5/3/2011 12:09 PM ET|
Worst places to buy car insurance
The reasons for high rates vary among states, but one thing is constant: Uninsured drivers are dinging the rest.
Michigan has the highest average car insurance rates in the nation, followed by Louisiana and Oklahoma, according to Insure.com's new national survey of car insurance premiums.
If you live in Vermont or South Carolina, you have access to the most affordable rates, saving $1,000 a year or more compared with drivers in the most expensive states.
Insure.com's study collected auto insurance rates from six large carriers for more than 2,400 vehicles, based on 10 ZIP codes per state. We then calculated averages nationally and for each state.
The reasons for high prices vary considerably among states, but one thing is for sure everywhere: Uninsured drivers are dinging the rest of us.
The big picture
When a state has a large proportion of uninsured drivers, insurance companies aren't able to spread their risk sufficiently. Uninsured drivers aren't paying their share, yet they're still crashing and causing damage, passing the buck to drivers who then make claims on their uninsured/underinsured coverage.
In Oklahoma, 24% of drivers were uninsured in 2007, the fourth-highest rate of uninsured motorists in the country, according to a 2009 study by the Insurance Research Council. Michigan had the ninth-highest rate of uninsured motorists, at 17%, according to the IRC, while Louisiana ranked 27th, with 12% of drivers uninsured.
Despite laws requiring liability insurance in 49 of 50 states -- New Hampshire is the exception -- the numbers of uninsured have likely grown along with the unemployment rate.
"It's more of an economic problem than anything else," says Marc Eagan, the president-elect of Independent Insurance Agents & Brokers of Louisiana, and president of Eagan Insurance Agency in Metairie and LaPlace, La. "They just can't afford the rates."
Michigan car insurance rates pounded by injury costs
The average annual car insurance premium in Michigan increased by $443 from last year's survey, enough for the state to rise from second place to first place and knock Louisiana down to No. 2.
The reason it holds that No.1 spot: Michigan is the only state that guarantees unlimited personal injury protection (PIP) payments to people injured in car accidents. Insurance carriers pay up to $480,000 of PIP benefits; the Michigan Catastrophic Claims Association, a private, nonprofit organization created by state law, reimburses insurers for costs above that amount. Auto insurers also must pay for up to three years of lost wages and replacement services.
Car insurance premiums in Michigan include an annual assessment by the association to pay for medical care when people suffer catastrophic injuries. The assessment through July 30 this year is $143.09 per insured vehicle. And that doesn't include what drivers have to pay for required PIP coverage.
"In some cases, the cost of unlimited medical coverage will be 50% of the entire premium on a vehicle," says Jon Spalding, the president-elect of Michigan Professional Insurance Agents Association and president and CEO of Spalding Insurance Agency in East Lansing and Perry, Mich.
Spalding says Michigan's car insurance law also has some expensive quirks.
Motorcycles are not considered motor vehicles in Michigan, so motorcyclists aren't required to purchase auto insurance -- only minimal liability coverage in case they injure someone or damage property. But as long as they buy the state-required liability amount, they can still collect unlimited medical benefits if they're injured in an accident with a car. In that case, the car driver's policy would pay out first.
"If a high-powered motorcycle ran into me from behind and went over my car, my insurance would provide unlimited medical benefits for the motorcyclist," Spalding says.
While motorcyclists represent about 2% of the assessments paid into the Michigan Catastrophic Claims Association, they account for 7.3% of claims.
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Car insurance is based on several factors; Age, were you live, type of car, VIN #, your driving record, and the other people around you and there driving records.
I have always felt that car insurance is a crock of S**T! Most of us shell out a ton of money to the insurance companies and have clean driving records, and do not see a return at all. I think that if you have a clean driving report that the insurance companies should reimburse you 75% of what you paid to them every year, am I right, they are still making a profit from you, but at the same time they are not robbing you blind. I am sorry but paying for something i do not use is bull****, especially Liability insurance. All it is good for is a crash and nothing else! If I don't have an accident then I should get most of my money returned to me minus a small fee, 25%. Plus the fact that the insurance companies have made it so that you HAVE to be covered to Legally drive your car is crap, plain and simple. I am sorry but if I own my car then I should be able to do what ever I want with it. Isn't this supposed to be a free country. If I hurt someone then I take responsibility for it, and for all the a**holes that take advantage of the loop holes in the legal system and sue someone for everything they have. YOU SHOULD BE ELIMINATED FOR THE GOOD OF SOCIETY!!!!!
If they can’t afford insurance then they have no business driving on our roads and highways!!!!!!!!!
Suspend their license and impound their vehicle.
I have been an independent insurance broker for over 20 yrs. and I believe there is a lot of misunderstanding about how and why one person’s insurance rate(cost) is different than another person’s insurance rate(cost) that live in the same State.
The simple answers is that its not an apples to apples comparison.
Numerous factors go into determining an insurance rate(price), including but not limited to: age, sex, zip code, driving record, year, make, model, ect! Different coverage’s are available (liability, or full coverage, and what deductibles, rental car, towing, ect) . Some companies give discounts based on credit score, good student, owning your home, multi-car, multi-policy, not driving between 12-4 am, driving less than 15k miles a year, accident free discounts, ect. Then there are mandated coverage’s by different States. Different amounts of required liability coverage’s, PIP or personal Injury Protection ( that’s what pays your medical bills if you are hurt in an accident). The list of factors goes on and on, its endless!!!
If you change anyone of these factors, then you get a different rate or price. So it is unfair to say, “I pay more (or less) then the other guy”, because unless he or she has the exact same situation as you, then you are going to get a different price! Again it’s not an apples to apples comparison.
