Car insurance cheapest states to retire
What’s going on in Michigan? The state’s car insurance rates are 136% higher than the national average. 136%! Sure, most of that is due to buff book journalists pretending to be hot shoes, but there has to be something else going on. At the opposite end, North Carolina’s insurance rates are 41% below the national average. That average, by the way, is $815 annually.
Michigan is followed at the top by Rhode Island (+45%), New York (+42%), Delaware (+41%) and Louisiana (+33%). The study was done by Quadrant Information System and InsuranceQuotes.com.
We know that driver age and driving history play a big part in insurance rates, but in the Mitten, we also get penalized because of our no-fault laws and unlimited lifetime coverage for medical expenses. The no-fault rule means that insurance companies compensate their policyholders no matter who’s at fault. That, combined with the lifetime benefits, leads to the high rate. The average personal injury claim in Michigan increased from $20,000 in 2003 to $46,000 in 2013. Increases in health-care costs and increased life expectancy also play a part.
North Carolina, on the low end, is followed by Idaho (-37%), Ohio (-33%), Maine (-33%) and Wisconsin (-28%).
Lower rates in these states are due mainly to rate caps, leading insurance companies to compete by offering discounts below the established cap. North Carolina has more than 2,000 possible different insurance discounts.
Even within states, there is a wide range of prices. For example, in New York, people in Kings County pay 73% more than the national average, while people in Chemung County pay 51% less than the average. Marquette has the lowest prices in Michigan, at 27% below the average, while One Autoweek Tower, located in Wayne County, gets shafted with 45% higher than average rates.
More than half of all auto thefts in the state occur in Wayne County, a stat that doesn’t help.
There are a few ways to lessen the blow, according to InsuranceQuotes.com. Calling your insurer and asking for discounts is the best way, considering some changes are automatic and some aren’t. Some companies let you pay as you drive depending on yearly distance and speed. Finally, you can avoid making small claims. One $2,000 claim can raise your rate 41%. For the best results, shop and compare at least once a year.
Check out the full list and the rest of the study at InsuranceQuotes.com.
The story “Where you’ll pay the most — and least — for car insurance” originally appeared on Autoweek.com.More from MarketWatch
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How to get cheap car insurance rates iStockphoto
In the long term, one of the best ways to get cheap car insurance is to be a safe, responsible driver. The worst drivers have high rates because the insurance company needs financial compensation for the high likelihood that it will have to pay out in the event these drivers get in an accident. If you have a spotless driving record, keep it up. If you have some accidents or tickets in your past, they shouldn't drive your rates up forever. If it's been a few years since your last incident, you can try calling your insurance company and asking for a lower rate, using your recent, safe driving record as a bargaining chip.
Another way to get cheap car insurance is to use the same insurance company for more than one type of insurance and get a discount for your loyalty. For example, you can contact the insurance company that provides your homeowners insurance, life insurance or motorcycle insurance and ask if the company can give you a good deal on car insurance. If you have more than one car, you can bundle the insurance coverage on both vehicles.
Your credit score will also affect your car insurance rates, just like it affects the rates you're offered when shopping for a mortgage. If your credit has improved since you last bought car insurance, you may be able to negotiate your way to cheaper car insurance. And if you pay your car insurance premiums and bills on time and in full, you'll build up goodwill with your insurer and might qualify for promotional rates.
If you don't drive very much during the year, you might get cheaper car insurance from a usage-based plan than you would from regular car insurance. Track your mileage before you start shopping for car insurance and see if your low mileage makes you eligible for a better deal.
If you're under 25, you'll pay higher premiums, all things being equal. That's because insurance companies judge young drivers to be riskier drivers. You can get lower rates by joining your parents' plan, or by using your good grades to get a discount on rates, if your insurance company offers that option. Once you reach your mid-20s there's no reason to keep paying the high rates that insurance companies levy on young drivers. You can ask your insurance company to lower your rate, or shop around for insurance from another provider.
