Car Insurance Drops, But Still Among Highest in U.S.

Published: Thursday, December 23, 2010, 6:58 AM By Joseph R. Perone/The Star-Ledger Auto insurance premiums for New Jersey drivers have dropped for four straight years but remain the third highest in the nation, according to a report by the National Association of Insurance Commissioners. The average premium for a New Jersey driver fell in 2008, the latest year for which figures are available, to $1,197, down from $1,227 in 2007, according to the NAIC report, which was released Monday. Citing the variety of factors that affect premiums, the NAIC does not rank states, according to a spokeswoman. However, their rankings can be discerned from information contained in the report. New Jersey has had the third highest auto insurance rates for the past two years. Louisiana is No. 1 at $1,274, and the District of Columbia is runner-up at $1,262. New Jersey has had the third highest rates for the past two years. Premiums for New Jersey drivers were as high as $1,386 in 2004 but have been dropping ever since. Average premiums, which include liability, comprehensive and collision coverage, fell to $1,336 in 2005 and $1,285 in 2006. During those years, the Garden State had the second highest rates in the nation. New Jersey had about 5.3 million insured drivers in 2008, the period the study covers, and 74 auto insurance carriers, according to Marshall McKnight, a spokesman for the state Department of Banking and Insurance. About 21 new carriers have entered the New Jersey market since 2003, including discounters such as Geico, Mercury and Progressive Insurance, which initially drive down rates. “People definitely have more choices and are shopping around for insurance,” McKnight said. “If they have to, they change their coverage or find a new carrier.” McKnight said New Jerseyans still pay among the highest rates in the nation because they tend to drive more expensive cars and have more coverage than motorists in other states. “In most states, drivers might have $5,000 to $10,000 worth of personal injury protection coverage,” he said. “In New Jersey, 85 percent of the cars have $250,000 of coverage.” About 94 percent of licensed drivers in the state live near urban areas, which also can raise their premiums, he said. The new auto insurance companies are trying to be creative in how they poach customers from competitors. Earlier this month, Progressive launched a usage-based insurance program, which the company says will save drivers money based on how and when they drive and how far. The NAIC is a volunteer organization of the chief insurance regulatory officials of all 50 states, the District of Columbia and five U.S. territories. The group’s Auto Insurance Database report lists the average cost of personal car insurance on a state-by-state basis. The type of coverage includes bodily injury and property damage liability (including no-fault), uninsured and underinsured motorist, medical payments, collision and comprehensive. The NAIC said insurance premiums can vary across the country because states can have different requirements for coverage, limits and benefits. “Many factors affect a state’s expenditures and premiums, including underwriting costs, driving locations, accident rates, traffic density, auto theft statistics, repair costs and state laws,” the NAIC said in a statement. “These variances make direct state-by-state comparisons difficult.” Joseph R. Perone: jperone@starledger.com