Where Auto Insurance is Most Expensive

by Jennifer Saranow Schultz
Wednesday, April 14, 2010

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Louisiana has the highest average auto insurance rates in the United States, while Maine has the lowest, according to new data from Insure.com that ranks the states according to their average insurance rates (see the full ranking below).

The data, which Insure.com released Monday, comes from a study Quadrant Information Services performed for Insure.com to find the most and least expensive vehicle to insure nationwide, which we covered in a March Bucks post. The data, which determined average insurance premiums rates for more than 2,400 vehicles from the 2010 model year from six large carriers across 10 ZIP codes in each state, also enabled a comparison of auto insurance rates in general across the states.

What's behind states' different rates?

According to Insure.com, states' different laws are partly to blame. "Our findings show that the financial ramifications of specific state laws and regulations are driving high rates in certain states," Amy Danise, senior managing editor of Insure.com, said in a statement. "No matter how good your own driving record is, you're paying for the decisions of lawmakers."

Ms. Danise said she had expected to see states with more urban areas at the top of the list but Insure.com discovered from talking with insurance agents that the states at the top of the list have certain regulations that drive up rates in those states. In Louisiana, for instance, more cases are settled out of court with expensive settlements because only cases with claims in excess of $50,000 receive a jury trial there. In Michigan, meanwhile, which had the second-highest average auto insurance rates, state law provides unlimited medical benefits for accident victims for life, probably pushing up auto insurance costs, according to Insure.com.

In contrast, population levels may be why certain states are at the bottom of the list. According to Ms. Danise, the states with the lowest insurance costs tend to be more rural. Maine, for instance, may have low auto insurance rates because its highways are less crowded, which may mean fewer crashes over all.

Here's the full ranking below, and let us know if it lines up with your experiences buying auto insurance in different states.

The most and least expensive states for car insurance:

Rank	State	Avg. Premium
1	Louisiana	$2,510.87
2	Michigan	$2,098.29
3	Oklahoma	$1,869.39
4	Montana	$1,857.96
5	California	$1,774.41
6	South Dakota	$1,772.83
7	Washington, D.C.	$1,753.19
8	Georgia	$1,751.42
9	Illinois	$1,679.15
10	Connecticut	$1,678.90
11	Arkansas	$1,648.80
12	New Mexico	$1,603.65
13	Rhode Island	$1,595.97
14	West Virginia	$1,589.69
15	Alaska	$1,572.21
16	Wyoming	$1,552.98
17	Maryland	$1,550.13
18	Kansas	$1,524.51
19	Kentucky	$1,515.30
20	Colorado	$1,480.97
21	Mississippi	$1,474.94
22	New Jersey	$1,473.73
23	New York	$1,463.21
24	Texas	$1,462.65
25	Florida	$1,453.20
26	Pennsylvania	$1,420.78
27	Delaware	$1,405.80
28	Missouri	$1,390.59
29	Minnesota	$1,381.09
30	Alabama	$1,380.38
31	North Dakota	$1,365.22
32	Hawaii	$1,306.97
33	Indiana	$1,302.51
34	Nevada	$1,282.50
35	Washington	$1,279.84
36	Utah	$1,234.30
37	Virginia	$1,233.36
38	Nebraska	$1,210.74
39	Oregon	$1,194.69
40	Idaho	$1,183.47
41	South Carolina	$1,182.18
42	Tennessee	$1,170.12
43	Arizona	$1,152.50
44	North Carolina	$1,130.45
45	Massachusetts	$1,043.80
46	Iowa	$1,039.04
47	New Hampshire	$1,011.23
48	Wisconsin	$1,010.93
49	Ohio	$999.86
50	Vermont	$968.58
51	Maine	$902.85

Source: Insure.com, from a study commissioned by Insure.com from Quadrant Information Services

http://finance.yahoo.com/insurance/article/109309/where-auto-insurance-is-most-expensive?mod=insurance-autos

Concerned About Uninsured Drivers? There Are Ways to Protect Yourself

One driver out of every seven in the U.S. is believed to have no auto insurance and that has broad repercussions for the 86 percent of drivers who do, according to the Insurance Information Institute (I.I.I.)

"Most people don't think about the uninsured or underinsured motorist coverage portion of their auto insurance policy until they are the victim of a hit and run accident, or are involved in a crash with a driver who either does not have auto insurance or has very minimal insurance," said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I.

Uninsured motorist (UM) coverage will reimburse you, a member of your family, or a designated driver for bodily injuries caused by a hit-and-run driver or an uninsured motorist. Underinsured motorist (UIM) coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. UIM coverage will also protect you if you are hit by a car as a pedestrian.

In a January 2009 study, the Insurance Research Council estimated that 14 percent of all drivers in the U.S. were uninsured in 2007, but found substantial variation among the states. The states with the highest percentage of uninsured motorists were New Mexico (29 percent), Mississippi (28 percent) and Alabama (24 percent). The states with the lowest percentage of uninsured drivers in 2007 were Massachusetts (1 percent), Maine (4 percent) and New York and North Dakota (5 percent each).

