DETROIT (WWJ) – Detroit has some of the most expensive car insurance rates in the nation, according to a recent survey, thanks in part to many uninsured motorists.
Website insuranceQuotes.com examined the average premiums in the 25 largest U.S. metropolitan areas and found that drivers in the metro Detroit area pay a whopping 165 percent more than the national average for car insurance. The next most expensive metros are New York City (36 percent more than the national average), Miami (+34 percent) and Los Angeles (+25 percent).
According to the National Association of Insurance Commissioners, the average cost of car insurance nationwide was $797 in 2011 — the most recent data available.
One of the main reasons car insurance is so expensive in the Detroit area is because Michigan is a no-fault state.
“What that means is that each insurance company has to compensate its own policy holders for the cost of injuries, regardless of who is at fault,” said Laura Adams, senior analyst for insuranceQuotes.com.
What makes things even worse, Adams said, is that Michigan is the only state where car insurance includes unlimited personal injury protection — which provides unlimited lifetime coverage for medical expenses resulting from auto accidents.
“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,” Adams said.
So, where are the cheapest insurance rates? Charlotte, North Carolina — where the average car insurance premiums are 43 percent less than the national average.
“Insurance companies who are doing business in North Carolina really have to jump through a lot of hoops to raise rates,” Adams said. “And so what happens is, we’re seeing the rates in North Carolina, you know, seem to be suppressed.”
Cleveland (-31 percent) and Pittsburgh (-24 percent) are the second- and third-least expensive metropolitan areas, respectively.