Auto insurance costs and where you live.

What’s driving the costs of your car insurance? It could be your driving record; at-fault accidents and speeding tickets won’t do you any favors. It could be the car you drive: A 20-year-old clunker is probably going to be cheaper than a brand new, foreign sports car.

These reasons all make sense, but many people don’t realize how much their location affects their rate. This was underscored by a recent survey done by Insure.com showing the most expensive and least expensive auto insurance costs by state. The full list is repeated below.

So why does it matter where you live when it comes to car insurance? You would think that car insurance rates by state would be fairly equal.

Auto insurance rates — insurance rates in general, in fact — are primarily based on risk such as:

  • What are the chances (risk) that a particular insured person will make a claim?
  • What is the risk that a particular situation can cause a claim?
  • What is the risk that a claim on an insured can be very costly?

Location matters because it can vary the amount of risk an insurance company projects. For example, hailstorms can cause significant damage to vehicles. Thus, an insurer may charge a higher rate if you live in an area where hailstorms are frequent. Or, perhaps you live in an area with a high rate of car theft and break-ins. The risk that you will make a claim goes up, and most likely so does your rate.

According to the Insure.com article, uninsured motorists are one of the big factors affecting rates. You see, most states require some sort of uninsured/underinsured motorist coverage when you buy a policy. So if a driver causes an accident and doesn’t have liability insurance (which is also required by law), your policy will provide some coverage to your vehicle and passengers that would have been covered by the other driver had he or she been insured.

As you can imagine, the more claims being made for uninsured drivers, the higher the risk and up goes auto insurance costs.

So, states with a higher number of underinsured and uninsured motorists are going to have higher rates. Also, states where more personal injury claims are filed are also going to drive up costs. The article notes that the economic downturn has caused many people to forego auto insurance. But when someone drives without insurance, we all pay the price.

Here is the list of the most and least expensive states for auto insurance in 2011 based on average annual premium (source: Insure.com):

  • Michigan, $2,541
  • Louisiana, $2,453
  • Oklahoma, $2,197
  • Montana, $2,190
  • Washington, D.C., $2,146
  • California, $1,991
  • Mississippi, $1,896
  • New Mexico, $1,837
  • Arkansas, $1,836
  • Maryland, $1,807
  • North Dakota, $1,794
  • Connecticut, $1,786
  • Rhode Island, $1,747
  • Wyoming, $1,714
  • Hawaii, $1,707
  • South Dakota, $1,707
  • Georgia, $1,670
  • New Jersey, $1,663
  • West Virginia, $1,633
  • Kentucky, $1,629
  • New York, $1,627
  • Minnesota, $1,614
  • Washington, $1,584
  • Missouri, $1,563
  • Indiana, $1,518
  • Colorado, $1,508
  • Texas, $1,492
  • Delaware, $1,489
  • Florida, $1,476
  • Nebraska, $1,470
  • Pennsylvania, $1,468
  • Kansas, $1,461
  • Alaska, $1,454
  • New Hampshire, $1,334
  • Massachusetts, $1,328
  • Idaho, $1,325
  • Alabama, $1,306
  • Oregon, $1,306
  • Nevada, $1,300
  • Illinois, $1,290
  • Arizona, $1,280
  • Utah, $1,272
  • Virginia, $1,237
  • Iowa, $1,179
  • North Carolina, $1,154
  • Ohio, $1,152
  • Tennessee, $1,146
  • Wisconsin, $1,128
  • Maine, $1,126
  • South Carolina, $1,095
  • Vermont, $995
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    Top 5 U.S. insurance news stories of 2010.

    A lot of the news in this country is often tied to the insurance industry because it is so much a part of our lives. Here are some of the top stories of 2010 that directly impacted insurance for both personal citizens and businesses.

    1) Health care reform

    On March 23, in a move that polarized the nation, President Barack Obama signed legislation that guaranteed access to medical insurance for millions of Americans. Republicans vowed to repeal the law and, according to the New York Times, nearly two dozen federal lawsuits have been filed trying to block portions of the bill.

    2) BP oil spill
    In April, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico killing 11 workers and unleashing an oil spill that killed countless wildlife and severely damaged Gulf industries like tourism and fishing. Over 4 million gallons of oil leaked before the well was plugged, and the costs of the response effort to BP hit $8 billion by September according to Reuters. That’s excluding damage and liability claims. Insurance costs for oil companies are expected to go up exponentially.

