Have you recently compared your 2015 car insurance rates with friends or relatives living in another area? You may find that prices in other states may be quite a bit higher than the price you currently pay. But they also may be lower. There's a big variance from the cheapest state to the most expensive state. We will show you the areas of the country that offer the most affordable options and explain why.
There are many factors that affect the price you pay for car insurance. Insurers look at your age, credit rating, driving record, and the type of vehicle you own. All of these can have a big impact on your insurance premium. But if you are careful behind the wheel, and maintain better than average credit, many of these factors become fairly easy to control. In fact, as you get older, in most areas of the country, your premium tends to go down (when you hit specific age milestones such as 21, 25, 55 and 65).
Just as importantly, if your state is a "no-fault" state (such as Michigan), Personal Injury Protection (PIP) is utilized to pay medical bills of other drivers...regardless if they were negligent. Passengers can also be included. With unlimited medical benefits paid to Motor City residents, it's not surprising to see their rates so high. The Michigan Catastrophic Claim Association pays medical expenses more than $530,000 but residents pay about $200 extra (per vehicle) for that right.
Where Do You Live?
Another factor that carriers take into account that is not as easy to control is where you live. Most people will not move to another state in order to lower their car insurance premium. But the state where you currently reside has a huge impact on your rates. Also, your zip code and county will also affect the cost. A difference of a few miles can raise or lower the premium by as much as 25%, especially in states such as Michigan, New York and New Jersey.
For example, the city of Detroit has very high pricing. However, nearby Troy and Ann Arbor have significantly lower costs. The same is true for Philadelphia, which typically has fairly high prices. Yet, West Chester and Lancaster, just a short drive to the West, always have significantly lower rates. Crime rates are always a factor that can't be ignored and Philadelphia and Detroit are two examples.
NOTE: Safe vehicles tend to be more pocketbook-friendly. We published a list of the safest vehicles and as expected, their insurance rates tend to be lower than most others. There are exceptions, especially, the high-performance and very large SUV options. Smaller sporty cars, although driven less, sustain more damage than other larger vehicles, and may not always be a cheap option to cover. Corvettes, of course, are one of the most costly vehicles to insure.
A recent study by a major insurance website compared the costs of car insurance among the 50 states and the differences in premiums can be a bit shocking. In some instances, the difference is more than 100%. (We use data from the National Association Of Insurance and other sources when researching and analyzing data).
As an example, drivers in Louisiana pay an average of $2,699 per year for car insurance, putting them at the top of the list. Louisiana drivers should be used to sky-high prices though, as they are consistently in the top of the rankings each year. Is everybody in Louisiana a bad driver? Certainly not. Is Mardi Gras celebrated all year? We hope not!
If you happen to live in Louisiana, one way you can lower your premiums is to drive a Jeep Patriot Sport which is the cheapest car to insure in the Pelican State. If you decide to forgo the Jeep and get a Mercedes S65S AMG, you will be paying the highest rates possible. As you might expect, most luxury and/or sports cars are going to cost the most. Any time you can remove the comprehensive and collision coverage, you'll save a significant amount of money.
Maine Leads The Way
Motorists in Maine, however, enjoy the lowest rates in the country according to the study. Residents of the Pine Tree State only pay, on average, $934 a year for coverage. Maine has slowly been moving up the charts in the last few years. They also have one of the oldest populations in the country which may account for less driving, and of course, fewer accidents. As more younger drivers replace their grandparents on the road, look for prices in the state to increase.
These rates only reflect the average in each state. Residents of large cities, such as New Orleans, Philadelphia or Houston will pay higher rates than drivers living in smaller cities. And often, small rural areas have the lowest available rates. Reasons include less traffic, lower maintenance and repair costs, lower speed limits, and fewer theft and vandalism incidents.
Luxury car drivers will pay a hefty premium for their fancy car, even if they are in a low cost state. Cruising a Mercedes-Benz CL65 AMG coupe in Oregon will cost about $5,687 per year, which is the highest car insurance premium in the country. A much cheaper choice would be driving a Toyota Tacoma in the state of Wyoming, which will only cost $698 a year. And if Yugos were still available, the price would be lower! Thankfully, they are rarely sold anymore.
According to the survey, the following are the most expensive states to insure your car:
1. Louisiana -- $2,699
2. Michigan – $2,520
3. Georgia – $2,155
4. Oklahoma – $2,074
5. Washington, D.C. – $2,006
6. Montana – $1,914
7. California – $1,819
8. West Virginia – $1,816
9. Rhode Island – $1,735
10. Kentucky – $1,725
The Cheapest States
42. Arizona – $1,227
43. Washington – $1,226
44. Indiana – $1,183
45. Vermont – $1,176
46. Idaho – $1,133
47. New Hampshire – $1,112
48. Ohio – $1,106
48. North Carolina – $1,085
50. Iowa – $1,028
51. Maine – $934
NOTE: Ironically, in an older article from Forbes Magazine regarding the cost of insuring your vehicles, the results were fairly similar.
Why Are Some States More Expensive Than Others?
There are a few factors involved, but one of the major reasons is that the majority of Louisiana drivers who are in an accident file a bodily injury claim. Louisiana law also allows lawsuits for less than $50,000 to be decided by a judge instead of a jury and these judges often side with consumers over insurance companies, which can lead to higher premiums. As you might expect, the easier it is to sue, the more likely your state will have higher prices.
Some of the states that discourage frivolous lawsuits, or at least make it more difficult and expensive to burden courts with unneeded litigation, are not surprisingly, states that typically have lower premiums. However, when serious injury is involved, especially when fatalities are present, proper adjudication should should always be followed. If you live in one of these states, your rates may be as much as 15%-25% lower than neighboring states.
The Cost Of A Medical Care Clause
Michigan, which has the second highest insurance costs in the nation, has a medical care clause, which allows for unlimited lifetime personal injury coverage for drivers involved in a car crash. This adds a significant amount to every policy written in the state. If a cap were placed on judgements, the cost of coverage would reduce by approximately 5%-20%. This "unlimited personal injury" feature is not popular with most informed residents of the state.
Maine, one of the cheapest states to insure a car, benefits from a large rural population which tends to file fewer claims. Instituting a graduated licensing program has also reduced crashes among teen drivers. Typically, states that make it harder for teenagers to get a license, enjoy lower premiums. Delaying the age by just 6-12 months can make a big difference. Delaying getting a license by 2-3 years provides maximum savings, although the concept is not popular among teens!
While most folks are not going to pack up a moving truck to chase a lower car insurance premium, knowing where your hometown falls in the survey results will make you aware of what to expect the next time your premium comes due. We will help you find the companies that specialize in the lowest prices in your area. Shopping the right way may save you as much as 20%.
May 2015 -- In another survey conducted in the Spring, Rhode Island, Michigan and New York have the highest rates in the US. Delaware and Louisiana are close behind. State with the most affordable prices include Wisconsin, Ohio, Maine, North Carolina, and Idaho. Although there has been a minor shakeup at the top, states with cheap rates typically tend to stay near the bottom of the list.