ValuePenguin Blog States That Pay the Most — and Least — on Insurance

Insurance costs are on the rise, and consumers are certainly feeling it in their pockets. Overall, American households spend an average of 5.3% of their income on health, auto and home insurance — but that spending varies by state. ValuePenguin researchers looked at where households pay the largest (and smallest) percentage of their income for these insurance types. Here's what we found. On this page Key findings U.S. households spend an average of $5,423 annually on insurance Michigan households spend the highest percentage of their income on insurance Hawaii households spend just 3.8% of their income on insurance Households are spending 7.0% less on insurance (based on income) year over year Saving on insurance: Expert tips Methodology Key findings American households spend an average of 5.3% of their income — or $5,423 — on health, auto and home insurance. Health insurance accounts for the biggest chunk of insurance costs at an average of 39.2%, while auto and home insurance account for an average of 32.8% and 28.0%, respectively. Michigan households spend the highest percentage of their income on health, auto and home insurance. Households in the state spend an average of 9.0% — or $7,940 — on these insurances, ahead of Louisiana (8.0%, or $6,306) and Oklahoma (7.4%, or $6,152). Hawaii households spend the smallest percentage of their income on health, auto and home insurance. Households in the state spend an average of 3.8% — or $4,596 — on these insurances, with Alaska (4.1%, or $4,446) and Washington (4.1%, or $4,726) next. U.S. households are spending 7.0% less of their income year over year on these insurances. Households spent an average of 5.7% of their income — or $5,507 — the prior year on health, auto and home insurance. Michigan (12.3%, or $10,567) and Louisiana (9.4%, or $7,202) were at the top the year before, too. Hawaii (3.9%, or $4,427) remained at the bottom. U.S. households spend an average of $5,423 annually on insurance On average, American households spend 5.3% of their income on health, auto and home insurance — amounting to $5,423. Broken down by type, health insurance accounts for the biggest chunk of the costs — $2,127 annually, or 39.2% of insurance costs. Meanwhile, auto insurance accounts for 32.8% of total insurance costs, at an average of $1,780 annually. That's followed by home insurance at an average of $1,516 annually, or 28.0% of insurance costs. Average cost of insurance by type Insurance typeAverage annual cost% of total insurance costHealth$2,12739.2%Auto$1,78032.8%Home$1,51628.0%Overall cost$5,423N/ASources: ValuePenguin analysis of U.S. Census Bureau Current Population Survey Annual Social and Economic Supplement and Quadrant Information Services data. According to ValuePenguin home insurance expert Nick VinZant, rising costs are likely to blame for insurance taking up a significant chunk of people's income. "That's why it's so important to shop around," he says. "People can really save by shopping around for all their insurance policies." Health insurance premiums, in particular, have risen dramatically over the past decade. Between 2010 and 2022, individual coverage premiums rose nearly 57% and family coverage premiums more than 63%, according to the 2022 and 2010 Kaiser Family Foundation Employer Health Benefits surveys. That's largely because medical spending as a whole has risen. According to another ValuePenguin study on health care expenditures, medical spending increased 14% between 2016 and 2019 alone. Not only has the cost to treat most medical conditions risen (with some conditions costing 120.4% more to diagnose and treat), but administrative and pharmaceutical costs have also risen by as much as 24.2% in the same period. Auto and homeowner insurance have also seen substantial increases over various periods. While average homeowners insurance premiums increased 15% between 2013 and 2018, average car insurance rose 8.4% between 2022 and 2023. Michigan households spend the highest percentage of their income on insurance By state, Michigan households spend the highest percentage of their income on health, auto and home insurance. Households in the state spend an average of 9.0% on these insurances — or an average of $7,940. Notably, the largest chunk of this is auto insurance — in Michigan, auto insurance accounts for 60.3% of total insurance costs. Michigan residents pay $4,788 a year for their auto insurance, the highest in the U.S. and 168% higher than the national average. This is largely due to the state's no-fault law: Insurers are required to cover the reasonable and necessary medical expenses for drivers and