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The most and least expensive states for car insurance in 2012

Editor's note: See the latest car insurance rate study here.

Louisiana has the most expensive car insurance rates in the nation, followed by Oklahoma and Michigan, according to data from Insure.com's survey of premiums for 2012 models.

Those states were also in the top three in 2011 and 2010.

Car insurance rates are cheapest in Maine, followed by Iowa and Wisconsin.

State rankings of auto premiums, 2012

Rank State Avg. annual premium
1 Louisiana $2,536
2 Oklahoma $2,047
3 Michigan $2,013
4 West Virginia $2,002
5 Washington, D.C. $1,866
6 Montana $1,856
7 Rhode Island $1,830
8 Wyoming $1,732
9 California $1,709
10 Georgia $1,694
11 Connecticut $1,665
12 Texas $1,661
13 Florida $1,654
14 Delaware $1,652
15 New Jersey $1,608
16 Pennsylvania $1,598
17 Hawaii $1,594
18 Kentucky $1,572
19 Mississippi $1,502
20 Missouri $1,455
  National average $1,438
21 Alaska $1,431
22 North Dakota $1,426
23 New York $1,413
24 Kansas $1,410
25 Massachusetts $1,378
26 Maryland $1,372
27 Alabama $1,345
28 Arkansas $1,334
29 Colorado $1,322
30 Utah $1,315
31 Washington $1,305
32 South Dakota $1,303
33 Indiana $1,301
34 Virginia $1,297
35 New Mexico $1,274
36 Minnesota $1,264
37 Nebraska $1,244
38 Oregon $1,241
39 Tennessee $1,228
40 Nevada $1,223
41 Illinois $1,192
42 Arizona $1,176
43 New Hampshire $1,133
44 South Carolina $1,108
45 Ohio $1,099
46 Vermont $1,063
47 North Carolina $1,022
48 Idaho $1,011
49 Wisconsin $987
50 Iowa $985
51 Maine $889
Source: Insure.com

High rates usually cannot be pinned on a single cause. Rather, a variety of unfortunate circumstances combined to make insurance bills more painful in some states:

  • Costly storm seasons in 2011 impacted rates in many states.
  • Once again, uninsured drivers caused high premiums for others because they didn't pay their share for accidents they caused. In most cases, drivers hit by uninsured motorists have to rely on their own coverage to fix their cars or pay for medical treatment. For example, an estimated 24 percent of drivers are uninsured in both Oklahoma and Florida, according to the Insurance Research Council. Maine and Massachusetts, on the other hand, have the lowest shares of uninsured drivers -- just 4.5 percent.
  • Agents in Michigan and Louisiana say a tough economy has made it hard for many drivers in their states to afford insurance. "I have people in my office on a weekly basis who say they just can't do it," says Jason Verlinde, vice president of Verlinde Insurance Agency in Richmond, Mich., and a board member of the Michigan Association of Professional Insurance Agents.

No. 1: Louisiana

Brad Bourg, past president of the Independent Insurance Agents & Brokers of Louisiana and president of Bourg Insurance Agency in Baton Rouge, La., says for some people it comes down to "whether to keep insurance or put food on the table."

In addition, some drivers buy only the minimum level of liability insurance required by the state, which often isn't enough to cover injuries and damages they cause in an accident. Insured drivers then have to tap into their own coverage to pay for damages.

Bourg was disappointed that Louisiana came out on top this year. "I thought we were doing better."

Agents and insurance companies contend the judicial system contributes to Louisiana's high car insurance rates. Louisiana is the only state that requires claims to reach $50,000 before they go to a jury trial. Lawsuits involving claims under that threshold go before elected judges, who are perceived to side more with their constituents over insurance companies.

Insurance trade groups and business organizations have called for legislation to lower the threshold for jury trials.

According to Insure.com’s data, New Orleans ZIP code 70117, which includes the Lower Ninth Ward and the Bywater and Holy Cross neighborhoods, has the highest rates in the state.

No. 2: Oklahoma

A state task force is working with the Oklahoma Insurance Department to tackle the problem of uninsured drivers. The goal is to reduce the share of uninsured drivers from an estimated 24 percent to 14 percent by 2017, says Denise Johnson, a task force member and immediate past chairperson of the Independent Insurance Agents of Oklahoma.

The task force is recommending a variety of measures to make people more accountable, including tougher fines for driving without insurance, says Johnson.

Wicked storm seasons have pounded the state for the last couple of years, leading to big losses, which also contribute to high rates.

Last year, Oklahoma was hit with two major blizzards and a series of tornadoes. The year before, softball-sized hail pounded Oklahoma City.

