Auto Insurance Rates Vary from State to State

Clients somtimes ask me, why do car insurance rates vary from state to state? For example, if you live in New Jersey you might find that your friend in North Carolina can get cheaper car insurance.

According to the National Association of Insurance Commissioners, the most expensive car insurance rates were found in Washington, D.C., Louisiana, New Jersey, Florida and New York. The least expensive car insurance rates were in Kansas, Wisconsin, North Carolina, Maine and Indiana.

There are many reasons why there is a difference in the cost of car insurance premiums among states. One reason is the population. If the state is densely populated, meaning more cars on the road, this will increase the likelihood that an accident will happen. More accidents equal more claims filed with the insurance companies. The more claims that are filed, the more money the insurance company will have to pay out. If insurance companies spend more, consumers will too.

Another reason is the crime rate. If the state is a densely populated area, then it may have a high crime rate. The insurance companies are worried about crimes such as auto theft and vandalism.

If litigation services are higher in a certain state than another, the insurance rates will show. This may sound unreasonable, but if the insurance company needs to sue someone or if they are being sued, they will past the cost along to the customer.

Natural disasters can increase insurance premiums. The more extreme weather conditions, the more accidents can happen, which brings more claims and more money.

The cost of living can increase insurance premiums, as well as the minimum amount of liability coverage required to have for personal injury and property damage in a premium. The greater the coverage amounts, the more expensive rates will be.

For more information:

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