Why Hawaii's car insurance market is a case of its own

By the usual national measures, Hawaii is cheap, not expensive. In the NAIC's report on 2023 data, the average Hawaii driver spent $888.07 on liability, collision and comprehensive coverage, the fifth lowest among the 50 states and the District of Columbia, against a national average of $1,281.92. That surprises people who expect island shipping costs and a small market to push prices up. The explanation is a mix of a no-fault law that caps medical benefits at $10,000 unless you buy more, a state ban on pricing by age and driving experience, and a regulator that reviews rates in advance. The ranking is also less stable than it looks, because Hawaii doubled its minimum liability limits on January 1, 2026.

Where Hawaii ranks

The numbers below come from the National Association of Insurance Commissioners' 2022/2023 Auto Insurance Database Report, published in 2025. The "average expenditure" measure divides total liability, collision and comprehensive premium by liability car-years, so it includes cars that carry liability only. The "combined average premium" adds the three coverages' averages, so it describes a full-coverage policy.

Two features of this table pull in opposite directions. Hawaii's roads carry more traffic per mile than any other state's in the NAIC data, which tends to raise collision claims. Yet its premiums are far below average and the gap widened between 2019 and 2023 (my calculation from the report's Table 4). The NAIC cautions that comparisons between states should be treated with a high degree of caution. Its list of factors includes weather, driving locations, accident rates, traffic density, theft, repair costs, medical and legal costs, and per capita disposable income, and no single factor explains a state's rank.

The no-fault law and what it pays

Hawaii is a no-fault state: after a crash, your own policy pays your medical costs regardless of who caused it, and your right to sue is limited. The rules are in HRS chapter 431:10C. If you are new to the idea, no-fault vs at-fault states and Personal injury protection (PIP) explained cover the basics.

What personal injury protection covers

Under HRS 431:10C-103.5, personal injury protection benefits are "all appropriate and reasonable treatment and expenses necessarily incurred as a result of the accidental harm," a list that includes medical, hospital, surgical, dental, chiropractic, ambulance, physical therapy, rehabilitation and therapeutic massage when prescribed. The statute caps benefits at an aggregate $10,000 per person, and allows insurers to offer additional coverage above that. The Hawaii Insurance Division's 2026 minimum-limits FAQ confirms that Hawaii law "continues to require" at least $10,000 of PIP for your own medical and rehabilitation costs.

The $5,000 threshold

The right to sue works through a threshold. Under HRS 431:10C-306, tort liability for accidental harm from motor vehicle accidents is abolished except where:

• death occurs;
• the injury involves a significant permanent loss of use of a part or function of the body;
• the injury is a permanent and serious disfigurement that subjects the person to mental or emotional suffering; or
• the PIP benefits incurred by the person "equal or exceed $5,000."

The statute lists what counts toward the $5,000. It includes PIP benefits incurred, paid or payable, amounts paid under social security, workers' compensation or public assistance laws, applicable deductibles and copayments paid, and amounts paid by health insurance for someone not entitled to PIP, within the allowable charges. The NAIC's table lists Hawaii's threshold as $5,000, against $2,000 for Massachusetts, another no-fault state.

Here is a hypothetical to show how it works. Say a driver is hit by a texting driver and has $3,800 in medical bills. Her PIP pays them, she has no permanent injury, and she is below the threshold: she cannot sue the other driver for pain and suffering, though her medical costs are covered. Say instead she has $6,200 in bills. Now the PIP benefits incurred exceed $5,000, so the tort protection no longer applies and she may seek non-economic damages from the other driver. These numbers are invented to show the mechanism. How a particular bill counts depends on the statute's rules, so a licensed attorney or the Insurance Division is the place for specifics. The reasoning behind pairing a dollar threshold with a benefits cap is covered in Do no-fault states really cost more? Comparing premiums by system.

A threshold this low has a predictable effect on claims. It limits how many injury claims reach liability coverage, which is part of why liability premiums can run lower in no-fault states, though the national comparison is mixed and other factors confound it.