"We've had so many losses," Johnson says.

No. 3: Michigan

Under Michigan's unusual no-fault auto insurance system, car accident victims are guaranteed unlimited, lifetime medical benefits for treatment of their injuries. Their insurance companies pay the first $500,000, and then are reimbursed for any amount above that threshold by the Michigan Catastrophic Claims Association, a nonprofit created by state law.

Car owners have to buy personal injury protection (PIP) coverage as part of their policy, and they must pay an annual assessment to the association. Michigan’s PIP coverage pays for medical bills for the policyholder, any family members living in the same house (even when they’re injured as passengers in someone else’s car) and any passengers who are injured but do not have no-fault PIP coverage.. This year's assessment from the association is $145 per vehicle. Michigan drivers have paid $7.3 billion to support the association in the last decade, according to research by Sharon Tennyson, a professor at Cornell University in Ithaca, N.Y.

"It's good coverage, but it's starting to be unaffordable, and for insurance companies, it's starting to be unsustainable," Verlinde says.

Another wrinkle in the system: motorcyclists don't have to buy PIP coverage, but if they purchase the minimum required liability coverage and are injured in an accident with a car, they still get unlimited medical benefits. The car driver's insurance pays out, and then the Michigan Catastrophic Claims Association kicks in.

Legislation is pending in the Michigan House of Representatives that would eliminate unlimited medical benefits and give consumers the ability to choose PIP limits of $500,000, $1 million or $5 million. The legislation would also establish a medical fee schedule for no-fault car accident injuries. This would set levels for how much insurers would reimburse hospitals and other health care providers for procedures, treatments and tests, such as MRIs and X-rays. Such fee schedules are in place for treatment through workers' compensation insurance. However, hospitals oppose the change.

"That’s where we'll see the biggest fight," Verlinde says.

Pretty low: Wisconsin

Wisconsin's rural environment and competitive market help keep rates down there, says Michael Froh, president-elect of the Independent Insurance Agents of Wisconsin and an agent with Burkart-Heisdorf Insurance in Sheboygan, Wis.

"We have a lot of strong regional companies in the area, besides the large national companies," he says.

He also points to a favorable regulatory climate. Last year, for instance, the state repealed a two-year-old law that allowed policyholders to “stack” uninsured motorist coverage. Stacking lets a policyholder combine the coverage limits on multiple cars to receive a larger payment for damages caused by an uninsured driver. The insurance industry generally opposes stacking, saying it leads to higher premiums.

Another factor pushing down rates: Wisconsin is less litigious than some other states.

"People are not as quick to sue," Froh observes.

Even lower: Iowa

Many regional auto insurance companies, as well as national insurers, compete for business in Iowa, helping keep rates low there, says Brian Petersburg, president of the Independent Insurance Agents of Iowa Inc. and owner of the A&J Petersburg Agency in Decorah, Iowa.

Another factor: a low rate of uninsured drivers.

“We’ve got great values in Iowa,” he says. “People pay for their car insurance before they go out to dinner.”

A low crime rate helps, too.

Petersburg says he doesn’t think his agency in Decorah, a city of 8,000, has processed a car theft claim in the last 10 years. 

Lowest: Maine

David Millar, president of the Maine Insurance Agents Association and principal of Riley Insurance Agency in Brunswick, Maine, says he's not surprised his state has the least expensive car insurance rates.

"The population is spread out, and there is not as much traffic as other areas," he says. "It's a competitive market. We're very fortunate to have a good number of carriers."

Sheila Sawyer, treasurer of the Carl M P Larrabee Agency Inc. in Wiscasset, Maine, and president-elect of the Maine Insurance Agents Association, says the state has lucked out with the weather, too. There have been no major natural disasters, which helps keep claims low.

"We also have a relatively low crime rate, so we don't see a lot of car thefts or vandalism," she says.

According to Insure.com’s ZIP code data, Falmouth, Maine (04105), which sits just north of Portland, has the lowest rates in the state.

Survey methodology

Insure.com commissioned Quadrant Information Services to provide auto insurance rates for more than 900 car models from six large carriers (Allstate, Farmers, GEICO, Nationwide, Progressive and State Farm) in 10 ZIP codes per state. Rates were not available for all models, particularly exotic cars.

We then averaged rates for all vehicles in each state to create the rankings of affordable car insurance.

Rates are based on insurance for a single, 40-year-old male who commutes 12 miles to work each day, with policy limits of 100/300/50 ($100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage. The hypothetical driver has a clean record and good credit. The rate includes uninsured motorist coverage. Average rates are for comparative purposes. Actual rates will depend on individual driver factors.

More from Barbara Marquand here

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