their passengers injured in an accident, regardless of fault. Michigan spends the most on auto insurance, but which states claim the other two categories? For health insurance, New Jersey tops the list. In this state, health insurance accounts for $2,762 (or 45.8%) of insurance costs. Meanwhile, Colorado tops the list for home insurance costs. Home insurance accounts for $2,900 (or 40.4%) of insurance costs in this state. States where households spend the highest percentage of income on health, auto and home insurance RankStateAverage household incomeHealth insurance annual costHome insurance annual costAuto insurance annual costTotal insurance annual costPercentage of income to insurance1Michigan$87,784$1,929$1,223$4,788$7,9409.0%2Louisiana$78,951$1,872$2,058$2,376$6,3068.0%3Oklahoma$82,644$1,918$2,278$1,956$6,1527.4%4Florida$94,357$1,836$2,207$2,856$6,8997.3%5Kansas$90,601$2,585$2,265$1,656$6,5067.2%5Nebraska$92,030$2,323$2,554$1,704$6,5817.2%Sources: ValuePenguin analysis of U.S. Census Bureau American Community Survey, U.S. Bureau of Economic Analysis (BEA), U.S. Census Bureau Current Population Survey Annual Social and Economic Supplement and Quadrant Information Services data. Next is Louisiana, where residents spend 8.0% of their income — or $6,306 — on the three insurance types combined. Auto insurance again makes up the chunk of the costs, though it's significantly lower than costs in Michigan. Louisiana residents pay an average of $2,376 on auto insurance annually, accounting for 37.7% of total insurance costs in the state. Oklahoma follows. Residents here spend 7.4% of their income on health, auto and home insurance — or $6,152. Home insurance accounts for the largest portion of the costs here, with residents spending $2,278 annually, or 37.0% of total insurance costs. This could be due to the risk of severe storms in the state: Between 2017 and 2021, tornadoes were the leading cause of severe weather damages in Oklahoma, causing $95.6 million in property damages. In 2022, Oklahoma experienced 58 tornadoes. Hawaii households spend just 3.8% of their income on insurance When it comes to the states that spend the lowest percentage of their income on insurance, Hawaii leads. On average, households in the Aloha State spend 3.8% of their income on health, auto and home insurance, or $4,596 annually. Following that, households in Alaska spend an average of 4.1% of their income on these insurance types — or $4,446 annually. Washington state ties here at 4.1%, or $4,726. While these states spend the smallest percentage of income on insurance costs, it's worth noting that West Virginia ranks lowest for average insurance costs. Households in this state spend an average of just $4,162 annually on health, auto and home insurance. States where households spend the smallest percentage of income on health, auto and home insurance RankStateAverage household incomeHealth insurance annual costHome insurance annual costAuto insurance annual costTotal insurance annual costPercentage of income to insurance1Hawaii$119,542$1,737$987$1,872$4,5963.8%2Alaska$109,247$1,735$1,307$1,404$4,4464.1%2Washington$114,328$1,898$1,292$1,536$4,7264.1%4California$125,345$1,831$1,839$1,752$5,4224.3%5New York$116,493$1,921$1,418$1,788$5,1274.4%5Utah$108,308$2,265$897$1,656$4,8184.4%5Pennsylvania$96,749$2,081$736$1,488$4,3054.4%Sources: ValuePenguin analysis of U.S. Census Bureau American Community Survey, U.S. Bureau of Economic Analysis (BEA), U.S. Census Bureau Current Population Survey Annual Social and Economic Supplement and Quadrant Information Services data. According to VinZant, risk likely plays the largest role in these states' rankings. "It boils down to risk factors," he says. "The less risk insurance companies think your state has, the less you're going to pay. States in the Midwest deal with severe storms, wildfires, tornadoes, flooding and drought, so they have some of the most expensive insurance policies in the nation." Although overall costs are comparatively low, households in these states may shell out significantly more for one type of insurance. Here's what takes up the largest chunk of insurance costs among the three states that rank lowest: Auto insurance accounts for 40.7% of insurance costs in Hawaii. Health insurance accounts for 39.0% of insurance costs in Alaska. Health insurance accounts for 40.2% of costs in Washington. In Alaska, competition between specialty care providers may play a role in high health insurance costs. Labor costs in the state are high — in fact, a 2020 report by Alaska Policy Forum found that spending on physician and clinical services in Alaska are 50% to 80% higher than the national average. Due to high labor cost