Car Insurance: Where You Live Contributes to How Much You Pay


Every day some 900 people move to the state of Florida. Unless they come from Michigan or Louisiana, they’re going to discover that their car insurance rates are higher in the Sunshine State than where they came from. That’s because Florida has the third highest rates in the country, behind only Michigan and Louisiana.

The average Michigan driver pays just over $2,600 per year. Drivers in Louisiana pay roughly $2,300 while their Florida counterparts pay just over $2,200. Maine is the cheapest state of all with an average annual insurance payment of $845. So why the disparity? Why does where you live contribute to how much you pay?

At-Fault Versus No-Fault

There are numerous things that play into car insurance rates beginning with whether a state has an at-fault or no-fault insurance model. Florida is one of a minority of states following the no-fault model, which is to say that every driver carries his or her own personal injury protection (PIP) coverage in order to limit lawsuits.

If you were to contact a Florida car accident lawyer in hopes of suing after the crash, your case would have to meet the specific threshold before you can proceed. This creates a situation in which every driver is forced to carry PIP. Because PIP is mandated by law in Florida, it adds to insurance premiums.

Traffic Congestion

The amount of traffic in a given area also plays into how much you pay. Where there is traffic, there are also accidents. Even though large portions of the Sunshine State are uninhabitable swampland or land set aside for agricultural purposes, the state’s cities tend to be rather densely populated. According to the Florida accident attorneys at VG Law Group, the cities are where the action is. Because most Florida residents live in the state’s cities, their car insurance rates are negatively affected.

Accident Rates

Car insurance is all about risk. In areas where accidents rates are high, so are insurance rates. The most fascinating thing about Florida is that it ranks 17th in terms of car accident fatalities. But the state ranks number two in the total number of car crashes involving careless and/or distracted driving.

Repair and Replacement Costs

Did you know that the cost to repair or replace your car in the event of an accident plays into how much you pay for your car insurance? Again, Florida is at a disadvantage here. Because of the state’s beautiful weather nearly year-round, cars last a lot longer in Florida than most other parts of the country. That means they also retain their value much better.

You do not see a lot of beaters on Florida roads. You do see a lot of new cars and cars that are just a few years old. They all cost more to repair or replace because they are in such good condition. That means higher insurance rates.

Risk Equals Cost

The point of all of this is to say that risk and cost go hand-in-hand when you’re talking car insurance. Car insurance companies have to weigh how much they could potentially lose on a customer should a claim ever be made. So they start by looking at demographics. They look at where a customer lives, traffic volumes in that person’s local area, and things like accident rates and violations.

They combine all of that data with driving history, mix in a few other factors, and come up with annual rates. The more risk all of these factors create, the higher the customer’s annual premiums.