Reviewing Auto Insurance Rates in Various States

It is no surprise that every driver wants to find the least expensive auto insurance possible. However, there are many factors that affect the cost that each state charges for annual car insurance policies. For example, the population size and current economic situation of the state in which you live will results in different insurance rates. It may be interesting to review the following statistics to see how much drivers in your area have to pay compared to motorists in other states.

NAIC Statistics

When the National Association of Insurance Commissioners or NAIC determines the average auto insurance expenses incurred by each state, it assumes that every insured vehicle in that state is covered by liability insurance. However, the NAIC does not automatically assume that every driver has purchased collision or comprehensive insurance coverage.

Calculation of State Auto Insurance Expenditures

The average car insurance expenditures are calculated according to the rate consumers must pay to insure their vehicle, instead of totaling the cost of comprehensive, collisions and liability insurance. The reason is that the majority of drivers do not choose to purchase all three kinds of insurance coverage. In fact, according to data published by the NAIC, only 77 percent of insured motorists purchase liability and comprehensive insurance coverage. The numbers drops to 72 percent for policy holders who also buy collision insurance coverage. The NAIC evaluates the pure premium, frequency of insurance claims, loss ratio, average premium cost and severity of insurance claims for every state.

Highest & Lowest State Auto Insurance Expenditures

According to a report issued by the NAIC in September of 2007, the highest average annual car insurance expenditures were $1,184 in the state of New Jersey. The District of Columbia came in second place with average auto expenditures of $1,182, followed by Massachusetts with $1,113 and Louisiana with $1,076. The state with the least expensive auto insurance expenditures was North Dakota with only $554 annually, followed by Iowa with a close $555.

Factors Affecting Auto Insurance Rates

The rate insurance companies charge for auto insurance is determined by numerous factors such as the type of insurance coverage. If you live in a state with a booming economy, there is a greater chance you will purchase a new vehicle than if you live in an area with a poor economy. New vehicles usually require different and more expensive insurance coverage than older vehicles. Therefore, these states will most likely have a higher annual cost of auto insurance expenditures. Other factors that can greatly impact the rate of auto insurance include the density of traffic, per capita income and urban population. Normally, states that are highly urban and have higher prices, wages and traffic, also pay the most for auto insurance every year.

Various Annual State Auto Insurance Expenditures

In a document published by the NAIC in 2005 that compared annual statewide auto insurance expenditures, Texans paid $845. This ranked Texas as the number 17 state for average auto insurance price. Arizona ranked fourteenth on the list with an annual rate of $926. The 18th state was California with an average rate of $845.

On the other hand, the sixth most expensive coverage was in Florida with insured motorists paying an average of $1,063 every year. Kansas was ranked fifth in the entire country with annual expenditures of only $590. Are you curious which state ranked the lowest for the cost of annual auto insurance? The answer is North Dakota with average auto insurance costs of $554.