Mississippi makes list of 10 top states – for highest auto insurance rates – but Louisiana roars in at #2!

According to a just-released ranking of state-by-state costs from the web site Insure.com, average rates in the most expensive state—Michigan—are two and half times as high as in the cheapest state, Vermont…

After Michigan, where the average rate is $2,541 a year, the second-highest rates are in Louisiana, where drivers pay an average of $2,453. Three other states had average rates above $2,000 a year: Oklahoma, Montana, and Washington, D.C.

No surprise to see Mississippi or Louisiana at the top of the list of states ranked by auto insurance rates – but it was somewhat surprising to see the reasoning in the story:

The high rates are roughly correlated with the proportion of uninsured drivers in a state, often in violation of state law. Uninsured drivers still have accidents, and their liability and personal injury costs are passed on to the rest of the state’s drivers through higher insurance rates. In Oklahoma, nearly one-quarter of drivers on the road are uninsured. Economically hard-hit Michigan had 17% of drivers with no insurance and Louisiana 12%. “It’s an economic problem. They just can’t afford the rates,” says Marc Eagan, president-elect of the Independent Insurance Agents & Brokers of Louisiana. (emphasis added)

Mr. Eagan understands what the Mississippi Legislature must not comprehend – the relationship between the cost of insurance and economy. Hold your tag! Mississippi Senate Passes Auto Insurance Verification Law:

Uninsured drivers could face various penalties under the new legislation, including a suspended driver’s license and a fine of up to $500. The bill also gives tax assessors and tax collectors the authority to deny vehicle license plates to motorists who are uninsured.

So, in a state with the nation’s “lowest per-person personal income — $31,186 — just over three-quarters of the national figure”, the choice is clearly gas or auto insurance.

Actually, according to the “You Work, You Ride” sign in the car lot, the choice for the average Mississippian is going to be between walking to work or not working. HB620 is on the Governor’s desk.

7 thoughts on “Mississippi makes list of 10 top states – for highest auto insurance rates – but Louisiana roars in at #2!”

  1. Nice post. This also supports a theory (which I have subscribed to for years) that insurers like State Farm and Allstate have their agents push UM rejections (selection of lower limits, UM/economic only, etc.) much harder in states with a large percentage of uninsured drivers. And that approach is even more concentrated in areas like Metro New Orleans. You would be amazed at how many smart professionals with high liability limits reject UM, simply because their agents tell them they don’t need it. (Sop might find a State Farm UM rejection form sent directly by SF to an attorney I sent him a while back. It had “sign here” stickers on the UM rejection form, when the issue had not even been discussed).

    This is the answer to the “responsive question” posed by the insurance companies: why would the carrier and the agents not want to make the premiums/commissions by selling UM? It’s because the cost of insuring these uninsured drivers is of much greater financial detriment to the carrier than the small commissions the agents can make and the additional premium the carriers make in these markets. And the agents just have to eat it.

    So what winds up happening is that lots of people who actually pay for insurance and need UM the most (those who live in states and cities with a high % of uninsured/underinsured drivers) wind up not having UM coverage.

  2. I agree with Sock Puppet that larger carrier agents suggest taking lower UM/UIM limits as it does reduce the overall cost of the policy. I also agree that in LA and MS carriers are taking a bath on increased UM/UIM limits even though the rates for those coverages in LA and MS are higher than in other states. So the issue is why are they so high? As stated in the post it is because of the high number of uinsured drivers in the states. Also, there is a tendency for those uninsured to more likely be involved in an accident. Until those states implement a program to be serious with uninsured drivers the problem will not be solved. I know in NC and SC any traffic stop checks for proper insurance coverage and the consequences are severe. Consequently most people carry equal limits for UM/UIM that they carry for Bodily Injury and the cost is relatively low. It all comes down to whether the states want to enforce financial responsibility laws.

  3. Sup:

    That’s true about the severity of the consequences for driving without insurance. Here in La., they are not very severe, which in turn, likely contributes to more people continuing to drive without insurance.

    One possible solution is to do what the City of New Orleans does relative to unpaid parking tickets. There is a surveillance vehicle that trolls the streets of downtown New Orleans, and it has some sophisticated video and computer software that immediately identifies vehicles for which unpaid parking tickets have accumulated. This enables the city to boot or tow the vehicles. Or maybe it could be like the traffic light cameras. Stick a couple on I-10 going into and out of the city, and you are getting a large percentage of uninsured vehicles.

    Such a system for identifying uninsured vehicles and the law-breaking owners would seem to be feasible. The offender would automatically receive a ticket in the mail to come to court. In the rare event of a mistake, the person would simply have to produce proof that he/she was insured on the date the vehicle was filmed/photographed. I’m not a fan of the “big brother” approach, but I don’t see how this is intrusive.

    1. I don’t know if those docs were ever published Sock but I do remember them. This general topic reminds me of this post from last year where we also wrote about UIM a good bit. In Layla’s case she claims Allstate altered coverages fraudulently, after the fact.


  4. With technology as it is this is not as big a challenge as one would think. I know in SC comapnies have to report monthly to the DMV the names of people who have let their coverage lapse. It is not a “big brother” approach, but if one is involved in any kind of traffic stop the concequences are significant as I indicated.

  5. I would be interested in knowing how this case evolved. I am well aware that ALL had a procedure of defaulting UIM limits to match BI limits without a signed rejection form by the insured and forwarded to the company.

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