5 Most Expensive Cities for Auto Insurance

Real estate is not the only industry that is all about location, location, and location. Auto insurance rates are largely dependent on the area where you live and drive. According to J.D. Power and Associates, "most accidents happen in larger cities; which means if you are a city-dweller, expect higher rates."

Most Expensive Car Insurance Prices

#1 - Detroit, Michigan - Average Annual Premium: $5,941

Topping the charts of most expensive cities for auto insurance is, ironically, Detroit, Michigan. Although Detroit is synonymous with cars, it is not a driver-friendly state. Michigan has a high crime rate, skyrocketing unemployment rate which is second in the nation at 15% which means more residents are letting their car insurance lapse and making higher rates for everybody.

Loretta Worters, vice president at the Insurance Information Institute said that Michigan has one more big problem: "[to] add fuel to the storm, Michigan's no-fault auto insurance system offers unlimited medical care to injured persons, regardless of fault. As a result, the Michigan Catastrophic Claims Association now covers the medical bills of nearly 13,000 accident victims. This generous system is expensive," says Worters.

#2 - Philadelphia, Pennsylvania - Average Annual Premium: $4,076

Second in line, but not by much is Philadelphia, Pennsylvania. Unfortunately, the City of Brotherly Love is anything but warm and fuzzy when it comes to auto insurance. Philly is similar to Detroit in that it is urban and has very high traffic density. Additionally, Philadelphia has many uninsured motorists and has high personal injury costs.

#3 - New Orleans, Louisiana - Average Annual Premium: $3,599

New Orleans, Louisiana comes in third, but not because of the crime or traffic density. In Louisiana, the court system is driving up insurance costs because when a case goes to court, only cases with claims in excess of $50,000 get jury trials. Therefore, many cases are settled for $49,000 - driving up insurance costs.

#4 - Miami, Florida - Average Annual Premium: $3,388

Port cities are also insured at a higher rate, which is why Miami, Florida makes the Top 5 list. The National Insurance Crime Bureau indicate that port cities have a higher rate of auto theft, and Miami is also the most populous city in the southeastern United States and more congestion will always lead to higher rates of traffic accidents. Florida also has a no-fault insurance system which leads to rises in fraudulent claims, and therefore to higher premiums.

#5 - Newark, New Jersey - Average Annual Premium: $2,867

Rounding out the top five is Newark, New Jersey which has high premiums due to one fun fact: New Jersey has more lawyers per capita than any other state. When car accidents turn into lawsuits, premiums go up. In 2009, defense costs in New Jersey were 16 percent of premiums, compared with 7 percent nationwide.

At the other end of the spectrum are cities with the lowest car insurance rates, these cities generally features a low crime rate, less populated areas, less urban density and stricter driving laws. Number one on the cheap list is Roanoke, Virginia. With an annual premium average of $937 per year, drivers enjoy full coverage at less than $80/month. Other cities that make the frugal list are Green Bay, Wisconsin, Wapakoneta, Ohio, Portland, Maine, and Boise, Idaho.

By Matt Reynolds - Google+

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