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Location a huge factor in what you pay for auto insurance rate (Map)

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Most American drivers know that information like your driving history and age plays a role in how much you pay for auto insurance.

But some may be surprised to learn that geography is just as important when it comes to pricing car insurance policies.

How your state auto insurance rate compares on a national level A recent Quadrant Information Services / insuranceQuotes.com study examined the average cost of auto insurance premiums in all 50 states.

For instance, the average annual cost of an auto policy in Michigan is a staggering 136 percent more expensive than the national average.

Meanwhile, drivers in North Carolina are paying -- on average -- 41 percent less than the national average for car insurance.

But huge premium swings can happen on a much smaller scale. The study also examined how each county's rate compared to its state average and found that the price of insurance can swing dramatically from county to county.

Auto insurance premium swings by state

According to the National Association of Insurance Commissioners (NAIC), the average annual cost of car insurance nationwide was $815 in 2012 -- the most recent data available.

But when it comes to examining the average cost of car insurance on a smaller scale, not all states are created equal.

According to the study, the following five states, on average, have the most expensive annual auto insurance rates in the country (by percentage above the national average):

  1. Michigan:  +136 percent.
  2. Rhode Island:  +45 percent.
  3. New York:  +42 percent.
  4. Delaware:  +41 percent.
  5. Louisiana:  +33 percent.

Meanwhile, the following five states, on average, have the least expensive auto insurance rates in the country (by percentage below the national average):

  1. North Carolina:  -41 percent.
  2. Idaho:  -37 percent.
  3. Ohio:  -33 percent.
  4. Maine:  -33 percent.
  5. Wisconsin:  -28 percent.

According to Mike Barry, spokesman for the nonprofit Insurance Information Institute, several factors can influence geographical insurance pricing, including population density, natural disasters and cost of living.

For example, states with a higher cost of living will also most likely have a higher cost for things like medical care and auto mechanics – and insurers will price their policies accordingly.

In states like Idaho, Ohio and North Carolina, an abundance of rural areas helps keep insurance costs lower due to lower crime rates and fewer accidents.

Meanwhile, a state like Louisiana may be largely rural, but it also has natural disasters to contend with. According to Barry, natural disasters like hurricanes can cause damage to vehicles (for example through flooding, or falling trees.)

After a hurricane, the number of comprehensive claims in a single year will shoot up, the cost of which gets passed along through higher premiums to the general insured population.

"This may also help explain New York (+42 percent) and Connecticut (+25 percent)," Barry says. "(Superstorm) Sandy wasn't all that long ago, and the claims made on flooded vehicles could still be affecting prices today."

Why is Michigan so expensive?

The most obvious outlier here is Michigan, where drivers pay substantially more for auto insurance than any other state in the country.

According to Lori Conarton, communications director for the Insurance Institute of Michigan, this is neither complicated nor surprising.

Michigan is a no-fault auto insurance state, which means each insurance company compensates its own policyholders for the cost of injuries no matter who's at fault in the accident. This benefit is known as personal injury protection (PIP).

What's wholly unique about Michigan, however, is that the state provides unlimited lifetime coverage for any medical expenses that result from auto accidents. It's an impressive benefit, but it also makes insurance very expensive.

"No other state in the country provides lifetime medical benefits," Conarton says.

The average personal injury claim in Michigan increased from $20,000 in 2003 to $46,000 in 2013.

According to Conarton, this is a result of continually increasing health care costs as well as longer life expectancies.

"Since younger people are injured more frequently in auto accidents than older drivers, the cost of covering a lifetime of medical expenses could easily climb into the millions-of-dollars range," Conarton says.

When it comes to North Carolina, the obvious outlier at the bottom of this list, there are a few reasons why its premiums are so low:

  • It’s a mostly rural state.
  • The commissioner of the North Carolina Department of Insurance (NCDI) sets a cap on car insurance rates. According to the NCDI website, “insurance companies compete by offering discounts below the established cap.
  • Because of this intense competition for the lowest premium, more than 2,000 different auto insurance discounts are offered by North Carolina auto insurers, an uncharacteristically high number.

Auto insurance premium swings by county

It’s not just state rates that matter – your county can also have a huge impact on what you pay for car insurance.

For instance, Kings County in New York is 73 percent more expensive than the state average, while Chemung County is 51 percent cheaper than the state average.

States with the biggest swing rates  between counties

So how can such different county rates occur in the same state?

Eli Lehrer, president of the nonprofit research group, The R Street Institute, attributes these swings to “equally drastic differences in traffic conditions and culture within the same state. When you have more cars on the road, you have a greater likelihood of accidents and insurance claims. That's why really crowded counties coming in so high."

In New York, for example, Lehrer points out that Kings County (i.e., Brooklyn) is a place with very high traffic density and a "culture known for not-so-polite driving. 

Chemung County, on the other hand, is a small, lightly populated county with "a very polite culture," low population density and few traffic lights.

"The same seems to hold true in all of the other states from this study," Lehrer says.

For example, Clark County, Nevada, is 11 percent more expensive than the state average, while Humboldt County comes in 34 percent cheaper.

"All you need to know is that Clark County contains Las Vegas and its immediate suburbs, while Humboldt County is a sleepy locale of about 17,000 people," Lehrer says.

The same reasoning holds true in Michigan. According to Conarton, Wayne County (+45 percent) contains Detroit and its surrounding metro region, while Marquette County (-27 percent) is a smaller, less-crowded rural suburb.

"More than half of all auto theft in this state occurs in Wayne County," Conarton says.

How to save money on auto insurance premiums

Regardless of your home state or county, here are four tips for reducing your auto insurance premium.

Car driving down the freeway Call your insurer to enquire about discounts.

Some discounts, such as the discount for turning 25, are automatic. However, if you get married, you may qualify for a discount – and you have to call your insurer in order to get the saving applied to your premium.

Enroll in a pay-as-you-drive program.

Many major insurers — including Allstate, Progressive, State Farm and Liberty Mutual — offer discounts based on how well, how far and how often you drive. It's a voluntary incentive and can save drivers as much as 25 percent on premiums.

Avoid making small claims.

Making just one claim worth $2,000 or more can kick up your rate by a national average of 41 percent, according to a January insuranceQuotes.com study.

Shop and compare rates at least once a year.

According to Barry, car insurance is a buyer's market, and shopping for new coverage could save you up to $500 per year.

View the press release here. 

Methodology: 

insuranceQuotes.com commissioned Quadrant Information Services to measure average car insurance premiums using data from the largest carriers (representing 60-70% of market share) in each state.

Assumptions included: driver is employed, drives a 2012 sedan, has a bachelor’s degree, a clean driving record, an excellent credit score and no lapse in coverage with the following limits: $100,000 (bodily injury per person) / $300,000 (bodily injury per accident) / $100,000 (property damage per accident), $10,000 (personal injury protection or medical payments) and a $500 deductible for comprehensive and collision.

Use our interactive map to find out:

  • How your state compares to the national average
  • How your county compares to the state average
  • How your ZIP compares to the county

Use the "Select state" or "Select county" dropdown menu to choose your state, then your county.

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