- Drivers in Detroit pay the highest rates for car insurance in the U.S., while those in Charlotte, North Carolina, get away with the lowest, according to a recent study.
- The study, commissioned by InsuranceQuotes.com, compared the average cost of auto insurance premiums in the 25 largest U.S. metropolitan areas.
- Factors that go into determining insurance rates for a given region include population density and state regulations.
SAN FRANCISCO — Drivers in Detroit pay the highest rates for car insurance in the U.S., while those in Charlotte, North Carolina, get away with the lowest, according to a recent study commissioned by InsuranceQuotes.com.
The study, conducted by property and casualty analysis specialists Quadrant Information Services, compared the average cost of auto insurance premiums in the 25 largest U.S. metropolitan areas and found a remarkable degree of difference based on location alone.
Drivers in the Detroit metro area, for example, pay a whopping 165 percent more than the national average, while those in the Charlotte-Concord region end up paying 43 percent less than average.
Why do those in Detroit get hit so hard?
"One of the main reasons why car insurance is so expensive in the Detroit area is because Michigan is the only state where car insurance includes unlimited personal injury protection," said Laura Adams, senior analyst for InsuranceQuotes.com, in a statement.
"Also, Detroit has a very high percentage of uninsured motorists — as high as 50 percent by some estimates. That unfortunately raises rates for those who do have car insurance."
Combine those reasons with the fact that insurance always tends to be higher in any large, urban area, and that Michigan is a no-fault insurance state, and you have what InsuranceQuotes.com calls "a perfect storm of sky-high premiums."
After Detroit-Warren-Ann Arbor, the metropolitan areas with the highest auto insurance rates are the New York-Newark-Connecticut-Pennsylvania region, where drivers pay 36 percent above the national average, Miami-Fort Lauderdale at 34 percent above the average, Los Angeles-Long Beach at 25 percent, and Atlanta-Athens at 17 percent above.
At the bottom end, after Charlotte-Concord, are the Cleveland-Akron-Canton area, which falls 31 percent below the national average, Pittsburgh-New Castle at 24 percent below average, St. Louis-St. Charles at 18 percent, and the Chicago-Naperville-Indiana-Wisconsin region at 16 percent below.
The number of insurance claims — including those for vehicle damage, personal injury, theft and vandalism — in large urban centers is a primary reason for the high premiums in major metropolitan areas.
Eli Lehrer, president of the nonprofit research group The R Street Institute, explains:
"There is definitely correlation between population density — and thus traffic density — and insurance rates. When you have more cars on the road, you have a greater likelihood of accidents and insurance claims. That's why you see really crowded cities like Los Angeles and New York near the top of the list, while cities like Charlotte and Cleveland are near the bottom."
And, as is the case in Michigan, state regulations can also have a dramatic impact on insurance rates. Lehrer notes that one reason for Charlotte's inexpensive auto premiums is that North Carolina requires all insurers to follow a single rate plan throughout the entire state. That means rates are raised in less densely populated areas of the state, so they can be kept lower in more dense regions.
Of course, many other factors affect insurance rates for any given individual, including type of vehicle, amount of coverage, the age of the driver, citation history, driver profile (e.g., number of miles driven), claims history and even credit rating.
For more information on car insurance, including tips on getting the lowest rates, see the Edmunds Auto Insurance pages.
Edmunds says: Consumers are advised to shop wisely for auto insurance, but it appears that those in the big cities can almost always expect to pay more.