Car Insurance Quotes differ between the states

Both the insurance industry and consumer organizations monitor the car insurance rates in the different states. In part, this is to collect evidence to argue repeal or retention of the McCarran-Ferguson Act of 1945 which exempted insurance from the anti-trust laws designed to keep free trade flowing across state borders. The result is each state is responsible for licensing and regulating their authorized insurers, while you are a captive market. You cannot buy an insurance policy across state lines. Without full price competition, premium rates tend to be higher in many states.

A recent survey assumed a 40-year old man with an average daily commuting distance of 12 miles. The researchers then got car insurance quotes for liability cover assuming 100/300/50 with a $500 deducible and uninsured/underinsured cover for a sample 10 ZIP codes in each state for about 2,400 different makes and models of vehicle. The top three highest averages were in Louisiana at $2,510, Michigan at $2,098 and Oklahoma at $1,869. The bottom three were Ohio at $999, Vermont at $968 and Maine at $902. Why is there such a big gap between the top and the bottom?

In part, it all comes down to how many people live in the state and how often they use their vehicles. Rural states with lower volumes of traffic have fewer accidents. Then there's the quality of the roads. Where there's a lot of wear and tear on poorly maintained roads, there are more accidents. Then comes the local courts. Where juries are more generous in awarding damages for personal injuries or there are other factors encouraging higher settlements, the premium rates are higher. Finally, there's the percentage of people driving uninsured. In some states this is as high as 20% so there's a positive need for “honest” drivers to buy uninsured/underinsured cover.

Put simply, car insurance quotes reflect local conditions. In Louisiana, the court system encourages higher settlements. In Michigan, every driver is required to carry unlimited liability coverage for medical expenses. While Maine has only 1.3 million residents and almost empty roads. So, while it's undoubtedly true that lack of competition is unhelpful, there real reasons for the big differences are local conditions. Despite their best efforts, there's no prospect for Washington to repeal the McCarran-Ferguson Act any time soon. The car insurance industry will retain its monopolies.