5 States with Unusually High Auto Insurance Rates
By: Mark Boyer
There are many factors that go into determining your auto insurance premium, including driving record, age and vehicle safety features. But one of the most important factors that goes into the calculation is your location. See more car safety pictures.
If you watch any amount of television in America these days, chances are you've viewed countless car insurance ads. They feature talking geckos, cavemen, perky sales people and "mayhem" personified as a car-wrecking villain. Ad spending by the insurance industry now tops $4 billion, and auto insurance makes up a big part of it. Insurance companies are getting aggressive with their ad campaigns because of increasing competition in the field, and because they want to attract new clients who, perhaps dissatisfied with escalating premiums, are increasingly taking to the Web to search for insurance quotes [source: Schultz].
There are many factors that go into determining your auto insurance premium, including driving record, age and vehicle safety features, but one of the most important factors that goes into the calculation is your location. Insurance companies tend to view some places as higher risk than others, and as a result, they require drivers in those places to pay more -- sometimes significantly more -- for insurance.
But isn't that undemocratic? Shouldn't everyone pay the same rate for the same service? Well, that's not how the insurance companies see it, as shown by the great disparity between the costs of car insurance in different parts of the country. For example, the average driver in Maine pays just $889 per year for car insurance, while a driver in Detroit, the nation's priciest city, pays a whopping $5,941 per year. But Detroit isn't the only place in the U.S. where people need to empty their wallets to cover their cars. Keep reading to see five states with unusually high auto insurance.
5: Washington, D.C.
The first entry to our little list of states with unusually high auto insurance isn't a state at all -- it's the District of Columbia. But as D.C. residents will tell you, The District functions like a state, with its own governance and a Department of Motor Vehicles that is separate from Virginia and Maryland. Washington, D.C. has a lot going for it -- great museums, history and the Cherry Blossom Festival -- but affordable auto insurance isn't one of them. Those corporate lobbyists must be to blame!
As far as cities are concerned, Washington, D.C. actually isn't in that bad shape; it hasn't cracked the top 10 of most expensive cities in recent years, and it's nowhere near Detroit, the country's most expensive city for car insurance. But at an average of $1,866 per year in 2012, the nation's capital is still pretty pricey.
The main reason that car insurance costs so much in D.C. is that it's generally more expensive to insure a car in a city than it is in a small town or rural area, and the entire district happens to be urban. Why do the insurance companies have against city-dwellers? For one thing, cities tend to have higher rates of theft and accidents, so they view them as higher risks. Also, cities and nearby suburbs tend to be the places where wealth is concentrated, and because of that, city dwellers often buy pricier cars than people who live in the country. The more expensive the car is, the more expensive it is to insure.
Who pays the least?
Maine consistently ranks as one of the nation's least expensive states to insure a car, at just $889 annually because the population is relatively spread out, which creates fewer opportunities for accidents, and it hasn't suffered from many major natural disasters in recent years [source: Marquand]. It's followed by Iowa ($985), Wisconsin ($987), Idaho ($1,011) and North Carolina ($1,022).
4: West Virginia
If having high car insurance rates were a contest, West Virginia would be the Cinderella story, climbing from the middle of the pack to become one of the top five most expensive states in America. From 2010 to 2012, West Virginia shot up in the rankings from No. 19 in 2010 to No. 14 in 2011, and all the way up to No. 4 in 2012. But of course, skyrocketing auto insurance isn't a contest that any state wants to win, and West Virginia residents have been feeling the pain.
Insurance premiums always result from a combination of factors. Like some of the other states that made Insure.com's top five list, West Virginia has experienced more than its fair share of natural disasters in recent years, including floods, mudslides, snow storms and tornadoes. That alone probably doesn't account for why rates are on the rise in West Virginia, but it's almost certainly a factor. The other factor that is sure to contribute to the escalating rates is the number of uninsured drivers on the road. In 2011, roughly one in seven West Virginia drivers was uninsured. When tens of thousands of people are driving with no auto insurance, those who do buy insurance end up pulling more than their own weight [source: Mothershead].
Michigan is the state that is most closely identified with automobiles, and the car's impact can be felt at all corners of the state. The roads are wider in Detroit than most cities to encourage driving, and many Michigan residents work at Ford and GM plants. So, you might assume that in a place with such a doting relationship to the automobile auto insurance would be fairly affordable, right? Wrong. Michigan consistently ranks among the top five states in the nation for high auto insurance, and in recent years the average price for car insurance in Michigan has remained more than $2,000 per year.
Part of the reason for Michigan's pricey auto insurance is a state law that provides unlimited medical benefits to accident victims for life. That's great for victims of car accidents, but for the average driver, it can take a hit on your wallet. Additionally, Michigan car owners are required to buy personal injury protection coverage as part of their policy, which cost $145 per vehicle in 2012.
Michigan has been hit harder than most places by the recent economic recession, and one possible consequence of Michigan's high car insurance costs is people who can't afford to pay the rates. For example, in 2011, 17 percent of drivers in Michigan had no insurance. That puts a pinch on insurance companies, because they have to absorb the losses when uninsured drivers get in accidents, and possibly results in a negative feedback loop that makes a bad situation worse.
Detroit Doesn't Rock
There are lots of reasons why auto insurance costs so much in the great state of Michigan, but the single biggest thing driving up the statewide average is Detroit. The average annual premium in the Motor City in 2012 was an obscene $5,941, which is caused by high rates of unemployment, uninsured drivers and crime. All of which probably lead to high rates of outrage when Detroit residents receive their monthly insurance bill [source: Loose].
