Cheapest Car Insurance and Minimum Wages

Last reviewed: September 16, 2026.

Car insurance is a fixed cost no matter what you earn, so it hits minimum-wage workers hardest. The federal minimum wage has stayed at $7.25 an hour since 2009, but most states now set their own, higher minimum — which means how many hours of work it takes to cover a year of state-minimum liability coverage varies enormously depending on where you live.

Source: state minimum wage figures from a 2026 multi-state survey (Paycor, "Minimum Wage Rate by State"); car insurance figures from Experian, "Car Insurance Average Costs by State," published September 9, 2026, and CarInsurance.com, "US State Minimum Liability Car Insurance Requirements," updated April 15, 2026.

Where the federal minimum wage still applies

Twenty states still use the federal floor of $7.25 an hour, including Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin and Wyoming. In those states, a full-coverage policy priced near the state average can still take a meaningful bite out of a minimum-wage paycheck.

States with the highest minimum wage

At the other end, Washington ($17.13/hr), Washington D.C. ($17.95/hr), Connecticut ($16.94/hr) and California ($16.90/hr) have the highest minimum wages in the country as of 2026, which cushions the cost of insurance considerably even in states where premiums themselves run above the national average.

What this looks like in practice

Comparing a full-coverage average premium against the applicable state minimum wage gives a rough sense of the burden. Two examples:

• Idaho: one of the cheapest states for car insurance, at $1,560 a year on average (Experian) — on the federal $7.25/hr minimum wage, that's about 215 hours of work a year.
• Louisiana: among the more expensive states, at $3,322 a year on average (Experian) — also on a $7.25/hr wage, that's roughly 458 hours a year, more than double Idaho's burden.

The gap is driven by two separate things: how much a state's insurers charge on average, and how high that state's minimum wage is. A state can be cheap to insure in dollar terms and still be expensive relative to a low wage, or the reverse.

What you can do when costs exceed your budget

You can't negotiate your way out of a state's minimum coverage requirement, but you can control how much you pay for it:

• Drive safely. A clean record over time is still the biggest single factor in what you're quoted.
• Keep an eye on your credit-based insurance score where your state allows insurers to use it — it affects pricing in most states.
• Shop around every renewal. Rates for the same coverage can vary widely between insurers, and loyalty doesn't always pay.
• Ask about low-income or state-sponsored programs. A handful of states run low-cost liability programs for qualifying drivers — check with your state's department of insurance.

Centris Insurance editorial team.