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U.S. Automobile Insurance Statistics

It’s a proven fact; driving without auto insurance is a risky endeavor. In fact, it’s illegal in all fifty states. Without car insurance coverage, automobile accidents can be much more costly than your insurance premiums.

According to a 2008 report from the National Association of Insurance Commissioners (NAIC), the average cost of automobile insurance actually fell 1.7% in 2006. Washington D.C. was actually named the most expensive city in which to insure a vehicle and North Dakota was the least expensive. The average price for automobile insurance in 2008 was $817 per year as reported by the Insurance Information Institute and the NAIC.

The price of automobile insurance is impacted by several factors. The most influential factor in determining cost of insurance is coverage. In states where the economy is healthy, people tend to purchase newer vehicles and opt for physical damages coverage, which translates into higher insurance costs. Also, things like urban population, traffic density, and per capita income have significant impacts on premiums. In reports compiled by the NAIC, states that have higher premiums tend to be highly urban, with higher wage and price levels and have a greater traffic density.

Along with environmental factors, claims also affect the price of premiums. According to the Insurance Information Institute, from 1998 to 2007, the claim frequency for bodily injury liability fell a staggering 20.6%, and claims for property damage liability fell 10.8%. However, claim severity (average claim amount) for liability coverages actually rose, 30.3% for bodily injury and 28.1% for physical property, nullifying the price lowering gains realized by the decrease in claim frequency.

Claims for collision and comprehensive coverages saw the same trends, with claims falling 4.6% and 16.0% respectively, but claim severity rising 37.7% and 40.9% respectively.

All fifty states and the District of Columbia provide a safety net for automobile insurance for those who are unable to obtain it on their own. This is more commonly known as the assigned risk or “shared” market. According to the Insurance Information Institute, until the mid 1960’s consumers who did not meet an insurance company’s standard for risk could only find insurance in the shared market. Then emerged the nonstandard market, where private insurers were willing to take drivers with marginal driving records and insure them at a higher rate. By the mid 1990’s, the nonstandard market was privately insuring 1/5 of the total private auto insurance market, which has held steady into 2008, per a 2008 Conning study. According to the Insurance Information Institute, the nonstandard sector of the private market reduced the number of vehicles insured in the shared market by 7.5% in 2006, with North Carolina having the largest number of vehicles reported at 23%, followed by Massachusetts with 5% and Rhode Island with 4%.

In the United States, currently there are 181,639,484 persons who are reported as having car insurance, either through the private market or the shared market.

The Bureau of Labor and Statics Consumer Price Index reports that the cost of auto insurance increased by 2.5% in 2008, after increasing by less than 1% in 2006 and 2007.

Car Insurance by State

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