#average car insurance
By: Janet L. Kaminski, Associate Legislative Attorney
You asked for an update of OLR Report 2000-R-0891 (copy enclosed).
Personal automobile insurance rates in Connecticut remain among the highest in the nation. Factors that contribute to the higher cost of automobile insurance here than in other states include Connecticut ‘ s dense, urban population; high per capita income; road congestion; tort system; high insurance coverage limits purchased; and newer, more expensive vehicles purchased.
In general, lost wages, medical costs, vehicular liability awards and attorney fees, vehicle repair costs, auto thefts, and fraud put upward pressure on insurance rates, while improved security devices, safer vehicles, and improved driving records can help keep premiums down.
AUTOMOBILE INSURANCE COST DRIVERS
The cost of automobile insurance is affected by the insurance coverage purchased and other factors. People who live in states where the economy is good tend to purchase new cars more frequently, which will be reflected in a higher average insurance cost. Urban population, miles driven, and per capita income have a significant impact on premiums. States with higher insurance premiums are often also highly urban, with higher wage and price levels and greater traffic density. Tort
liability and other automobile laws, labor costs, liability coverage requirements, and theft rates also affect automobile insurance costs (Insurance Information Institute Insurance Fact Book, 2005).
Connecticut is highly urbanized with an estimated population density of 723 people per square mile, which ranks 4 th densest nationally. Connecticut is 8.7 times as densely populated as the nation, which has 83 people per square mile overall (CQ ‘ s State Fact Finder, 2006).
The state ‘ s residents are relatively prosperous and have excellent access to medical and legal services. Per capita income in Connecticut is first in the nation at $45,506 (CQ ‘ s State Fact Finder, 2006). The number of doctors per 1,000 people is the 5 th highest among the states at 3.62, which is 36% higher than the national average of 2.66 (U.S. Census Bureau). Connecticut has 18,578 lawyers or 1 for every 189 residents, compared to the national average of 1 for every 265 people (American Bar Association).
Traffic density and road usage in Connecticut are high. The number of registered automobiles is estimated at 2,964,000 or about 844 per 1,000 people, which is higher than the national average of about 780 per 1,000 people (Statistical Abstract of the United States, 2006).
The urban areas of Bridgeport-Stamford, Hartford, and New Haven have among the most congested roads in the nation based on annual per-person hours of delay, which are 17, 8, and 11, respectively (Texas Transportation Institute, 2005 Urban Mobility Study). The Connecticut statewide annual average daily traffic per lane-mile (AADT/lane) is approximately 6,700. In the three specified urban areas, the AADT/lane is significantly higher: Bridgeport-Stamford = 16,667, Hartford = 13,196, and New Haven = 14,327. About 75% of the state ‘ s traffic is located on state maintained roads, which make up less than 20% of the total roads in the state.
AUTOMOBILE INSURANCE SYSTEM
Automobile insurance rates can vary depending on the type of auto insurance system the state adopts. Some states have a tort system, which allows the accident victim to sue the party responsible for the accident. Other states have no-fault or add-on laws, which restricts or limits an accident victim ‘ s right to sue the party responsible for the accident. Some states do not have a compulsory automobile insurance law. Minimum required limits for liability vary from state to state as well
as required policy benefits. Some states have a much higher exposure to uninsured motorist than other states. All of these variations have an affect on the cost of insurance.
Connecticut is a tort law state that allows accident victims to sue the responsible party for injuries without first meeting certain monetary thresholds or injury requirements. Insurance is mandatory and the minimum liability limits are higher than in some states.
Connecticut state law requires minimum bodily injury liability coverage of $20,000 per injured person up to a total of $40,000 per accident, and property damage liability coverage with a minimum limit of $10,000. This basic coverage is often referred to as 20/40/10 coverage. Most drivers purchase much higher limits (e.g. $100,000 bodily injury per person and $300,000 per accident). To help protect against damages caused by an uninsured driver, Connecticut state law requires minimum uninsured-underinsured motorist coverage of $20,000 per person and $40,000 per accident for any bodily injury caused by an uninsured driver.
Connecticut ‘ s estimated uninsured driver population is 12%, compared to 14.6% nationally. The five states with the highest uninsured driver estimates are Mississippi (26%), Alabama (25%), California (25%), New Mexico (24%), and Arizona (22%). The five states with the lowest uninsured driver estimates are Maine (4%), Vermont (6%), Massachusetts (6%), New York (7%), and Nebraska (8%) (Insurance Research Council).
AVERAGE EXPENDITURE AND PREMIUM
The nationwide average insurance expenditure per vehicle was $774 in 2002 (most recent number available). The average expenditure is defined as the total written premium for each coverage divided by the liability written car-year. A written car-year is equal to 365 days of insurance coverage for a single vehicle. Average expenditure measures what consumers are actually spending for insurance on each vehicle.
Twenty states (including Connecticut) and the District of Columbia had an average expenditure greater than the national average, while 30 states had an average expenditure less than the national average. Connecticut ‘ s average expenditure was $965, which makes it the 5 th highest in the country, behind New Jersey ($1,113), New York ($1,087), District of Columbia ($1,040), and Massachusetts ($984) (Statistical Abstract of the United States, 2006).
In 2003, the average auto insurance premium (including liability, collision, and comprehensive coverage premiums) was $821 nationally. Connecticut ‘ s average cost, $983, was about 20% higher than the national average and was ranked 7 th highest behind New Jersey ($1,188), New York ($1,161), Massachusetts ($1,052), Florida ($1,015), Louisiana ($1,014), and Rhode Island ($992) (The Public Policy Institute of New York State, Inc.).