What you must carry in 2026

Hawaii raised its mandatory liability limits for new and renewal policies effective on or after January 1, 2026. The Division's FAQ gives the new minimums: $40,000 per person and $80,000 per accident for bodily injury and $20,000 for property damage, "commonly shown as 40/80/20." The previous minimum was 20/40/10. HRS 431:10C-301(b) sets out the requirement and adds three more:

1. Uninsured motorist coverage in the bodily injury limits, unless the named insured rejects it in writing.
2. Underinsured motorist coverage offered conspicuously, with a priced offer and a signature line for written rejection.
3. No stacking, except that insurers must offer the option to stack uninsured and underinsured coverage and the option to select it up to the bodily injury limits.

The Division was candid about the cost. It said doubling the limits "may result in an average premium increase of about 25%," while noting that actual results vary with driving record, vehicle and claims history. Say a driver paid $900 a year at the old minimums (a hypothetical): a 25 percent rise would add $225, for $1,125. The 2023 NAIC data predate the change, so they likely understate what Hawaii drivers now pay. For the general question, see do higher state minimum limits raise everyone's rates?.

The insurance commissioner's role

Hawaii is a prior-approval state, which the NAIC records for private passenger auto in 2020, 2021, 2022 and in its current column. The rules sit in HRS chapter 431:14.

• Filing. Under HRS 431:14-104, insurers file every manual of rates, rating plan and modification through the NAIC's SERFF system, with a $50 fee, along with supporting information. A filing sits for a waiting period of 30 days, which the commissioner may extend by up to 15 days with written notice. The filing "shall be deemed to meet the requirements" of the law unless the commissioner disapproves it within that window. If the commissioner asks for more information, the clock starts over once it arrives.
• Standards. Under HRS 431:14-103, rates cannot be excessive, inadequate or unfairly discriminatory, and the commissioner weighs loss experience, expenses, investment income and a reasonable margin for underwriting profit.
• Mandating new filings. Under HRS 431:14-103.3, if the commissioner has "actuarially sound information" that current rates may be excessive, inadequate or unfairly discriminatory, the commissioner may require insurers to submit new filings within 120 days, with a hearing process if the insurer objects.

In practice review can take longer than the statutory window suggests. A February 2024 actuarial study by Milliman, commissioned by the National Association of Mutual Insurance Companies, an insurer trade group, measured filing-to-disposition times for each state's top 10 personal auto insurers. Hawaii's average ranged from 66 to 258 days between 2013 and 2022, and was 66 days in 2022. The report groups Hawaii with California and Washington as states where times were typically over 100 days. Read it as one industry-funded view, not a neutral audit. The broader debate about whether approval systems raise or lower prices is in prior approval vs file-and-use: do regulated states pay more or less?.

Rating bans that change the average

Hawaii restricts what insurers may use more than most states do. HRS 431:10C-207 says no insurer may base any standard or rating plan, "in whole or in part, directly or indirectly," on a person's race, creed, ethnic extraction, age, sex, length of driving experience, credit bureau rating, marital status or physical handicap.

The mechanism matters for the statewide average. When insurers cannot charge more for a 17-year-old with no driving experience, the cost of that group's claims is spread over everyone else, so young and new drivers pay less than an unrestricted market would charge them and others pay somewhat more. I have not seen a Hawaii-specific measurement of that shift. Because the NAIC average blends all drivers, it can differ a lot from a given driver's own quote. Two guides on the underlying factors are how age, gender and marital status affect car insurance and credit-based insurance scores and car insurance.

Island economics and a thin market

Parts, repairs and distance

Hawaii is an island chain, so vehicles and replacement parts have to be shipped or flown in. The mechanism is easy to follow: freight adds to the price of parts, shops compete in a smaller labor pool, and a repair that waits for a part that is not on the island lengthens rental-car costs. I could not find a Hawaii Insurance Division or NAIC source that measures island repair costs or labor rates, so I am not quoting a figure. General repair-cost drivers are in why car repairs cost so much more than they used to. What the NAIC data do show is that Hawaii's per-vehicle spending is low despite those costs, which suggests that other features of the market outweigh them in the averages.

