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5 Common Differences in State Auto Insurance

Our mobile society has discovered that auto insurance rates differ markedly from one state to the next. Many factors play a role in the actual annual premium rates charged to drivers who live in each state. Since every driver is required to carry sufficient auto insurance coverage, the rates must be affordable for most drivers. Enter your ZIP to compare auto insurance companies for FREE and INSTANTLY!

Auto insurance laws differ because of the preferences of the people living in the state. When costs are exorbitant for every member of an insurance pool, the state governments will decide to take action and restrain the costs that drive up insurance rates. Certain factors are controlled more effectively by market pressure and healthy competition, but there are specific actions that lower costs for every insurance company. Compare auto insurance and find cheap car insurance for FREE when you enter your ZIP into our FREE comparison tool!

no fault insuranceNo-Fault Insurance

The definition of no-fault insurance states that each person involved in an accident would receive payment from their own insurance company. The pure no-fault model is not followed by any of the twelve states that use a no-fault auto insurance system. Cost reduction is the primary reason that states choose a no-fault auto insurance model. The name is not descriptive because the assessment and payment of damages still has a great deal to do with the driver that is deemed to cause the accident or property damage.

  • Limits are placed on litigation awards to reduce costs to the insurance company, which restrains annual premium costs for everyone in the insurance pool.
  • Administrative costs under the no-fault system have proven to be less expensive for the insurers, resulting in lower annual premiums.
  • Lower liability limits are required on each auto insurance policy because of the legal limits placed on monetary and non-monetary awards in litigation.

Liability Requirements

Forty five states require that personal liability insurance is carried by every driver. The other five states have requirements that each driver is covered by uninsured motorist insurance or sign a form claiming personal responsibility. This type of insurance is designed to pay for property damage and injuries to other people in the accident. Requirements within this category include:

  • Bodily injury liability – A minimum amount of coverage is required for each person involved in the accident. From state to state, these amounts vary from $10,000 to $50,000 of medical expense coverage per person.
  • An additional sum is designated for the amount of money the insurance company is obligated per incident for medical expenses. This amount is usually twice the amount of per person coverage.
  • Property damage liability – Damage caused to property belonging to someone else is covered up to the amount stated in the policy, and the individual can be held accountable for any costs that are above the limits on the auto policy.
  • Insurance companies are recommending that drivers and homeowners carry an additional umbrella liability policy that would cover any additional costs associated with accidents in the car or in the home. This type of policy is especially important when protecting the personal and business assets from litigation awards to another party.

Uninsured Motorist Coverage

When a licensed and insured motorist is involved in a car accident where the other driver does not have an auto insurance policy, the uninsured motorist coverage in the insured driver’s auto policy will cover the damages that occur to his own vehicle and his personal medical expenses. This coverage is required in most states because of the foreseen risk of being involved in an accident involving an uninsured motorist. There are many benefits to carrying this type of coverage, including:

  • car insuranceNot just driving – When an auto insurance policyholder is a pedestrian, motorcyclist, bystander or bicyclist, the uninsured motorist coverage would cover injuries and damage if an uninsured driver causes an accident.
  • Hit and run – If an uninsured driver’s vehicle makes contact with the vehicle or person of a policyholder with uninsured motorist coverage, the insurance company will pay the bills associated with the accident.
  • Additional coverage – Other drivers in an accident might have lower liability limits than the driver with uninsured motorist coverage. In this situation, additional costs above their policy limits could be paid from the uninsured motorist coverage on the other policy.

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Statistical Occurrence of Claims

Every state insurance commission tracks the actual number of claims that are filed by drivers throughout the state. Insurance companies will charge higher premiums to insure against loss when the risk is perceived to be higher. The auto insurance discounts each company offers are related to encouraging certain behaviors that will mitigate the risk factors. Costs of auto insurance are impacted directly by the following geographic factors:

Crime rates – Theft and vandalism are more prevalent in certain locations. The costs associated with repairing and replacing vehicles are higher in these areas, and the costs are passed on to the drivers who are living in the area. Falsifying an address to receive a lower rate is considered fraud, and the insurance company will pursue legal action.

  • Extreme weather – In colder climates, the risk of accidents because of slick roads increases during cold months, and the insurers calculate these factors into the repair estimates for auto insurance. Where tornadoes and hurricanes occur, replacement costs are higher. Drivers will pay more for insurance where weather is extreme.
  • Repair costs – Parts and labor costs vary widely from one state to the next because of the associated cost of living. Insurance rates will reflect the actual costs experienced by the insurance company over the previous fiscal year. When costs rise, the insurance premiums charged to every driver in the pool will rise.
  • Population density – Heavily populated areas experience higher loss rates, so the insurance companies charge higher premiums in very densely populated areas. Within the major cities, certain areas experience other risk factors that will raise rates for people within certain zip codes.
  • Commute distances – Where mass transit options are not available and commute distances are high, insurance rates are higher because of the perceived risk of accidents. Many factors can lower those rates including improved roadways and the addition of mass transit.

Male versus Female Premium Rates

Insurance companies track the risk associated with insuring each individual driver through actual claim statistics. Every state has higher auto insurance rates for male drivers because of the following factors that have proven to raise the costs associated with their driving habits and preferred vehicles. Enter your ZIP to find the best auto insurance INSTANTLY!

The percentage of difference between rates for men and women varies widely, and population density is not the overriding factor since Wyoming has the largest difference. Perceived risk is costly in the annual premiums charged to male drivers to offset the frequency of claims paid to repair or replace their vehicles.

  • DUI violation – Men are 50 percent more likely to have a DUI violation on their driving record. Being convicted of driving under the influence is one of the most expensive risks assessed by the insurance industry. Every insurance company will raise their premiums in various amounts if a DUI is present on the driving record.
  • Moving violation – Women are less likely to have moving violations on their driving records than men. This perceived risk is added into the premium charged to the male driver.
  • Type of vehicle – Men purchase and drive more expensive vehicles than women, which results in higher repair costs. Actual statistics have been tracked to calculate an eight percent difference between the replacement value of the vehicles driven by men and women.
  • Primary driver – Multiple-vehicle policies have a male driver as the primary driver, which exaggerates the statistical analysis of annual premium rates. When multiple vehicles are insured and teen drivers are on the family auto insurance policy, the rates appear to be higher because of the male driver.

Male vs Female car insurance

Tips for State Auto Insurance

Safe and responsible drivers should be able to find affordable auto insurance rates in their location because the insurance companies reward behaviors that lower risks. Every insurance company works diligently with the state insurance commissions to address the needs of drivers in each location.

Risks vary widely because of the population, terrain, weather and legal environments in each of the 50 states. Laws are written to shape driver behavior and reduce the costs of litigation to prevent the insurance rates from increasing beyond the affordable range for the majority of drivers. The best way to find affordable insurance is to compare the premiums and coverage offered by each insurance company. Don’t wait to save! Enter your ZIP and allow us to perform a FREE auto insurance comparison for you! After comparing, take the time to read our Auto Insurance Guide and find all the answers to your auto insurance questions!

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