one violation or accident is going to increase the cost of insurance.
Your credit: If it’s low, you’re seen as a bigger risk of a claim and charged more in many states.
Your mileage: The less you drive, the less risk you have of hitting someone.
Your insurance history: If you’ve let your policy lapse, even for a few days, you’ll pay more.
Your car: If your car has a significantly higher rate of claims than most, your liability rates will reflect that risk.
Remember that no two insurers offer identical rates, and even on state-minimum policies, premiums can differ by hundreds of dollars a year. Whether you're a parent or a teen, it’s worth it to research and compare insurance quotes to help you make the best choice.
This article is adapted with approval from carinsurance.com: http://www.carinsurance.com/Articles/10-factors-that-affect-your-car-insurance-rates.aspx.
