Car insurance premiums in the US vary from state to state. So, it is not surprising that someone living in one state may find that his friend is paying much less a car insurance premium in another. For example, the car insurance premium for someone living in New York is more compared to someone living in Pennsylvania, and similarly, Georgia offers car insurance at a lower premium when compared to Florida.
Some resources are available on the internet that gives an idea about the relative premiums for car insurance in various states. The most expensive ones are New York, Louisiana, New Jersey, Florida, and D.C. The top 5 cheapest states for car insurance are Kansas, Wisconsin, North Carolina, Maine, and Indiana.
Many factors are responsible for this variation in cost as far as car insurance premiums are concerned. Here are a few of those mentioned below.
- The first factor that affects insurance premiums is the population. If the state is densely populated, there are more cars plying the streets. This increases the likelihood of accidents. Car insurance pays for claims when accidents happen. More accidents would mean more claims being filed. This increases the amount of money that these insurance companies need to pay. Therefore, the insurance companies also increase the car insurance premiums to cover the extra expense they incur in paying.
- The next factor that affects the car insurance premiums one has to pay is the crime rate in the state. Again population plays a vital role in this factor too. Densely populated areas tend to have higher crime rates. These crimes could be anything from auto theft to vandalism. Car owners are aware of these risks if their state is densely populated and there is more crime. Car owners often have to take expensive car insurance in order to make claims when their car is affected due to such crimes. The high premiums for their car insurance are often a reason for disappointment for the car owners. However, insurance companies also have to deal with many claims resulting from auto theft or vandalism. In the long run, these companies honor most of these claims and make payouts. This is the reason the cost of insurance is higher in those states.
- One more factor that has a profound impact on the cost of insurance is the litigation fees. The cost of litigation varies substantially from state to state. Some states tend to have a more complex legal system, whereas others may have a higher cost of litigation. There are chances that someone sues a car owner or vice-versa. The cost of the legal system comes into play once this happens. The higher cost of litigation makes car insurance expensive in those cases. The insurance company never wants to pay these legal fees from their pocket. They increase the insurance premium and collect the same from the car owners. Once again, car owners may feel a little disappointed that they are forced to pay more premiums for no fault of their own, but this is something that can’t be helped.
- The insurance company raises the cost of car insurance in states that are more prone to natural calamities. Natural calamities can be devastating. We all know that states that are more prone to natural disasters like tornadoes, hurricanes, and earthquakes will have more accidents and damage to cars. These accidents and destruction lead to more claims. As a result, car owners residing in such places have to pay more for their car insurance.
- The other factors that affect the premium are the cost of living and the minimum amount of liability coverage in car insurance. The liability is calculated on the basis of what minimum amount is needed to cover personal injury and property damage. These values are a critical measure of the overall premium of car insurance. Thus, the higher these values, the higher the premium.
People relocating from a state that charges less to one that asks for more often find it disappointing. Others who go the opposite way rejoice. No matter which way you are going, or if you want to enjoy the best deal on car insurance premiums, you can check out resources on the internet. These can compare available insurance policies for you and give you the one quoting the lowest in your state.