Smart Auto Insurance Blog

Industry studies continuously show Louisiana auto insurance rates to be sky high and this is frustrating residents more and more.  They want to know why this is happening and why they are subject to some of the highest auto insurance rates in the nation.  The article “Car Insurance Costs” by John DeSantis on HoumaToday.com, offers some insight as to why this is consistently the case.

If you talk to local auto insurance agents, many believe the higher number of lawsuits involving auto insurance claims is to blame.  This is just one of many factors, but this is a very direct reason why rates have been increasing.  Auto insurance fraud, auto theft, traffic congestion, and overall claims filed all play into auto insurance rates being generally higher in Louisiana.

Some Louisiana officials are working hard towards reform to keep costs down.  Specifically, there is one law being worked on to make it more likely for insurers to settle rather than to fight cases they may win.  The director of Louisiana Lawsuit Abuse Watch, a non-profit organization out of Baton Rouge, says a particular law requires that a claim of at least $50,000 or more be made before a jury trial is assigned to a case and she feels this is unfair.  She says this isn’t fair to auto insurance companies defending lawsuits because many cases end up in front of judges and wastes a lot of time and money.  She feels there are cases where the judge is more likely to find for the plaintiff, although this is not always the case.

Written by Sara Smart

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According to the article “Louisiana Auto, Property Insurance Rates Highest in US” by Christopher Tidmore on Bayou Buzz, an average quote for Louisiana auto insurance is $1,111 which is the highest in the nation.  This is based on a recent survey conducted by InsWeb.

There was a drastic difference between Louisiana and other southern states.  For example, North Carolina’s average rate is $495 and Virgina’s average rate was $521.  This is about half of what the state of Louisiana is experiencing which is making it difficult for Louisiana residents to afford auto insurance coverage.

The closest southern state was Florida coming in at about $750 on average.  Louisiana also ranked high for very high property insurance rates as well.  The average premium for home owners insurance for the whole nation is $690.62 which is significantly cheaper than Louisiana’s average which is $1392.  This is up .2% from the previous year.

The south typically has higher insurance rates because of the devastating threats of hurricane season, but Louisiana consistently is one of the most expensive states for insurance in the United States.

Louisiana once again is experiencing the highest median auto insurance costs throughout the entire nation.  Coming in at $1,111 on average according to the InsWeb survey, Louisiana feels the weight of these high rates especially when compared to other states which are significantly lower.

According to the article “Louisiana Auto, Property Insurance Rates Highest in US” by Christopher Tidmore on BayouBuzz, North Carolina’s average cost is $495 and Virgina comes in at $521.  Both of these rates are less than half the cost of Louisiana auto insurance.  Florida auto insurance quotes have jumped and are on the higher side as well, coming in at about $750, which is worse than last year.

InsWeb’s 2011 Car Insurance Rate Report comes in handy when people are shopping around to compare auto insurance.  It gives consumers an idea of what to expect and what might be considered “high” in their state.  The annual report ranks all 50 states and Washinging DC and bases their rankings on the median household car insurance rate for a 6 month policy.  InsWeb gets their rates from a system that tracks rates from the largest auto insurance companies in every state in addition to actual profiles of their customers.

For many years, auto insurance companies have been using a consumer’s credit score to help determine risk and calculate auto insurance quotes.  It has been debated by industry experts and consumer advocates whether or not this is fair and whether or not it makes sense.  Most auto insurance companies agree that this is an accurate way to determine risk, and study after study shows that riskier drivers tend to have lower credit ratings.

The National Association of Insurance Commissioners has been probing insurers continuously about their credit score use and the auto insurers are defending themselves.  This is according to the article “Auto Insurance Companies Defend Use of Credit Scores” found on Insurance NewsNet.com.  With a struggling economy, the issue is even more hot.  People with once excellent credit scores are finding themselves out of work and paying late on bills which is affecting their credit.  Double whammy once they receive an auto insurance quote and see their rates have increased due to the drop in their credit score.

The use of credit scores is supported by most states, which use a model from the National Conference of Insurance Legislators.  Louisiana commissioner of insurance, Jim Donelon, says he doesn’t see anything wrong with the practice and he attended a public hearing with the NAIC’s Property and Casualty Insurance Committee where auto insurance companies defended their use of credit scores when determining auto insurance rates for customers.

If you were to ask anyone in New York City if they pay a lot for auto insurance they most likely would tell you they do.  It makes sense since it’s the largest city in the US with common congested traffic and risky cab drivers.  But surprisingly, New York does not even show up on the top 20 states with high auto insurance rates.  According to the article “The States With the Highest & Lowest Auto Insurance Rates” by James Zol on TheAutoInsurance.com, Louisiana takes the top spot as the state with the highest auto insurance rates.

Based on a study completed by Insure.com, Louisiana has the highest auto insurance rates primarily due to their law structure.  According to MSN News, Louisiana allows for some of the highest out of court settlements in the US.  Because of this auto insurance companies charge Louisiana residents more to make up for this potential expense.

Maine takes the number one spot for the state with the lowest auto insurance rates.  This is mostly due to the low population which translates to less accidents and fewer lawsuits.  Many Maine residents tend to resolve auto accident situations without even contacting the insurance companies.  This translates to lower rates across the board in Maine.  This is something other states may want to consider before filing frivolous claims.  You may make some money in the short run, but in the long run everyone pays through higher auto insurance quotes.

Auto insurance quotes vary greatly from state to state.  According to the article “Where Auto Insurance Is Most Expensive” by Jennifer Saranow Schultz on nytimes.com, Louisiana has the highest average auto insurance in the US and Maine has the lowest.  This data was accumulated by insure.com, which ranked the states based on average auto insurance rates.

This data was released this week and comes from a study completed by Quadrant Information Services which looked for the most and least expensive car to insure across the country.  The information determined average auto insurance quotes for over 2400 cars from the 2010 model year from 6 large companies across 10 zip codes in every state.  This also enabled auto insurance rates in general to be compared from state to state.

It’s surprising how dramatically auto insurance rates can vary from state to state.  Insure.com says the varying laws from state to state is partly to blame.    Regardless of how good someone’s driving record is, a portion of your rates are at the mercy of your states’ insurance laws.  Shopping around is your best bet at getting comparison quotes.  Even smaller companies such as Bristol West Insurance can offer competitive rates.