3 States With Largest Auto Insurance Premium Increases In 2009
If you own and drive a car anywhere in the U.S., your auto insurance premiums are a major expense. Just be glad that you don’t live in Wyoming, Minnesota or Tennessee. According to Insurance.com’s Ratewatch, Wyoming premium rates have risen 5.6 percent, the highest increase in 2009 through the end of August. Minnesota comes in second to that at a 4.2 percent increase, followed by Tennessee at a relatively modest rise by 3.1 percent. To date, 2009 insurance premiums for auto owners in these states have climbed the highest and the fastest this year. In comparison, auto insurance rates have either decreased or stayed the same in 37 states.
Why would rates increase at a substantial percentage in these three states? According to the National Association of Insurance Commissioners (NAIC), there are three main reasons why some states have higher insurance premiums than others. If the population of a particular state is more affluent, residents tend to purchase new cars. Typically these car buyers purchase physical damage coverage whether or not the lender requires it. The more coverage on a policy, the higher the auto insurance rate will be. The states with higher populations and traffic density will also traditionally have higher rates because there is a greater risk of being involved in a collision. Automobile accidents in these states result in a higher frequency of claims against policies. Increased auto insurance claims will result in – you guessed it – increased premiums. States that have more high crime areas will also see residents paying higher rates, as auto thefts increase the number of auto insurance claims.
The question is: Do Wyoming, Minnesota and Tennessee fall under any of the aforementioned categories? While each of these states has pockets of affluence balanced with high crime and dense populations, they hardly compete with states such as the District of Columbia, Pennsylvania, Rhode Island and Utah who topped this same list in 2008. Minnesota gets honors for substantial insurance premium increases for both 2008 and 2009. Since the state saw an increase of 6 percent in 2008, do Minnesotans feel relieved to be at a paltry 4.2 percent this year? Tennessee and Wyoming residents truly have a gripe, since the respective 3 percent and 0 percent increases from 2008 have been dramatically increased so far this year.
It seems unlikely that there have been any dramatic changes in demographics, population and density in these states. One must be left to ponder the question of why auto insurance premiums have increased in Wyoming, Minnesota and Tennessee more there than anywhere else in the U.S. Then again, with the way the economy going the way it is these days, nothing should come as a surprise.