What if you found out that you lived in one of the most expensive states for car insurance? You probably wouldn't pack your bags and move just to get lower auto premiums. But you might be curious why you're paying more and whether there's anything you can do to get a better rate.
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A new study by CarInsuranceQuotes.com looks at insurance costs state-by-state and examines why rates vary so much. CarInsuranceQuotes.com used the median annual car insurance premium in each state (plus the District of Columbia) to determine which states' residents pay the most and least for auto coverage. Here are the results:
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Most expensive
1. Michigan ($4,490 median annual premium)
2. Louisiana ($2,912)
3. District of Columbia ($2,570)
4. New Jersey ($2,556)
5. Delaware ($2,456)
6. New York ($2,334)
7. Kentucky ($2,292)
8. Rhode Island ($2,132)
9. West Virginia ($2,074)
10. Nevada ($2,070)
Least expensive
51. North Carolina ($860)
50. Oregon ($1,108)
49. Massachusetts ($1,128)
48. Ohio ($1,128)
47. Maine ($1,160)
46. Iowa ($1,202)
45. Hawaii ($1,244)
44. Indiana ($1,268)
43. Utah ($1,270)
42. Idaho ($1,290)
State regulations are a major reason rates vary so much. Car insurance is so expensive in Michigan because it's a no-fault state. All policyholders must buy personal injury protection, which covers their own medical costs in an accident regardless of who is at fault. It's also the only state that guarantees unlimited personal injury protection, says John Egan of CarInsuranceQuotes.com.
Other factors also play a role: the costs of car repair and medical care, the amount of insurance fraud taking place, the number of uninsured drivers and the number of people living in an area. Rates in Louisiana are so high because the state leads the country in injury claims, and policyholders are more likely than those in other states to hire attorneys, according to CarInsuranceQuotes.com.
On the flip side, the cost of insurance in North Carolina is low, in large part, because a state bureau sets a base rate. The state also has a subsidized high-risk insurance pool for riskier drivers who companies won't insure at the low base rate.
Egan says that it's important to remember that, regardless where you live, you can get a better deal on auto insurance by shopping around. The Consumer Federation of America found that rates for the same insurance for a hypothetical consumer ranged from $762 to $3,390. See our tips for reshopping your car insurance.
CarInsuranceQuotes.com also offers these tips for lowering your rates:
Ask about discounts. Although the base rates are high in Michigan, insurers do offer discounts that help lower premiums. For example, if you have a good credit history, you may qualify for a discount. Or you can save by bundling your auto and homeowners policies with one insurer.
Consider usage-based coverage. You have to agree to let the insurance company install a device in your vehicle to monitor your driving. But you'll pay a lower premium if the insurance company determines that you're a good driver. See Data-Tracking Technology Can Help Lower Your Car Insurance.
Consider liability only. If your car is five or more years old, depending on its value, you may be better off dropping both collision and comprehensive coverage and banking the savings. Estimate your car's value at the Kelley Blue Book site to decide whether the extra you're paying for collision and comprehensive coverage is worth it.
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