Auto Insurance Rates Too High? Consider Moving

car insurance rates

Photo from Peter Blanchard

Spikes or declines in auto insurance rates could be directly attributable to where you live rather than how you drive, according to a new survey conducted by NerdWallet.

Using a 26-year-old male test subject with a $500 deductible and a 2012 Toyota Camry, the website checked rates in 125 cities throughout the United States and discovered that rates would often go up dramatically for the same coverage simply because of where one lived.

Among the most expensive premiums in the country, Detroit was the highest with an annual average of $10,723.22. The next closest was New Orleans, which held a $4,309.61 annual rate.

Rounding out the top 10 were Grand Rapids, MI ($4,042.42); Newark, NJ ($3,525.43); Baton Rouge, LA ($3,363.73); Hialeah, FL ($3,271.86); Jersey City, NJ ($3,266.63); Louisville, KY ($3,255.99); Miami, FL ($3,168.75); and Philadelphia, PA ($2,930.53).


The Cheapest Cities

Six of the 10 cheapest cities, in contrast, were located in North Carolina, “where a unique set of laws caps rates and personal-injury awards while giving regulators broad control over price increases,” noted Yahoo! contributor Justin Hyde.

The North Carolina cities included Winston-Salem ($969.10); Greensboro ($1,089.58); Raleigh ($1,098.48); Durham ($1,100.50); Charlotte ($1,123.09); and Fayetteville ($1,294.80). Rounding out the bottom 10 were Boise, ID ($1,221.65); Rochester, NY ($1,249.26); Spokane, WA ($1,307.68); and Montgomery, AL ($1,375.82).

In Washington, high-risk drivers are encouraged to enroll in the Washington Automobile Insurance Plan (WAIP),” NerdWallet stated. “The WAIP is a part of the Western Association of Automobile Insurance Plans (WAAIP), a group that allows insurance companies to share the risk of high-risk drivers.”

In Montgomery, a home to many government agencies and Maxwell Air Force Base, most insurance companies are noted for offering military discounts. “USAA, which only accepts military personnel and their family as members, is often rated highly for its service and price,” NerdWallet added.

Rochester’s cheap auto insurance rates were attributed to it being a “good city to raise a family,” with reasonable employment rates and some influence from the state of New York’s Automobile Insurance Plan for assisting high-risk drivers with affordable coverage.

Similar to Rochester, Boise’s crime rates were low and its unemployment rate of 5.9 percent was well below Gallup’s last-quoted average of 8.7 percent.


Further Findings On The Most Expensive Cities

“As for the most expensive cities,” Hyde writes, “Michigan requires insurers to offer unlimited medical benefits, which pushes up rates to begin with. Detroit’s high rate of auto thefts and overtaxed police force add to insurers’ worries as well.”

Hyde also acknowledges that “rates have been so high for so long many lower-income residents can’t afford coverage, with some studies finding more than half of the city’s drivers go without auto insurance despite state laws.”

Newly elected Detroit mayor Mike Duggan has even vowed to start a city-owned auto insurance company to “provide affordable coverage to Detroit residents,” but given the city’s recent financial woes, that could be easier said than done.

Particularly interesting about the new data is the fact that all of the top 10 most expensive cities for auto insurance are located in states with no-fault insurance requirements, which increase insurer costs. “These areas also suffer from high rates of uninsured motorists, and a fair amount of severe weather,” Hyde said.

So what can be done to lower rates if one lives in one of these more expensive areas?

The experts continue to suggest keeping a clean driving record and many insurers are encouraging  electronic driving monitors which can lead to discounts for safer driving. Also, since many states’ rates are influenced by credit scores, paying bills on time and paying off high-interest debt can help.


In Summary

The thing to remember about studies like NerdWallet’s is this: it’s easy to ask the insurance industry why, but insurance rates mostly fluctuate from state-to-state because of insurance laws. States can differ drastically in how they regulate drivers and insurers. Laws on the assumption of risk, no-fault, negligence, financial responsibility, tort, and coverage requirements, to name a few, vary even, in many cases, where the states share a border. Furthermore, enforcement of those laws — depending on how lenient or strict — can create a wide chasm between the high and the low, respectively.

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