Finally, the type of car you drive can affect your car insurance rates. Big, powerful and flashy cars are more likely to trigger high car insurance rates because the insurance company assumes you'll be more likely to speed in that kind of vehicle, and that the vehicle will be a target for theft. Vehicles with high repair costs (such as foreign-made cars) may be more expensive to cover, too. In some states, having a used car will mean lower rates because rates are affected by your car's replacement value. But in other states, rates are based on vehicles' safety features, so having an older car won't necessarily help you get cheap car insurance. If your car has special safety and/or anti-theft features, you may qualify for cheaper car insurance on that basis.
If you live in Michigan, your auto insurance costs an average $1,930 more than if you lived in Maine. Those are the most and least costly states in a compilation released this week by the insurance-shopping website Insure.com.
The differences aren't only, as you might suppose, all about density of traffic or frequency of accidents. Rather, a mix of state laws, competition by insurance companies and frequency of fraud add into the computation of insurance rates.
To see how this operates, let's take a closer look at the three most costly states and the three least expensive. Then we'll give you a list of the top 10 and bottom 10 (numbered from 1 to 51, including the District of Columbia). To check your own state, Insure.com also has state-by-state rundown and an interactive map with more info for each state.
1) Michigan -- Michigan's high premiums are all about medical insurance requirements. Michigan is the only state that mandates drivers to buy personal so-called PIP (personal injury protection) insurance that will cover medical expenses for you and any passengers in case of an accident. The high cost of insurance causes many drivers to defy the law and go without -- an estimated 21 percent of drivers. That in turn boosts rates for the remaining drivers who do get insurance. The average Michigan driver pays $2,738. The national average is $1,325.
2) Montana -- Montana repeats its improbable second-place finish this year. With no large urban areas, Montana nonetheless has the highest vehicle death rate in the country -- 22.6 deaths per 100,000 people. Apparently the wide-open spaces encourage speeding and fatalities. The average auto insurance bill in Montana is $2,297.
3) New Jersey -- New Jersey comes closer to fitting the stereotype of a high-cost insurance state. It's mostly urban and suburban and has a high accident rate. According to Kacy Campion Renna, vice president of the Professional Insurance Agents of New Jersey, high medical costs and frequent fraud also come into play. Finally, said Renna, "New Jersey residents tend to be pretty litigious." The average New Jersey premium is $1,905
On the other hand, here's what keeps down costs in the three least expensive states:
51) Maine -- Maine repeats this year as the lowest-cost state. It has few urban areas, thus has less tangled traffic and lower accident rates. While Maine gets a lot of snow, it only rarely sees tornadoes or hailstorms that can cause costly damage to cars. And Maine drivers do their duty: Only 4.7 percent drive without insurance. The average Maine premium is $807.
50) Ohio -- Ohio has two large cities, Cleveland and Cincinnati. But the influence of that urban traffic is overridden by the robust competition among insurance companies. More than 650 companies write auto policies in the state, compared with 134 in California and 40 in New Jersey. That competition results from firm but not stifling regulation, said Perk Reichley, who owns an Ohio insurance agency. The average Ohio premium is $899.
49) Wisconsin -- Like Ohio, Wisconsin has a competitive insurance market. Large swathes of the state are rural, and Wisconsin drivers aren't very litigious. The average Wisconsin premium is $912.
Here are the 10 most expensive states for auto insurance:
1) Michigan $2,738
2) Montana $2,297
3) New Jersey $1,905
4) Louisiana $1,842
5) Oklahoma $1,778
6) Washington, D.C. $1,773
7) California $1,752
8) Florida $1,654
9) Maryland $1,610
10) Rhode Island $1,608
And these are the 10 least expensive:
51) Maine $808
50) Ohio $900
49) Wisconsin $912
48) Idaho $935
47) New Hampshire $941
46) Vermont $942
45) North Carolina $987
44) Iowa $989
43) Virginia $1,020
42) Illinois $1,035