The majority of Americans know that things like prior accidents and citations affect how much you’ll pay for auto insurance premiums. Though, you may be surprised to find out that where you’re insured also has a huge impact on how much you pay. GEICO spent almost $2 Billion last year, telling us that we could save 15% or more on car insurance by switching to them. A study undertaken by Quadrant Information Services collected data on how much the average insuree’ paid across the 50 states. For example they found that the top 3 most expensive places to pay for car insurance were New York, Rhode Island, and Michigan, with premiums in Michigan being 135.9% above the national average. However, other than shopping around for different carriers and perhaps purchasing a vehicle that’s cheaper to insure, there’s little we can do to change the inevitable factors that will affect our premium.
These inevitable factors that will affect our insurance premiums include (but are not limited to): prior driving record, location, credit history, marital status, and age. The one we’re interested in, location, is one we do have some degree of control over. Think about it, if you live in a crime ridden urban neighborhood, you can expect to pay considerably more than someone who live in the perfect, quiet, cookie-cutter neighborhood. That’s just for the economic part of it. Penny Gusner of Insure.com had the following to say about your location, and where you live, “Your driving record and your car are the same no matter where you live… Change your ZIP code just a couple of towns the wrong way and your rates can double.”
According to the study by the NAIC, the following five states, on average, have the most expensive annual auto insurance rates in the country (by percentage above the national average):
Michigan: +136 percent.
Rhode Island: +45 percent.
New York: +42 percent.
Delaware: +41 percent.
Louisiana: +33 percent.
Meanwhile, the following five states, on average, have the least expensive auto insurance rates in the country (by percentage below the national average):
North Carolina: -41 percent.
Idaho: -37 percent.
Ohio: -33 percent.
Maine: -33 percent.
Wisconsin: -28 percent.
According to Insure.com, the top 10 states (in terms of dollars) that are the cheapest and most expensive for auto insurance premiums are the following:
Top 10 Cheapest Location To Insure:
New Hampshire: $905
North Carolina: $986
New York: $1,013
Top 10 Most Expensive Locations to Purchase Car Insurance
District of Columbia: $1,799
West Virginia: $1,716
Rhode Island: $1,656
New Jersey: $1,595
According to BankRate and the National Association of Insurance Commissioners, the average annual cost of car insurance nationwide was $815 in 2012, which is the most recent data available. However, as you more, closely examine the cost of car insurance state by state you see that all state are not created equal. Let’s say you live in either, Maine, Idaho, or Ohio, on average, your auto insurance premiums will be a third of the national average (when trying to insure a new care). Michigan drivers can expect to face an auto insurance premium up to 90% higher than the national average. When comparing the cheapest state (Maine) with the costliest (Michigan) the differences can be staggering. The difference between the two over your typical 5 year ownership period, with Maine at $805, and Michigan at $2,662 comes out to be $9,285.
Why is Location so Important?
According to the Insurance Information Institute, factors such as population density, natural disasters (or risk thereof), and cost of living can affect why it costs more to insure certain areas. For example, states with higher costs of living such as California or New York will have higher premiums for things like medical insurance and home insurance – insurers will also place the price accordingly. States like North Carolina, Ohio, and Idaho have much more rural space and lower crime incidence and rate to keep auto insurance premium low. However, in states like Louisiana, and other coastal states have natural disasters such as Hurricanes to contend with and thus are likely to face higher premiums because Hurricanes have the ability to damage vehicles. For example, in New York and Connecticut, Sandy may still be affecting their premiums, given that they pay 42% and 25% above the national average, respectively.
What should you do?
Other than moving, your inherent location has a price tag that you will have to deal with. It would be rather extreme to move just because of car insurance, but if you live close to a border in Michigan it then may be worth consider moving a state over because of the outrageous premiums in Michigan. Things to consider doing to lower your rate are, enquire about discounts by call your carrier, shop around other companies before renewing, avoid making small claims, use a pay as you drive program. These things are unavoidable, and since we’d rather keep money in our pockets we must find every way possible to save wherever possible.