    3) 20 million recalls by auto makers
    In April, several major car insurance companies sought to recoup money from Toyota for claims paid on crashes that involved sudden acceleration. Sudden acceleration incidences were the main reason for Toyota’s recall of millions of vehicles. General Motors Co., Honda, Nissan, Ford and Chrysler all had recalls in 2010 according to Insurance Journal.

    4) Worst year for bank failures since 1992
    According to the Federal Deposit Insurance Corp., more banks failed in 2010 than any year since the savings-and-loan crisis of 1992. 157 banks failed at the close of this year, with more to come, leaving the FDIC insurance fund in the red.

    5) National Flood Insurance Program lapses/extends
    The National Flood Insurance Program is a federal government program that provides homeowners with flood insurance who live in flood zones. (Standard property insurance policies don’t provide this coverage.) The U.S. Senate allowed the program to expire on May 31, leaving many homeowners without the ability to renew or obtain coverage. The program was eventually extended until September, 2011.

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    No medical exam life insurance: A better option than no life insurance at all.

    If you don’t have life insurance, but have people who depend on you for financial support, make it a New Year’s resolution to get some coverage. The cheapest life insurance usually requires a medical exam, but if you’re worried about taking that exam consider a no-medical exam policy.

    With this kind of policy, you only need to answer a few questions about your medical history and maybe your family’s medical history. Some of the questions typically include:

    • Have you used tobacco in the past x number of years?
    • Are you taking any prescription medications?
    • Have your parents been diagnosed with cancer, heart disease or other issues before a certain age?

    The insurer can check some of your answers against a medical information database. They may also check your driving and credit record.

    Once your application is approved, you can get coverage. You can typically choose to pay monthly or annually, though you’ll usually get a little break for paying by the year.

    You do pay a higher premium for this type of policy. That’s why many people check out no medical term life insurance. Term life is less expensive than a whole or permanent life policy.

    Also, you can try at a later date to reduce your premium by applying for a policy that does require an exam.

    Whatever route you choose, be sure to get several quotes to compare life insurance rates as they do vary from company to company. Also, you should only buy from a reputable company with a stable financial background.

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    Best car booster seats for kids reviewed in recent test.

    Child booster seats are necessary to help safely restrain a child in seat belts that are normally designed for adults. According to recent testing by the Insurance Institute for Highway Safety (IIHS), they’ve come a long way in improved fit.

    According to the IIHS, booster seat safety comes down to how well the lap and shoulder belts are positioned on average booster-age children in most automobiles. Lap belts should be across the child’s upper thighs, and shoulder belts should lie along the mid-shoulder. The belts should not be riding up on the child’s tummy, against their neck or falling off their shoulder.

    What the IIHS found was that for the first time in their testing, there were more products with top booster seat ratings than ones that they don’t recommend. This is good news for parents, because it probably means there are more choices out there to help them find the best booster seat.

    If you already have a seat but it doesn’t fit perfectly, you should keep using it until you can get a better one. The IIHS notes that children age 4 to 8 who ride in boosters are 45 percent less likely to sustain injuries in a crash, than if they were in seat belts alone. That’s significant.

    You can read more about the IIHS review and their ratings here.

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    College students and insurance.

    Insurance is probably the last thing on a college student’s mind right now. Classes, homework and homecoming are getting a lot more attention than auto or health insurance. And it should be that way; parents or students shouldn’t have to worry about insurance during this time. So it’s worth it to take few minutes and review your situation.

    Auto insurance
    — If your car is insured under your parent’s auto policy, but you will be living away from home, the insurance company will need to know where the vehicle will be garaged. Location is one of the factors that determine car insurance rates, and the insurer will need to know this. If it makes a big difference in premium, you may want to shop around and see if you can get lower quote for your own policy.

    For parents, if a child is listed as a driver of your vehicles, but they won’t be driving it anymore because they don’t live at home, notify your auto insurer. It may lower your premium.

    Health insurance — If you’re no longer covered under your parent’s health plan, see if your school offers an accident or illness student health insurance plan. You can also shop for full time student health insurance quotes to find a plan for your needs.

    Dental insurance
    — There are a couple of options here if your school doesn’t offer a dental plan. You may be able to find individual dental insurance in your area that’s affordable by comparing quotes. Also, you may consider a discount dental plan. With these types of plans, you pay a membership fee and receive discounts on many procedures at participating dentists.

    Personal property insurance
    — Many of your possessions may still be covered against theft by your parent’s homeowner policy, but double check to see what the limits are for off-premise items. You also may be able to purchase an affordable renters insurance policy to cover your items.

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