Did you know that the average cost of car insurance varies from one state to the next? It's true — even among identical policies with the same company. For example, your brother in New Mexico might pay $800 annually for his policy while you pay $700 for the same policy, with the same company, in Kentucky. Some of the price difference relates to population density, weather, and certain age and sex demographics. But the largest contributing factors to price differences at the state level are regulations and taxes.

According to statistics from 2008, the highest average cost of car insurance in the United States was not actually found in a state; it was found in the District of Colombia. Following Washington DC were Louisiana, New Jersey, Florida, and New York. All of the top five have peculiar circumstances associated with them that cause high insurance rates. Beginning with Washington DC, car insurance is costly their because of a very high population density, a higher rate of accidents per capita, and a higher rate of car theft.

The following chart is based on the latest data from the National Association of Insurance Commissioners on 2006-2008 premiums.

State 2008 Average Expenditure 2008 Rank 2007 Average Expenditure 2007 Rank 2006 Average Expenditure 2006 Rank Alabama  $667 32 $684 31 $684 34 Alaska $904 12 $923 13 $955 11 Arizona $858 14 $873 14 $913 14 Arkansas $653 38 $660 36 $684 34 California $776 20 $809 19 $843 16 Colorado $729 23 $738 24 $785 23 Connecticut $950 9 $964 10 $981 10 Delaware $1,007 6 $1,012 7 $1,024 8 D.C. $1,126 1 $1,140 1 $1,164 1 Florida $1,055 4 $1,043 5 $1,069 5 Georgia $765 21 $782 21 $788 22 Hawaii $816 18 $837 16 $853 15 Idaho $562 47 $564 47 $577 46 Illinois $720 27 $723 26 $740 27 Indiana $612 42 $618 42 $631 41 Iowa $519 50 $518 50 $536 48 Kansas $576 46 $568 46 $579 45 Kentucky $699 29 $720 29 $739 28 Louisiana $1,105 2 $1,096 3 $1,094 3 Maine $600 43 $611 43 $634 40 Maryland $922 10 $933 11 $949 12 Massachusetts $903 13 $981 9 $1,042 6 Michigan $907 11 $928 12 $925 13 Minnesota $698 30 $721 28 $753 25 Mississippi $654 36 $680 32 $746 26 Missouri $657 35 $658 37 $673 35 Montana $667 31 $666 33 $661 36 Nebraska $547 48 $554 48 $584 44 Nevada $970 8 $1,000 8 $1,006 9 New Hampshire $727 25 $750 23 $793 21 New Jersey $1,081 3 $1,104 2 $1,152 2 New Mexico $728 24 $730 25 $737 29 New York $1,044 5 $1,047 4 $1,083 4 North Carolina $595 44 $591 44 $596 42 North Dakota $503 51 $512 51 $530 49 Ohio $617 41 $628 41 $654 38 Oklahoma $663 33 $646 39 $659 37 Oregon $727 26 $723 27 $726 30 Pennsylvania $817 17 $820 17 $832 18 Rhode Island $986 7 $1,017 6 $1,038 7 South Carolina $751 22 $762 22 $756 24 South Dakota $520 49 $534 49 $554 47 Tennessee $641 39 $649 38 $654 38 Texas $854 15 $808 20 $820 20 Utah $709 28 $697 30 $702 31 Vermont $653 37 $662 34 $687 32 Virginia $663 345 $661 35 $685 33 Washington $840 16 $841 15 $839 17 West Virginia $808 19 $819 18 $827 19 Wisconsin $581 45 $582 45 $590 43 Wyoming $632 40 $631 40 $639 39 United States $789 NA $795 NA $817 NA

At first glance it would seem as though Louisiana should not be so expensive due to their demographics. But you have to remember how many vehicles were lost as a result of Hurricane Katrina in 2005. Three years later insurance companies were still paying out claims; claims that will take them years into the future to recover from. As a result, everyone's rates went up to help mitigate some of the losses.

In terms of New Jersey and New York, regulation and taxes are killing them. Even though state governments claim they don't tax insurance policies, the fact is they do. Any "surcharge" or "fee" charged by the state government is a tax, regardless of what that state wants to call it. Furthermore, both states have a tort system based on the "no-fault" model. No-fault insurance automatically lends itself to higher premiums because insurance companies have no hope of avoiding payments — even if an accident is someone else's fault.

Finally, Florida is also fairly high due to population densities in Miami, Daytona, Tampa, and Orlando. While there is a lot of wide-open space in that state, these four cities account for the greatest concentration of residents. Furthermore, accident and theft rates in the Miami area affect all the state's drivers. And while we’re at it, don't forget the number of seniors that retire to Florida in their older years. All of these things add up to make Florida a state with a fairly high accident rate.

There are certainly a lot of other things that go into determining how much you pay for car insurance. But the average cost of car insurance by state clearly demonstrates there are some trends that affect every driver, regardless of where he or she lives. Like it or not, there are just some states where the annual cost of living is disproportionately high. Hopefully you don't live in one of them.