Densely populated regions often have the highest insurance rates due to more frequent crashes.
It may be the Motor City, but driving there comes at a steep cost – motorists in the Metropolitan Detroit area paying the highest premium for insurance in the country, according to a new study.
On average, a motorist in the Detroit area will pay 165% of the national average for auto insuance, according to research by Quadrant Information Services. Those in the sprawling New York metroplex come in just behind, but they pay a mere 36% more than the average for motorists across the country.
On the flip side, drivers in the region around Charlotte, North Carolina are paying an average 43% less than the national average for car insurance, noted InsuranceQuotes.com, the website that commissioned the study.
The typical U.S. motorist spends $797 a year for insurance, according to the National Association of Insurance Commissioners. But that figure can vary widely depending on a variety of factors, including a driver’s age, sex and home base, as well as their driving record and the type of vehicle they own.
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It’s no surprise that a person with a lot of tickets or crashes will be penalized, as will someone driving a sports car or some other, riskier vehicle. Young drivers also pay a premium, as TheDetroitBureau.com has reported, because they tend to have more accidents – especially teenage males.
But where a person lives is also be a factor that insurance companies take into consideration when determining premiums. Areas with a large population typically experience more crashes on their crowded roads. That’s apparent when noting that the Big Apple is second on the list, with the sprawling Los Angeles region fourth, its motorists paying 25% more than average for auto insurance.
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But other issues come into play, such as vehicle theft rates, the percentage of uninsured motorists and state regulations, noted InsuranceQuotes.
Michigan motorists, on the whole, are hammered because it is the only state that provides unlimited personal injury protection – which means hefty medical bills that motorists, on the whole, must help pay for. According to state data, personal injury claims surged from $20,000 to an average $46,000 from 2003 to 2013.
The Detroit area, in particular, has a high rate of vehicle thefts and uninsured motorists, also driving up insurance bills for the entire region.
Miami, the third on the list, also has a problem with uninsured motorists and thefts – particularly the high-end vehicles that the region’s wealthy like to drive.
The rest of the Top 10 metro areas for car insurance:
5) Atlanta, at 25% above the national average;
6) Sacramento, 16%;
7) San Francisco/San Jose, 10%
8) Philadelphia, 10%
9) Houston, 10%
10) Tampa/St. Petersburg, 9%
The study found a few surprises, including the fact that Washington, D.C. came in at 6% below the average for the 25 largest metro areas including in the study.
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Analysts say regulations can both help or hurt motorists. In Michigan, they pay more because of the policy on personal injury protection. Charlotte motorists, on the other hand, benefit from a state cap on premiums that helps spread costs out to rural regions, InsuranceQuotes noted.
The rest of the 10 metro regions with the lowest insurance costs:
2) Cleveland, 31% below the national average;
3) Pittsburgh, -24%;
4) St. Louis, -18%;
5) Chicago, -16%;
6) Denver, -12%;
7) Phoenix, -10%;
8) Orlando, -10%;
9) Seattle, -10%;
10) Washington, D.C., -6%
Minneapolis was 5% below the national average, Portland 1% under. Dallas/Ft. Worth was a modest 1% over the average, while Boston and San Diego came in 2% over.
The study was based on figures for drivers with a bachelor’s degree who clocked 15,000 miles a year, had no breaks in insurance coverage and who had $500 collision and comprehensive deductibles, with state minimum liability coverage and full personal injury protection.