2: Oklahoma
Insurance rates are exorbitant in Oklahoma, partly because of the weather, which can include everything from softball-sized hail (a car's worst enemy), blizzards and tornadoes.
F1online/Thinkstock
First the good news: On average, auto insurance actually became less expensive in Oklahoma in 2012 than it was the previous year. But that still doesn't take the sting out of knowing that Oklahoma is the second most expensive state in the country to insure your car. At an average of $2,047 per year, Oklahoma is just one of four states where an auto insurance policy costs upwards of two grand per year.
Oklahoma consistently rates at the top of the pack when it comes to auto insurance, but why? What's so risky about owning a car in The Sooner State? The number crunchers at Insure.com tend to blame high insurance premiums on the number of uninsured drivers in a state, which is an especially big problem in Oklahoma. Statewide, an astounding 24 percent of drivers are uninsured, and when they get in accidents, the costs of personal injury and vehicle repairs are passed on to other drivers in the form of increased insurance premiums. An Oklahoma taskforce is seeking to tackle the issue, with the goal of lowering the number of uninsured drivers from 24 to 14 percent by the year 2017.
Another possible problem is storms and natural disasters. In recent years, Oklahoma has been victim of an almost Biblical array of storms, ranging from softball-sized hail (a car's worst enemy), blizzards and tornadoes. All of those losses can contribute to escalating insurance rates.
1: Louisiana
Planning to insure your car in Louisiana? You might have to think about opening a new line of credit, because the Bayou State is far and away the most expensive state in the country to insure a vehicle. The average auto insurance premium in Louisiana is a whopping $2,536 per year, according to data from the Insurance Research Council; that's nearly double the median in the U.S., and it's almost three times as much as Maine, which is currently the cheapest place to insure a car. Louisiana is also home to New Orleans, which in 2012 was the third most expensive city in the country, with the average premium in that city costing $3,599 per year.
Why does auto insurance cost so much down by the bayou? Insurance companies blame the state's judicial system. Louisiana requires claims to reach $50,000 before they head to juried trial, and anything under that is resolved by an elected judge, who, out of self-preservation, is more likely to side with a voting constituent than an insurance company. Or so the theory goes. Because of that law, many cases are reportedly settled for $49,000, which of course drives up costs for insurance companies [source: Loose]. Additionally, the recession has been as hard on Louisiana as any state, meaning that many people, out of desperation, end up driving without insurance. For some people it comes down to "whether to keep insurance or put food on the table," Brad Bourg of Bourg Insurance Agency in Baton Rouge told Insure.com [source: Marquand].
Author's Note: 5 States with Unusually High Auto Insurance
Car insurance is a topic that I don't typically spend a lot of time thinking about, so this was a bit of a learning experience for me. I recently moved from a large city to a more rural area that thankfully isn't located in any of the states that made this list, and my insurance premium dropped considerably. The irony of it is that I don't feel like I've become less "risky" since moving away from the city; in fact, because I depend on my car to get almost everywhere now, I'm probably at a much higher risk of getting in an accident. So take that, insurance companies!
5 Things You Should Tell Your Insurance Company Immediately After a Crash
5 Things You Should NOT Do After a Car Accident
How Car Insurance Works
How Liability Insurance Works
How much insurance do you need for an older car?
What does comprehensive auto insurance cover?
Ballenger, Brandon. "7 Ways to Save on Car Insurance." Money Talks News. May 23, 2011. (March 20, 2012) http://www.moneytalksnews.com/2011/05/23/7-ways-save-car-insurance/
Edgerton, Jerry. "Auto Insurance Costs: Where Does Your State Rank?" CBS News. March 14, 2011. (March 24, 2012) http://www.cbsnews.com/8301-505145_162-40542496/auto-insurance-costs-where-does-your-state-rank/
Insurance Information Institute. "Auto Insurance: Costs and Expenditures." (March 20, 2012) http://www.iii.org/facts_statistics/auto-insurance.html
Loose, Terence. "Most Expensive Cities for Car Insurance." Yahoo. (March 22, 2012) http://education.yahoo.net/auto-insurance/articles/most_expensive_cities_for_car_insurance_alt.htm
Marquand, Barbara. "Car insurance rates by state: The most and least expensive places to buy auto insurance in 2012." Insure.com. March 5, 2012. (March 20, 2012) http://www.insure.com/car-insurance/car-insurance-rates.html
Mothershead, Robert E. "State should take action on uninsured motorists." The Journal. July 2, 2011. (March 22, 2012) http://www.journal-news.net/page/content.detail/id/564132/State-should-take-action-on-uninsured-motorists.html?nav=5061
Saranow Schultz, Jennifer. "Where Auto Insurance Is Most Expensive." The New York Times. April 12, 2010. (March 24, 2012) http://bucks.blogs.nytimes.com/2010/04/12/where-auto-insurance-is-most-expensive/
Schultz, E.J. "How the Insurance Industry Got Into a $4 Billion Ad Brawl." Advertising Age. Feb 21, 2011. (March 24, 2012) http://adage.com/article/news/insurance-industry-s-4-billion-advertising-brawl/148992/
Mark Boyer "5 States with Unusually High Auto Insurance Rates" 2 April 2012.
HowStuffWorks.com. <https://money.howstuffworks.com/personal-finance/auto-insurance/5-states-with-high-auto-insurance-rates.htm> 30 January 2023