AUTO INSURANCE

COSTS AND EXPENDITURES

The average auto insurance expenditure dropped from $799 in 2007 to $797 in 2011 according to a December 2013 report from the National Association of Insurance Commissioners.

In 2011 (the latest data available), the average expenditure was highest in New Jersey ($1,184), followed by the District of Columbia ($1,138), and Louisiana ($1,111). The 2011 average expenditure was up slightly (0.6 percent) from $792 in 2010.

To calculate average expenditures, the National Association of Insurance Commissioners (NAIC) assumes that all insured vehicles carry liability coverage but not necessarily collision or comprehensive coverage. The average expenditure measures what consumers actually spend for insurance on each vehicle. It does not equal the sum of liability, collision and comprehensive expenditures because not all policyholders purchase all three coverages.

AAA’s 2013 Your Driving Costs study found that the average cost to own and operate a sedan was $9,122 in 2012, up by 2.0 percent, or $176, from the previous year. The cost reflects a relatively large increase in maintenance costs and more moderate increases in other areas except for tire costs which were unchanged. Average insurance costs for sedans rose 2.8 percent, or $28, to $1,029, following a 3.4 percent rise in 2011 and a 6.1 percent drop in 2010.

AAA insurance cost estimates are based on typical coverage for a low risk driver with a clean driving record for a policy with a $500 deductible for collision and a $100 deductible for comprehensive coverage. Figures are not comparable with the National Association of Insurance Commissioners’ Auto Expenditures data below.

AVERAGE EXPENDITURES FOR AUTO INSURANCE, UNITED STATES, 2002-2011

Source: © 2013 National Association of Insurance Commissioners (NAIC).

76 percent of insured drivers purchase comprehensive coverage in addition to liability insurance, and 71 percent buy collision coverage based on an III analysis of 2011 NAIC data.

TOP TEN MOST EXPENSIVE AND LEAST EXPENSIVE STATES FOR AUTOMOBILE INSURANCE, 2011[1]

(1) Based on average automobile insurance expenditures.

Source: © 2013 National Association of Insurance Commissioners (NAIC).

AUTO INSURANCE EXPENDITURES BY STATE

The table below shows estimated average expenditures for private passenger automobile insurance by state for 2007 to 2011, providing approximate measures of the relative cost of automobile insurance to consumers in each state. To calculate average expenditures the National Association of Insurance Commissioners (NAIC) assumes that all insured vehicles carry liability coverage but not necessarily collision or comprehensive coverage. The average expenditure measures what consumers actually spend for insurance on each vehicle. It does not equal the sum of liability, collision and comprehensive expenditures because not all policyholders purchase all three coverages.

Expenditures are affected by the coverages purchased as well as other factors. In states where the economy is healthy, people are more likely to purchase new cars. Since new car owners are more likely to purchase physical damage coverages, these states will have a higher average expenditure. The NAIC notes that urban population, traffic density and per capita income have a significant impact on premiums. The latest report shows that high premium states tend also to be highly urban with higher wage and price levels and greater traffic density. Tort liability and other auto laws, auto repair costs, liability coverage requirements, theft rates and other factors can also affect auto insurance prices.

(1) Ranked highest to lowest by average expenditure. (2) Preliminary.
Source: © 2013 National Association of Insurance Commissioners (NAIC).

"Note: Average expenditure=Total written premium/liability car years. A car year is equal to 365 days of insured coverage for a single vehicle. The NAIC does not rank state average expenditures and does not endorse any conclusion drawn from these data.

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