The Top 5 States with the Highest Auto Insurance Rates

Data gleaned from each state’s Department of Insurance show that auto insurance costs continue to rise. Rates varied considerably from a low average of about $900 in Maine to a high average of $2,878 in Michigan, which is a startling difference for the very same product (for advice on getting a better rate, see Experts Share Top Tips for Saving on Auto Insurance ).

Although insurers take many factors into consideration when determining the premium for auto insurance, the minimum required coverages and limits in each state play a large part in the final amount consumers will have to pay to protect their vehicles and themselves. For instance, examples can include bodily injury and property damage liabilities.

1. Michigan $2,878

The out-of-control insurance costs in Michigan are the result of one particular mandate in their auto insurance requirements: Personal Injury Protection (PIP). Typically, only no-fault states (such as Michigan, Florida, and New York) require drivers to purchase PIP. This coverage helps pay for medical expenses, lost wages and additional out-of-pocket expenses to the named insured no matter who is at fault in an accident.

Read: Who Is a Named Insured

Other no-fault states typically require a $10,000 to $20,000 limit for PIP, but Michigan wanted no part of that. In Michigan, the PIP coverage is considered unlimited, with lifetime benefits for those injured in automobile accidents. Insurers operating in the state are responsible for the first $580,000, and then the Michigan Catastrophic Claim Association (MCCA) takes over when costs exceed $580,000. The coverage offered by the MCCA is paid for by an assessment of $220 added to every Michigan auto policy, which adds insult to injury for vehicle owners in the state.

Although having good car insurance is beneficial for drivers in Detroit, Flint, and other Michigan areas, the cost passed on to consumers has contributed to about 20% of drivers electing not to be insured, compared to about 13% in other states.

2. Louisiana $1,842

While Louisiana has low minimum liability legal requirements of only $15,000 per person and $30,000 per accident, it remains in the top five for average auto insurance rates.

With a reputation of settling overly generous claim payments, the New Orleans area is considered one of the worst parts in the state for auto insurance since the average settlement is 40% higher than in the remainder of the state.

To make matters worse, the state has a “no pay, no play” law that prohibits uninsured motorists from receiving compensation for the first $15,000 for injuries and the first $25,000 for property damage, no matter who is at fault in an accident. If you don’t have insurance when in an accident, you are unable to sue; furthermore, you will be fined, have your license plates removed, and your car will be towed.

On the bright side, insurance companies often offer bundle packages to save you money on multiple insurances. For example, if you live in Louisiana you can bundle life insurance with auto insurance and mobile home insurance (with companies such as Progressive or Nationwide), saving you money on your bill in the long run.

3. Florida $2,239

Florida is still one of the top three states in terms of the highest auto insurance, including last year. One of the main factors for this high premium is due to Florida having the most motorists with no insurance, at over 25%. Even the drivers who have insurance tend to have the most basic plans with the least amount of coverage.

There is also a significant amount of high-risk drivers in Florida. Examples comprise of many college students, elderly drivers, and tourists. This thereby raises the risk factor for more accidents and careless driving.

4. Texas $2,050

Texas has worked its way up to a high premium over the years, as it was at tenth last year. Due to its higher speed limits (which can go up to 85mph) and dense population, there has been a rise in auto accidents. Texas is the second-largest state, with three popular cities (Dallas, Houston, and San Antonio) that attract large crowds of people. Furthermore, Texas has a high number of alcohol-impaired driving fatalities that have surpassed the 1,400 mark, and over 200 drunk driving crashes in Odessa, TX annually. Thus, premiums are raised due to the rise in Driving Under the Influence. Although car insurance rates are higher in Texas (for example, the average cost of auto insurance in Odessa, TX is $1,402 annually), it is definitely worth getting full coverage. However, you can bundle together your Texas home insurance and car insurance to save on premiums with insurers such as State Farm and Nationwide.

5. California $1,968

California is also densely populated with many popular cities (such as Los Angeles and San Francisco). The rise in population has led to more traffic, automobile accidents, as well as cars getting stolen or vandalized. Nonetheless, about 15% of motorists do not have insurance. This may be due to rising housing costs in California, which leads to drivers being unable to afford to pay for auto insurance. Although auto insurance is more expensive in CA, if you own a home and a car, you can bundle up two insurances together for a discount. For example, State Farm’s life insurance in Los Angeles or in San Diego can be bundled together with auto insurance to help you save money.

What’s more, California has higher loss ratios when relating the number of paid claims to the number of premiums received each year.

Summary

In many states across the country, a vicious cycle appears to be unbroken by the various departments of insurance. High insurance rates lead to drivers going without insurance, which leads to insurance rates climbing even higher.

Even though there are many factors involved in establishing insurance rates, these top five states seem to be trapped in the “perfect storm” of auto insurance underwriting, and regretfully, every driver in the state must foot the bill.