Where Drivers Pay the Most -- And Least -- For Car Insurance

Where Drivers Pay the Most -- And Least -- For Car Insurance

Auto Insurance
Where Drivers Pay the Most -- And Least -- For Car Insurance

Friday, September 12, 2014

Where Drivers Pay the Most -- And Least -- For Car Insurance

Jim Gorzelany

Forbes Auto

We've said it before and here we go again: Just as with real estate values, a driver's car insurance rates can vary greatly according to location. What is already a major long-term auto ownership cost can become a true burden if a driver is living in a zip code insurance company actuaries deem as carrying a greater risk of accident, theft or vandalism, or is rated for higher premiums based on a range of circumstances.


For 2014, the major U.S. metropolitan area in which residents tend to suffer the highest car insurance rates is Detroit, MI, where policyholders tend to pay 165 percent higher premiums than the national average. While none approach the stiff toll Detroiters face, other budget-busting burgs include New York City (36 percent above average), Miami (+34 percent) and Los Angeles (+25 percent).


That's according to a survey of the most populated metro areas in the U.S. conducted by Quadrant Information Services.


By comparison, the study determined residents in the bucolic Charlotte, NC / Concord SC areas enjoy the lowest auto insurance rates in the country, with premiums at 43 percent below the national average. Cleveland (31 percent below average), Pittsburgh (-24 percent) and St. Louis (-18 percent) were found to be the next most affordable places to insure a car.


According to the National Association of Insurance Commissioners, the average annual cost of car insurance nationwide was $797 in 2011 (the most recent data available), which we can assume to be nearer to the $1,000 mark today. Not only is it bad enough that the average Detroiter probably pays somewhere around $2,650 a year by that measure to insure a car, but anyone that's living with the city limits and is unfortunate enough to have multiple accidents and/or moving violations on their records could well find his or her premiums approaching – perhaps even exceeding – their car payments.


While one might think Detroit's rough and tumble nature is primarily to blame for driving up rates, the astronomical cost of insuring a vehicle in the Motor City can largely be attributed to other factors. “One of the main reasons why car insurance is so expensive in the Detroit area is because Michigan is the only state where car insurance includes unlimited personal injury protection,” says insuranceQuotes.com senior analyst Laura Adams.” In that regard Michigan gives claimants unprecedented lifetime coverage for injuries resulting from motor-vehicle accidents, which tends to drive up rates exponentially. What's more, Michigan is a so-called “no fault” state in which each insurance company compensates its own policyholders for the cost of injuries incurred in an accident regardless of who's at fault. And that's not all. “Detroit has a very high percentage of uninsured motorists – as high as 50 percent by some estimates – which unfortunately raises rates for those who do have car insurance,” Adams explains.

According to the study, these are the 10 metro areas that have the most expensive average annual auto insurance rates in the nation (ranked by percentage above the national average):

  1. Detroit / Warren / Ann Arbor, MI: +165 percent
  2. New York, NY / Newark, NJ: +36 percent
  3. Miami / Fort Lauderdale, FL +34 percent
  4. Los Angeles / Long Beach, CA: +25 percent
  5. Atlanta / Athens, GA: +17 percent
  6. Sacramento / Roseville, CA: +10 percent
  7. San Jose / San Francisco, CA: +10 percent
  8. Philadelphia / Reading / Camden, PA: +10 percent
  9. Houston / The Woodlands, TX: +10 percent
  10. Tampa / St. Petersburg / Clearwater, FL: +9 percent

At the other end of the range, here are the 10 metro areas determined to have the least expensive average auto insurance rates in the country (ranked by percentage below the national average):

  1. Charlotte, NC / Concord, SC: -43 percent
  2. Cleveland / Akron / Canton, OH: -31 percent
  3. Pittsburgh / New Castle, PA: -24 percent
  4. St. Louis / St. Charles, MO: -18 percent
  5. Chicago / Naperville, IL: -16 percent
  6. Denver / Aurora, CO: -12 percent
  7. Phoenix / Mesa / Scottsdale, AZ: -10 percent
  8. Orlando / Deltona / Daytona Beach, FL: -10 percent
  9. Seattle / Tacoma, WA: -10 percent
  10. Washington, DC / Baltimore – Arlington, VA: -6 percent

Indeed, population density, accident and theft statistics, the number of uninsured drivers on the road, and whether or not state regulations favor insurance companies all affect what the average driver in a given location will pay for coverage. On top of that, rates are compounded by personal factors including a driver's age, sex, and marital status and his or her driving record.


Since most of those considerations are unalterable, the easiest way to lower one's insurance premiums is to change addresses. To that end, insuranceQuotes.com maintains a searchable database that allows consumers to compare how their car insurance costs might be affected when relocating, according to every U.S. zip code.

The Fine Print: The above averages are based on a driver with a bachelor's degree who drives 15,000 miles a year and who has had no breaks in coverage, a $500 collision and comprehensive deductible, state minimum liability coverage and full PIP coverage.


Forbes.com/sites/jimgorzelany/2014/09/12/the-cities-where-drivers-pay-the-most-and-least-for-car-insurance/

Article last updated on 2/11/2016 1:10:00 PM | Article Views: 715