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Auto insurance premiums are determined according to a rich stew of variables that include one’s driving record, age, gender, marital status, credit rating, the make and model of car driven, and the policy holder’s address. While the most volatile of these is usually a motorist’s claims history and driving record – as evidenced by how much one’s rates can rise after getting into an at-fault accident and/or being issued multiple moving violations – where one lives can make a surprising difference in premiums.
And that’s not counting the differences between those living in a sleepy rural area and a densely populated city within a given state. Residents of Detroit face the steepest insurance rates in the nation at over $3,000 for a single car, according to the Detroit Free Press, due to the metro area’s high population density, congested roadways, high crime rates, and other variables.
“Location, location, location isn’t just a mantra for buying a house in a nice area with a good school district, it’s also normally a big rating factor for auto insurance companies,” says Insure.com’s insurance expert Penny Gusner.
Generally, those living in rural states are granted lower rates than those living more densely populated ones, but there’s also a wider variety of variables at play here. These include the propensity of claims incurred because of local weather conditions (especially hail storms, hurricanes, and tornadoes), state insurance laws, and how friendly or combative local court systems are regarding claim-related judgements.
Gusner says Michigan tops the list of costliest premiums in large part because of its so-called no-fault auto insurance system. As with other no-fault states, Michigan requires auto owners to carry personal injury protection (also known as PIP) coverage that pays for medical expenses of the policyholder, family members, and uninsured passengers if they’re injured in a collision. The kicker here is that unlike other states that have similar provisions, Michigan does not set limits on PIP coverage. Higher rates of insurance fraud and a greater-than-average number of uninsured drivers on the road also help drive up premiums in the Wolverine State.
By comparison, residents of Maine enjoy the nation’s cheapest average premiums because of a lack of densely populated and traffic-clogged urban areas, generally non-violent weather conditions, fewer uninsured motorists, and an auto insurance market that isn’t as heavily regulated as it is in other states.
Though few people might consider pulling up stakes and moving to another state in order to save money on their car insurance, if you happen to live in Connecticut, you might want to check out real estate listings in nearby Vermont, where you’d see your annual rates slashed in half, from an average $1,897 to just $949. In lieu of changing addresses to obtain lower premiums, compare rates among several carriers regularly, and be sure you're getting all the discounts to which you're entitled.
Here’s Insure.com’s list of the costliest and cheapest states (including the District of Columbia) for car insurance:
1. Michigan, $2,395, 82% higher than average
2. Louisiana, $1,921, 46% higher than average
3. Connecticut, $1,897, 44% higher than average
4. Rhode Island, $1,848, 40% higher than average
5. Florida, $1,840, 40% higher than average
National Average $1,076
47. North Carolina, $1,010, 23% less than average
48. Vermont, $948, 28% less than average
49. Idaho, $942, 29% less than average
50. Ohio, $919, 30% less than average
51. Maine, $864, 34% less than average
Click here for more details and to check out an interactive map of the U.S. that notes each state’s average car insurance rates for 2017, and how they fare versus the national average.
The fine print: Insure.com’s study is based on rates from six large insurance carriers in 10 ZIP codes in every state, and assume a 40-year-old male motorist having a clean driving record and good credit history with a full-coverage policy. Rates are further based on the averages quoted for the 20 best-selling vehicles in U.S. during the first quarter of 2017.
Source: Forbes.com
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