Top 10 most expensive states for car insurance

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Top 10 most expensive states for car insurance
Image Credit: Rusty Clark / Flickr
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The most expensive state in the nation for car insurance is Michigan, according to a report from Insure.com. But if you’re a resident of that state—or any other high-cost state—you still have ways you can reduce the insurance premium you pay.

Read more: 3 ways to pay less when you have a teen driver under your roof

It’s not cheap to insure your auto in these states!

Following Michigan as the most expensive states are Montana, New Jersey, Louisiana, Oklahoma, Washington, D.C., California, Florida, Maryland and Rhode Island.

The average annual premium across the 50 states $1,325.

Here’s how premiums break down by state:

Michigan $2738
Montana $2297
New Jersey $1905
Louisiana $1842
Oklahoma $1778
Washington, D.C. $1773
California $1752
Florida $1654
Maryland $1610
Rhode Island $1608

What do you do if you live in a high-cost state? You’ve got to shop your auto insurance. Price differences from one insurer to another for the same driver or the same family can be gigantic.

The same exact person could be paying well more than $1,000 more annually than they need to—just because they haven’t shopped. Some insurers consider unusual factors like credit score, education and employment that could cause you to overpay. Others will only look at your driving record. Hence the huge differences.

Clark recommends you shop your insurance every three years. See what’s out there and get the best deal. Here’s how to get started:

Begin by identifying solid companies

Clark has long talked about the merits of Amica Mutual and USAA. But those aren’t the only two companies you should look at. Consider buying a one-time subscription to Consumer Reports and checking their latest list of the best auto insurance companies to find others that should make it onto your shortlist.

Get your quotes

Once you have a list of candidates, you’ll want to start getting quotes. This typically takes around 15 minutes on the phone per insurer. Have your most recent policy in front of you in case any questions come up about the make and model of your vehicle(s).

Working with an insurance broker is another option. He or she will get multiple quotes for you and you’ll have access to all the insurers they do business with. It’s an easy one-stop shop that lets you still have the flexibility of comparison pricing.

Compare quotes

Once you get the quotes back, it’s time to compare them. Each quote should be based on the same amount of coverage so you can do an apples-to-apples comparison. What if a poorly ranked company offers you a great quote? Clark says to avoid them! While the premium might be tempting, you want to be sure your insurer is there for you when the chips are down.

Know when to drop comprehensive and collision

The general rule is when the cost of comp and collision exceeds 10% of your old vehicle’s value, that’s the time to dump it and just have liability coverage. You can determine your vehicle’s value at Edmunds.com, KBB.com or NADA.com.

So let’s take a simple example. Say your vehicle is worth $4,000. If you’re paying anything more than $400 annually (that’s 10% of $4,000) for comp and collision, it no longer makes any financial sense. One notable exception to this rule: If there’s no way you could financially cover the loss of your vehicle, forget the math and keep paying for comp and collision.

Be prepared to take a higher deductible

You should always opt for a $1,000 deductible for the best savings on your policy. At that level, you’ll pay a lower premium and won’t be tempted to file any small piddling claims.

Don’t forget about discounts!

The Insurance Information Institute reminds you that there are a ton of different discounts out there. Here are some you can ask about:

  • Anti-theft devices
  • Multiple policies with the same company
  • College students living away from home
  • Defensive driving courses
  • Drivers ed courses
  • Low annual mileage
  • Long-time customer
  • More than one car
  • No accidents in three years
  • No moving violations in three years
  • Student drivers with good grades

Read more: How to counter lowball offers from auto insurers after your vehicle is totaled

Adjust auto insurance deductible to save money in the long term

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Clark Howard About the author:
Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. More about Clark
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