Financial Advisor

Understanding How State Car Insurance Premiums Vary

With gas prices skyrocketing higher and higher, it’s nice to hear that annual car insurance rates continue to decline. Today, the Internet allows drivers all over the world to shop around and compare the best options on how to get affordable car insurance. Many factors go into insurers pricing your auto policy. These factors include age, gender, driving record, amount and type of insurance, type of vehicle (make, model and year), and your geographic location. What type of role does your geographic location play in regards to your state auto insurance costs? Understanding how your geographic location affects your policy may save you money by helping you make smart moving decisions.

When you’re shopping around for state auto insurance, it’s good to understand the factors that go into calculating your premium. One of those is your geographic location, including the area of the state you live in (rural versus city) and the length of your drive to work. In addition, car insurance companies take into account statistics such as parking, traffic and the amount of uninsured drivers in your location, too. Just because you live in a specific state, such as Illinois, California or Florida, you can’t determine how your car insurance rates will be affected until you ask for a quote or talk to your insurance agent. However, there are some general guidelines in terms of understanding how your geographic location affects your state car insurance premiums.

How Car Insurance Rates Are Affected by Your Location
People living in the city generally pay significantly higher car insurance rates than those living in rural areas due to the increased likelihood of an accident in these more densely populated areas. So if you live in downtown Chicago, where there are many cars on the road, your insurance probably will be higher than if you live in Decatur, Illinois. And in Miami, Florida, nearly one-third of drivers are uninsured. This can cause your car insurance rate to be higher. In cities like Boston or New York, where people often park on the street, ca insurance rates are often higher, too.

In addition, you may find that specific neighborhoods have higher or lower insurance premiums, which can be attributed to the crime rates, specifically incidents of vandalism and theft. If you are trying to decide between a few new living quarters, you may want to compare the car insurance rates for both to see if there are any differences. If one is significantly higher, it could influence your decision, as well as save you from a surprise in the future.

In addition, your car insurance rates will be higher if you have a lengthy daily commute to work, too. If you are planning to move from downtown New York City into one of the suburbs, but will still have to commute into the city each day, get a quote beforehand to determine if your car insurance rates will increase, decrease or remain about the same, so that you can factor that into your monthly budget. Even though you may think your rate will decrease because you’re moving out of the city, a one-hour commute on the busy highways could end up costing you more than your current situation of walking to work each day and leaving your car parked in the city on a permanent basis.

Weather also can factor into state car insurance rates, causing more and greater severity of accidents. If you live in an area that is prone to hail and other severe local weather issues that cause damage to your car, your car insurance rates are likely to be higher. You may also find that having cover for your car, like a garage, can help deflect some increased costs due to weather.

Overall State Car Insurance Rankings
While you can’t determine what your car insurance rates will be just by the state in which you reside, there are some trends you may want to consider if you are relocating.

States with the least affordable car insurance rates include: Washington, D.C.; California; New York; New Jersey; Maryland; Massachusetts; West Virginia; Connecticut; Pennsylvania; Delaware; North Carolina; Rhode Island; Louisiana; Arizona and Florida. As you can see, many of these states have major metropolitan areas that likely influence the overall rankings.

States with the least expensive car insurance rates include: Maine; Ohio; Iowa; Missouri; Wisconsin; Vermont; Idaho; Illinois; Tennessee; Virginia; Oklahoma and Indiana. Again, these are states that tend to have more rural areas, less drivers on the road and fewer uninsured drivers.

Car Safety Standards Affect Affordable Car Insurance Rates
Another factor affecting car insurance rates is the type of car that you drive. Car dealers nationwide agree that car insurance is a small consideration when choosing a car to drive. Fewer than 10 percent of consumers research a car’s insurance rates before deciding to buy. However, insurance rates can change drastically depending on the type of car you chose. The likelihood of accidents occurring, as well as the severity of injuries obtained in those accidents, affect how insurers view the safety of your car and how high they should set your rates. A general rule of thumb is that the larger the car you drive, the lower the risk of driver fatality and vise versa: The smaller the car is in size, the higher the risk of driver fatality.

How to Get More Affordable Car Insurance Rates
While you may not be able to move in order to reduce your state car insurance rates, there are some things that may qualify you for a lower insurance premium, such as:

    * Purchasing a car with an optional safety standard called ECS (Electronic Stability Control), which has been proven to lower driver fatalities, or one with a higher safety rating
    * Insuring multiple-cars
    * Enrolling in driving education classes
    * Maintaining good grades in school
    * Keeping blemishes of your record (“safe driver”)
    * Combining your auto insurance with your home insurance under the same insurance company
    * Utilizing Internet sites to shop around for lower rates

Get a Car Insurance Quote or check out an Auto Insurance Coverage Guide to learn more about car insurance options. Also make sure to compare State Car Insurance Quotes before deciding to change locations or buy a new car.

About the Author

Melanie Broemsen is a content specialist at Rosetta, one of the top 10 interactive agencies in the U.S. Broemsen has a degree in Public Relations from Kent State University and more than 10 years of experience in interactive marketing.

Understanding How State Car Insurance Premiums Vary by Melanie Broemsen