While auto insurance policies with both UM and UIM coverage are available nationwide, these are optional coverages in a majority of states.

Carrying UM coverage is required by law in 20 states and the District of Columbia. The states are: Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Vermont, Virginia and West Virginia. The price of uninsured motorist coverage varies considerably from state to state, depending in part on the percentage of drivers who are uninsured.

Only five of the states that insist their drivers carry UM coverage also mandate the purchase of UIM coverage; they are: Connecticut, Maine, Minnesota, North Carolina and Vermont.

There are some other ways drivers can receive protection. No-fault insurance laws, which are in effect in 12 states and Puerto Rico, provide some relief from uninsured motorists because accident victims are generally able to collect benefits from their own insurance companies, regardless of whether the other party has insurance coverage. Nevertheless, even if you live in a no-fault state, UM/UIM coverage is a cost-effective purchase because the policy provision provides an additional layer of financial protection.

Moreover, if you are in an accident caused by an uninsured motorist and you do not have UM coverage, your health insurance policy will usually pay medical bills related to that car accident. However, your health insurance will not pay for lost wages if you miss work, nor will a health insurance company seek redress for pain and suffering resulting from the crash. Lost wages and pain and suffering are paid for by the liability portion of the at-fault driver's auto insurance policy. But, if the at-fault driver has no or little coverage, the victim's UM or UIM policy provisions are accessed.

Every state, with the exception of New Hampshire and Wisconsin, requires its licensed drivers to purchase an auto insurance policy; Wisconsin has enacted a law that will mandate the purchase of an auto insurance policy in June 2010.
The IRC found the states with the highest percentage of uninsured motorists two years ago were New Mexico (29 percent), Mississippi (28 percent) and Alabama (24 percent). The states with the lowest percentage of uninsured drivers in 2007 were Massachusetts (1 percent), Maine (4 percent) and New York and North Dakota (5 percent).

Insurance Information Institute

Most Expensive Cars to Insure

Eyeing that 2007 Mercedes S Class with all the trimmings? Be prepared to pay through the nose for it.
And for the insurance.

It should come as no surprise that the more expensive the car, the more it will cost to insure it. But just how expensive may come as a shock. For modest coverage ($500 deductibles on collision and comprehensive coverage, $100,000 each for personal and property coverage and $25,000 each for medical and uninsured coverage) on this year's $135,400 Mercedes SL, owners will pay about $22,536 a year.

For pricey cars like this, 20% of the base price is typical. But for those with low monthly payments on high-end cars, that could mean spending more on insurance than on the car itself.

"The cost of the vehicle is primary when setting the price of a policy," says David Wurster, president of Vincentric, a Detroit-based automotive data firm that studies car- insurance costs. Vincentric gets its data from state agencies and averages these figures in compiling its list of most expensive yearly rates. "But there's also the type of vehicle it is. Sports-car owners tend to drive them a little more aggressively."

This, in turn, leads to higher-priced policies. With this in mind, it's no surprise that racy offerings from Mercedes, BMW and Porsche make for some of the most expensive cars to insure.

How It Works

"We start with the manufacturer's suggested retail price (MSRP)," says Kip Diggs, a spokesman for State Farm, the largest insurer of autos in the U.S. Diggs says State Farm then considers how expensive it is to repair each model. The more costly the parts, the higher the policy. For foreign brands with parts from afar, expect to pay more. "From there," Diggs says, "we look at safety features to see if a vehicle qualifies for a safety discount."

Allstate, the second-largest U.S. car insurer, also considers the MSRP, but places more weight on a policyholder's driving record.

"Pricing has more to do with the driver than the car," says spokesman Raleigh Floyd. "If there are two drivers with the same car, the driver with accident histories will have a higher rate. He has shown himself to be a higher risk." Those with a penchant for wrecking Ferrari Enzos on California's Highway 1, for example, can expect to pay more.

Age is also a factor. "A 17-year-old driver is going to be more expensive to insure than a 40-year-old with a family," says Floyd. "Experience counts. It counts a lot."

There are some anomalies in the ranking.

"You would think a Corvette convertible would be hideously expensive to insure," says State Farm's Diggs. "But that car is involved in very few accidents, so it's fairly low." This is because research shows Corvettes typically aren't driven every day.

More utilitarian models, like the Toyota Camry, however, can be more expensive to insure because with more road time, they are more likely to be involved in an accident. Vincentric doesn't collect data on exotics like Ferraris and Lamborghinis because, says Wurster, there are too few owners to make the data useful.

Policy pricing also has to do with where a car is garaged, with urban areas considered higher-risk. "In a more concentrated area, your chances of bumping into something are higher," says Floyd. "Jersey's going to be on one end of the spectrum, and a less populous state is going to be on the exact opposite."

But if you have a hundred grand to spend on a car, you're probably not worrying about insurance.

"For people of that caliber," says a salesman at Mercedes Benz Manhattan, "the cost of insurance really isn't an issue."

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-David Gelles