With that being said, I think its safe to say that understand insurance rates and coverage’s can be very complex and convoluted, but that’s why you have insurance professional like me, your local agent to answer these questions. Call me old fashion, but I’m a big believer in doing business face to face, again, with your “local agent”. Not some 800 number with a person 1000 miles away or even halfway around the world, that can’t see or relate to you and your needs. That's not saying the "800 number" guys wont give you the right information, it's just my opinion that I provide better service. So if you live in Minnesota or Colorado and have any question relating to insurance (I'm not try to sell you anything) feel free to call me and I will be happy to speak with you. My office number is in my username listed above.
Thanks and good luck!!!
Personally, I believe insurance of any kind is a rip-off. Use it, or lose it, and who WANTS to use it.
If insurance were an investment rather than an expense, I would endorse it. If you never make a claim on your car, home, health, etc. insurance at some point you should be able to start getting some of that money back, say at retirement. Don't tell me insurance companies couldn't do that, just look at their balance sheets. Have you ever heard of an insurance company going bankrupt?
But to get back to the above topic, you should have to show proof of insurance to renew your drivers license. That would cut down on the number of uninsured, or increase the number of people driving without a license. Either way, it's never going to get equalized.
Insurance is nothing more then an italian style mafia strong arm. "pay us a monthy fee and we'll give you selective help".
What a croc.
I find it stunning that over half the readers of this article give ut a thumbs down. It is merely reporting facts: some places are riskier than others.
No one Llikes to pay for auto insurance. It is a necessary evil. The cost of which could plummet if people learned to drive.
Here in New Mexico chronic speeding and following way to closely account for most accidents. I'm willing to bet it's that way in the other 49.
In 1985 we moved from Vermont to Arizona and in Arizona our insurance company had this policy for uninsured motorists. My first thought, are you nuts? But after a little explaining to me I signed up. A month later I bought a beautiful new 1986 Monte Carlo SS off of the show room.
Then I was t-boned in the parking lot at work and the other driver had no current tags, inspection, drivers licenses and of course no insurance.
Since then we’ve always had a policy for uninsured motorists. Now we live in Texas and I also love to hear in when an accident occurs and any person with out any insurance is liable for that accident even if they were not the cause.
Now with the new technology for law enforcement they will be able to scan the vehicle tags and see if the owner is insured or not. And this I fully support!
If they can’t afford insurance then they have no business driving on our roads and highways!!!!!!!!!
To me this is a privilege not an entitlement.
Dick (Austin TX)
SHAMBLADOR is a complete moron he stated Geico was created for uninsured people.
First if you sign up for Geico you are then insured. What a concept.
Second, the acronym of Geico stands for GOVERNMENT EMPLOYEES INSURANCE COMPANY.
They started with a large pool of federal, state and local school teachers, firemen, police officers and others.
Police and firemen tend to be good drivers off duty because they deal with the carnage of stupid drivers all week long. Schoolteachers tend to be good drivers because they understand the laws of physics and have a sense of civic responsibility.
Thank God for these heroes who serve us and keep my Geico rates fairly low.
Scumbagger should be so lucky to qualify for Geico. If his brains match his hievos he'll re-post and apologize to the millions of public servants who cover his pathetic butt 24/7.
Insurance in general is a massive scam.
NYS requires car insurance in order to register a car--I'm not necessarily against that as it prevents uninsured motorists from crashing into me and leaving me with the repair and medical bills....however, I haven't had an accident in years and yet my insurance premiums increase every single period.
When I call the underwriter and question the premium increase I'm given the same story each time; charge or fee imposed by NYS. So, NYS requires insurance, yet NYS keeps imposing fees on having insurance.
I'm 43 years old have been driving for 27 years. I've had no accident and had two speeding ticket when I was 18 years old. Why should I have to pay the same amount as someone who has had accident. I don't fill this is fair in any way. I keep paying for other people to drive stupid. Does this sound fair. The insurance company says o well pay it or loss your license for not having insurance. The are a big rip off. They need to charge it to the people who have the accident's not the ones who have very good driving records.
Insurance Companies are a rip off. It's all about making money, and the insurance industry is making a ton of it.
With the technology we have today, there is no reason for people to be allowed to drive with no insurance.
Most States require you to have insurance (at least liability) on your vehicle before you can register and get plates for your vehicle. It is probably a state law that you carry at least liability insurance. With today's economy, people are purchasing insurance so that they can get their plates/tags for their vehicle and then not renewing/paying the premium when due and are running around for 10 months with no insurance at all.
Insurance companies really want this, because they can then charge all this money for uninsured and underinsured drivers and in the long run make a lot of money.
The insurance industry could do a lot to eliminate the problem of people driving around with no insurance. With the computer technology today, if the insurance policy is not renewed by the due date, the computer system would send an email to the State Dept of Motor Vehicles where the resides. The State Dept of Motor Vehicles would issue a letter/certified to the owner/driver of the vehicle and also send a notice to the local City/County Law Enforcement.
The local agency, would issue a citation and the person could explain to a Judge, why they do not have insurance on their vehicle. Let the Judge explain what will happen if they are back in court again for no insurance. I know the Law Enforcement people are busy and the courts are busy, but that is what they are there for.
There is nothing in the Constitution that says you have a right to drive. It is a privilege. The law says you are to carry insurance on a vehicle if you drive.
I've always said you should insure the driver, not the vehicle. If I have more than one vehicle, I have to carry insurance on both vehicles. Why is this fair? I can only drive one at a time. Let me pay insurance on the most expensive vehicle to insure that I own. Insurance companies would never go for that because they would loose a lot of money.
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You can give your car the care it needs without draining your bank account if you follow this advice.
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