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What state has the highest auto insurance rates?

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Things to Remember...
  • After crunching the numbers the top five most expensive were Louisiana, Michigan, Oklahoma, Montana, and California
  • An SUV will cost more than a compact car, a brand-new car will cost more than a used one, and larger vehicles with lots of glass will be more costly than a small vehicle with a little glass
  • State regulations play an extremely important role in auto insurance prices because of their artificial influence of the market

In the world of auto insurance, one of the most common questions is regarding which state has the highest rates. Interestingly, you can do an Internet search on this question and find a lot of different answers.

But, before you begin to question that, realize that rankings by state are not always consistent because all of the factors involved change so rapidly.

You can get immediate free online auto insurance quotes by entering your zip code below!

A survey published by the Miami Herald last year ranked the states and their average insurance premiums by using a formula which included data on 2,400 different cars, compared in at least 10 zip codes per state, for every state and the District of Columbia.

After crunching the numbers the top five most expensive were Louisiana, Michigan, Oklahoma, Montana, and California. The bottom five included New Hampshire, Wisconsin, Ohio, and Vermont, and Maine.

What kind of coverage are we talking about here?

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In fairness, the survey considered the “average” auto insurance policy a typical American driver would have.

Being that most Americans take out loans to purchase their cars, a standard auto insurance policy includes state liability, collision, full glass, and fire & theft.

Understanding this explains why 47 states and the District of Columbia had rates in excess of $1,000. If all you’re going to purchase for your car is minimum state liability your policy will cost you significantly less.

It’s also important to note that cars of different styles and values were used in the study. It goes without saying that if you drive a BMW, your car insurance is going to be more expensive than someone who drives a VW.

An SUV will cost more than a compact car, a brand-new car will cost more than a used one, and larger vehicles with lots of glass will be more costly than a small vehicle with a little glass.

How important is regulation in the equation?

State regulations play an extremely important role in auto insurance prices because of their artificial influence of the market. For example, a state that requires extremely high liability amounts may be justified in doing so because of population density.

Nonetheless, mandating higher liability limits will always result in higher auto insurance premiums. Someone has to pay for it, and it’s not going to be the insurance company.

Another thing to consider in terms of state regulation is taxes imposed on your insurance policy. If you look over your declarations pages you will probably never see the words “tax” or “taxes.”

That’s because the government is not foolish enough to put that line on your declarations pages. Instead, they use creative terms like “fees” and “surcharges.”

In a highly taxed state like New Jersey, for example, state fees add a significant burden to the amount of insurance money we pay.

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Can insurance companies charge different rates in different states?

When people move from one state to the next they are often surprised at the difference in their auto insurance rates. This is especially true if the cost went up after they moved.

Unfortunately, your car insurance carrier has to take into account population density, the distance you travel to and from work, weather conditions, the safety record of the average driver in the state, and many other things.

Is there anything else at the state level that can influence auto insurance rates?

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There are several other state-related factors, but none more important than the tort system.

In a “no-fault” state, each driver carries his own insurance policy which will cover him, his property, and his passengers in an accident. In no-fault states, jury awards tend to be very small by comparison.

On the other hand, fault-based states adopt an “every man for himself” mentality which makes lawsuits and high financial awards pretty common. As it turns out, fault-based states tend to pay more.

The one advantage you might have living in a fault-based state is that safe driving tends to be more rewarding.

In a no-fault state, litigation is kept at a minimum because parties in an accident tend to settle out of court. In this kind of system, whether you like or not, every auto insurance claim becomes a blemish on your record.

But in a fault-based state, each accident is investigated and fault assigned. The longer you can drive without an accident being blamed on you, the more trustworthy you become in the eyes of the insurance carrier.

To find auto insurance quotes in your states, enter your ZIP code in the search tool below!

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