Who sells insurance there

A small market limits how many insurers choose to compete. The Milliman report's table of 2022 market concentration shows Hawaii with $836,992 thousand in direct written premium, 18 insurers holding at least 0.10 percent of the market, and shares of 28.9 percent for the largest insurer, 69.0 percent for the top four and 91.4 percent for the top eight. California's top four held 45.1 percent. Milliman's Herfindahl-Hirschman measure put Hawaii among five jurisdictions that it classed as moderately concentrated. how concentrated the auto insurance market is, nationally and by state explains that measure.

The residual plan

Hawaii also runs a joint underwriting plan. The Hawaii Joint Underwriting Plan insures drivers who cannot get coverage from a licensed company or have multiple accidents or convictions, and all motor vehicle insurers in the state must participate. Its coverage matches what other drivers can buy but may cost more. Under HAR 16-23-80, the commissioner sets the plan's rates, rules and territories after consulting its board. It is small: the NAIC counted 105 residual-market car-years against 943,705 total in 2022, about 0.01 percent. See assigned risk plans: insurance of last resort for how these plans work elsewhere.

Tourism and rental cars

Visitors rent cars in Hawaii, and the law addresses rentals directly. HRS 431:10C-301(a)(2) requires the policy on a U-drive (rental) vehicle to pay on behalf of the renter or any permitted operator the sums they are legally obligated to pay for damage to others' property, subject to exceptions. The owner and insurer keep a right of subrogation against the renter for breach of the rental contract, and the lessor must give other parties the information it has about the renter and driver on request.

The statute does not say how rental claims affect premiums, and I found no state or NAIC figure for it. The mechanism is plausible but unmeasured: a large rental fleet adds unfamiliar drivers on unfamiliar roads, and the fleet's insurers carry the property damage exposure. If you are renting, read accidents in a rental car: whose insurance pays before you decline the counter's coverage.

Why the ranking is not simple

"Is Hawaii expensive or cheap?" depends on what you measure.

For more on income-based comparisons, see car insurance affordability by state: premium as a share of income.

What to check on your own policy

1. Read your declarations page after the first 2026 renewal. Confirm the liability limits are at least 40/80/20 and that PIP shows at least $10,000.
2. Confirm your uninsured and underinsured choices in writing. The statute lets you reject uninsured coverage in writing; decide deliberately, not by default.
3. Ask whether higher PIP is offered. Insurers may sell PIP above the $10,000 aggregate, and a serious injury can exceed it.
4. Keep medical records and bills. Your total of PIP benefits incurred matters to the $5,000 threshold.
5. Ask about parts and repair options at renewal, since island repair times and parts sourcing affect rental-car days.
6. Compare more than price, including the limits and endorsements on each quote. state car insurance requirements lookup shows current minimums for other states.

Common questions

Is Hawaii a no-fault state?

Yes. The NAIC lists it as no-fault with a $5,000 threshold, and HRS 431:10C-306 abolishes tort liability for accidental harm from motor vehicle accidents except in the listed circumstances.

Do I need uninsured motorist coverage in Hawaii?

The policy must include it in the bodily injury limits unless the named insured rejects it in writing, under HRS 431:10C-301(b)(3). A rejection should be a deliberate written choice.

Why can't Hawaii insurers charge more for young drivers?

HRS 431:10C-207 prohibits rating based on age and length of driving experience, among other factors. The cost of young drivers' claims is therefore spread across all policyholders.

Will my rates rise in 2026 because of the new limits?

Possibly. The Division said that doubling limits may raise the average premium about 25 percent, while stressing that individual results vary by driver, vehicle and claims history. Ask your insurer what changed at renewal.

Key takeaways

• On the NAIC's 2023 data, Hawaii ranked 47th of 51 for average expenditure ($888.07 against $1,281.92), even though its roads carry the most traffic per highway mile.
• Hawaii's no-fault law pays PIP of at least $10,000 per person and bars suits for pain and suffering unless the injury is permanent or serious or PIP benefits reach $5,000.
• State law bans rating by age, sex, driving experience, credit and marital status, which blends costs across groups.
• The market is concentrated (top four insurers 69 percent in 2022, per an industry-funded study) and the joint underwriting plan is tiny.
• Minimum limits doubled to 40/80/20 on January 1, 2026, so 2023 data likely understate current prices.