Top 5 most expensive states for car insurance

A new study from consumer information site has ranked the states according to auto insurance rates, giving a glimpse into what drives rates across the country.

Business Wire/File
A new study released Monday, April 27, by consumer information site, has ranked the states according to auto insurance rates. Michigan has the most expensive rates based on percentage from the national yearly average, while North Carolina has the least expensive.

If you’re looking to save money on car insurance, it’s best not to live in Michigan – North Carolina might be a better fit.

Drivers in the Great Lakes State pay more than double the national average for car insurance premiums, the highest rate in the country, while those in North Carolina pay 41 percent less, representing the lowest, according to the latest data from consumer information site

The rankings, which were based on data from the country’s largest insurance carriers and on a national average of $815 a year, provide a glimpse into what drives auto insurance costs up and down around the country.

According to the study, the five states with the highest average annual car insurance rates are: Michigan, at 136 percent above the national average; Rhode Island, at 45 percent; New York, at 42 percent; Delaware, at 41 percent; and Louisiana, at 33 percent.

Those with the least expensive rates by percentage below the national average are: North Carolina, at 41 percent; Idaho, at 37 percent; Ohio and Maine, each at 33 percent; and Wisconsin, at 28 percent.

Jessica Mendoza/Staff

The reason for the disparities depend on things like population density, crime rate, and cost of living, all of which factor into geographical insurance pricing. Largely rural states, for instance, have fewer traffic accidents and less crime, which in turn keep insurance rates down.

Natural disasters can also influence car insurance pricing. While insurance companies are prohibited from raising premiums after a single event – like a destructive wildfire or hurricane – past events will be factored into future costs, Sarah Stodola wrote for The Fiscal Times.

“So even if a big storm doesn’t lead directly to increased premiums, in a less direct way, it will encourage higher premiums as insurers reassess the potential damages they could have to pay out if climate change creates more frequent and intense weather events,” she noted.

Legislation is also big factor in insurance costs. In Michigan, a no-fault policy ensures that each insurance company compensates its own policyholders regardless of who’s at fault in a vehicular accident. The state also provides unlimited, lifetime medical coverage for people injured in auto accidents, a benefit that no other state offers. But as health care and auto repair costs rise, so does the rate of insurance in Michigan.

On the other hand, North Carolina law mandates an evaluation of an injured person’s role in an accident, making it difficult to win personal injury lawsuits – a big reason behind the state’s low auto insurance rates, according to Insurance Journal.

Of course, not everyone can up and leave the state they’re in for the sake of saving on car insurance. Comparing insurance policies among companies, maintaining good credit, and taking advantage of existing discounts on things like low mileage driving can all help drive down personal insurance costs, according to the Insurance Information Institute.

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.