5 States with Unusually High Auto Insurance Rates

The first entry to our little list of states with unusually high auto insurance isn't a state at all -- it's the District of Columbia. But as D.C. residents will tell you, The District functions like a state, with its own governance and a Department of Motor Vehicles that is separate from Virginia and Maryland. Washington, D.C. has a lot going for it -- great museums, history and the Cherry Blossom Festival -- but affordable auto insurance isn't one of them. Those corporate lobbyists must be to blame!

As far as cities are concerned, Washington, D.C. actually isn't in that bad shape; it hasn't cracked the top 10 of most expensive cities in recent years, and it's nowhere near Detroit, the country's most expensive city for car insurance. But at an average of $1,866 per year in 2012, the nation's capital is still pretty pricey.

The main reason that car insurance costs so much in D.C. is that it's generally more expensive to insure a car in a city than it is in a small town or rural area, and the entire district happens to be urban. Why do the insurance companies have against city-dwellers? For one thing, cities tend to have higher rates of theft and accidents, so they view them as higher risks. Also, cities and nearby suburbs tend to be the places where wealth is concentrated, and because of that, city dwellers often buy pricier cars than people who live in the country. The more expensive the car is, the more expensive it is to insure.

If having high car insurance rates were a contest, West Virginia would be the Cinderella story, climbing from the middle of the pack to become one of the top five most expensive states in America. From 2010 to 2012, West Virginia shot up in the rankings from No. 19 in 2010 to No. 14 in 2011, and all the way up to No. 4 in 2012. But of course, skyrocketing auto insurance isn't a contest that any state wants to win, and West Virginia residents have been feeling the pain.

Insurance premiums always result from a combination of factors. Like some of the other states that made Insure.com's top five list, West Virginia has experienced more than its fair share of natural disasters in recent years, including floods, mudslides, snow storms and tornadoes. That alone probably doesn't account for why rates are on the rise in West Virginia, but it's almost certainly a factor. The other factor that is sure to contribute to the escalating rates is the number of uninsured drivers on the road. In 2011, roughly one in seven West Virginia drivers was uninsured. When tens of thousands of people are driving with no auto insurance, those who do buy insurance end up pulling more than their own weight [source: Mothershead].

Michigan is the state that is most closely identified with automobiles, and the car's impact can be felt at all corners of the state. The roads are wider in Detroit than most cities to encourage driving, and many Michigan residents work at Ford and GM plants. So, you might assume that in a place with such a doting relationship to the automobile auto insurance would be fairly affordable, right? Wrong. Michigan consistently ranks among the top five states in the nation for high auto insurance, and in recent years the average price for car insurance in Michigan has remained more than $2,000 per year.

Part of the reason for Michigan's pricey auto insurance is a state law that provides unlimited medical benefits to accident victims for life. That's great for victims of car accidents, but for the average driver, it can take a hit on your wallet. Additionally, Michigan car owners are required to buy personal injury protection coverage as part of their policy, which cost $145 per vehicle in 2012.

Michigan has been hit harder than most places by the recent economic recession, and one possible consequence of Michigan's high car insurance costs is people who can't afford to pay the rates. For example, in 2011, 17 percent of drivers in Michigan had no insurance. That puts a pinch on insurance companies, because they have to absorb the losses when uninsured drivers get in accidents, and possibly results in a negative feedback loop that makes a bad situation worse.

First the good news: On average, auto insurance actually became less expensive in Oklahoma in 2012 than it was the previous year. But that still doesn't take the sting out of knowing that Oklahoma is the second most expensive state in the country to insure your car. At an average of $2,047 per year, Oklahoma is just one of four states where an auto insurance policy costs upwards of two grand per year.

Oklahoma consistently rates at the top of the pack when it comes to auto insurance, but why? What's so risky about owning a car in The Sooner State? The number crunchers at Insure.com tend to blame high insurance premiums on the number of uninsured drivers in a state, which is an especially big problem in Oklahoma. Statewide, an astounding 24 percent of drivers are uninsured, and when they get in accidents, the costs of personal injury and vehicle repairs are passed on to other drivers in the form of increased insurance premiums. An Oklahoma taskforce is seeking to tackle the issue, with the goal of lowering the number of uninsured drivers from 24 to 14 percent by the year 2017.

Another possible problem is storms and natural disasters. In recent years, Oklahoma has been victim of an almost Biblical array of storms, ranging from softball-sized hail (a car's worst enemy), blizzards and tornadoes. All of those losses can contribute to escalating insurance rates.

Planning to insure your car in Louisiana? You might have to think about opening a new line of credit, because the Bayou State is far and away the most expensive state in the country to insure a vehicle. The average auto insurance premium in Louisiana is a whopping $2,536 per year, according to data from the Insurance Research Council; that's nearly double the median in the U.S., and it's almost three times as much as Maine, which is currently the cheapest place to insure a car. Louisiana is also home to New Orleans, which in 2012 was the third most expensive city in the country, with the average premium in that city costing $3,599 per year.

Why does auto insurance cost so much down by the bayou? Insurance companies blame the state's judicial system. Louisiana requires claims to reach $50,000 before they head to juried trial, and anything under that is resolved by an elected judge, who, out of self-preservation, is more likely to side with a voting constituent than an insurance company. Or so the theory goes. Because of that law, many cases are reportedly settled for $49,000, which of course drives up costs for insurance companies [source: Loose]. Additionally, the recession has been as hard on Louisiana as any state, meaning that many people, out of desperation, end up driving without insurance. For some people it comes down to "whether to keep insurance or put food on the table," Brad Bourg of Bourg Insurance Agency in Baton Rouge told Insure.com [source: Marquand].