Cheap car insurance for young drivers
Even a no-frills car represents a huge expense for the 4 million or so Americans working a minimum-wage job.
But it represents a bigger challenge in some places than in others. Young drivers in Rhode Island and New Hampshire will work nearly three times as long as their counterparts in Illinois to buy the legally required state-minimum liability coverage, according to a CarInsurance.com analysis.
We ranked states by the number of hours needed to buy coverage, comparing their cheapest car insurance for 18-year-olds with their minimum wage.
This is as cheap as insurance gets, and there are few trade-offs available to save further. For example, you can t reduce your limits below the minimum amounts. And you can t raise your deductible. There are no deductibles on liability insurance.
According to the Bureau of Labor Statistics, the average hourly wage was $24.57 in December 2014, up from $24.17 per hour a year earlier. The average annual outlay for liability car insurance, says the Insurance Information Institute, was $504 as of 2012.
This means an average worker could buy a year of liability car insurance with about 21 hours of work.
But consider an 18-year-old working an entry-level job. The average state minimum wage as of July is just $7.92 an hour. And teenagers pay much more for insurance: The average price of a year of bare-bones coverage was $841, according to rates gathered from the national carriers in CarInsurance.com s online quotes tool.
At those averages, a year of state minimum liability insurance would require 106 hours of work.
Because both wages and car insurance rates swing dramatically, we looked at affordability by comparing the cost of legal-minimum auto insurance with each state s minimum wage. Young drivers in Rhode Island and New Hampshire had it worst, with 174 hours required to buy the cheapest liability policy we found. A young driver finds much cheaper insurance in Illinois — a year of liability insurance takes just 56 hours of work.
How much is car insurance for an 18-year-old?
These are best-case scenario numbers. Keep in mind that car insurance for young drivers is always expensive.
We compared rates 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. We chose the least expensive rate we found. Unless you re 18, male, a resident of the particular addresses we used and proud owner of a 1997 Ford Taurus, your quotes probably won t exactly match ours, which are only a snapshot of available rates.
They are, however, a good indicator of the financial hurdle confronting teenagers who depend on their own car to commute to school or work.
What an 18-year-old pays for state-minimum liability