Why Is Car Insurance So Expensive In Louisiana?
The high cost of insurance in Louisiana is due to factors like frequent severe weather, increasing repair and construction costs, and a high number of lawsuits.
Louisiana continues to be one of the most expensive states for car insurance. According to the Insurance Research Council (IRC), in 2022, the average cost of auto insurance in Louisiana was almost 40% higher than the national average.
The reasons behind these high costs can be complex and hard to understand. However, with over 20 years of experience in the insurance industry, I can provide some helpful insight into this issue.
Key Takeaways
On average, Louisiana residents spend 2.7% of their income each year on car insurance, with almost half of that going toward coverage for injuries instead of repairs.
Low income levels and a high number of lawsuits in the state make car insurance even more expensive.
Starting in May 2025, a new law will require insurance companies to list all the discounts they offer that could lower the cost of auto insurance.
A great way to save on car insurance is by comparing quotes from different providers.
Why Is Car Insurance So Expensive In Louisiana?
The high cost of insurance in Louisiana is due to factors like frequent severe weather, increasing repair and construction costs, and a high number of lawsuits. The state’s low average household income also makes it harder for people to afford insurance. These, along with other reasons make Louisiana’s car insurance expensive as compared to other states.
Unique Reasons Why Car Insurance In Louisiana Is So High
The cost of Louisiana car insurance can be attributed to the following reasons as noted below.
Hurricane Season
In Louisiana, hurricane season is a major factor driving up insurance costs. It usually begins in June and ends in November. Hurricanes bring a range of damages, from wind and debris to flooding, and every storm results in more auto repairs.
As the number of hurricanes hitting the coast increases, car insurance companies face a higher volume of expensive and unpredictable claims. To cover these costs, insurers must raise their rates.
Uninsured Motorist
High numbers of uninsured drivers in Louisiana contribute to auto insurance costs being 46% higher than the national average. The steep insurance prices also explain why nearly 11.7% of Louisiana drivers lack coverage altogether.
Furthermore, 40% of drivers only carry the minimum insurance required by law, which often isn’t enough to fully cover the damages from an accident. In cases involving uninsured or underinsured drivers, accident victims typically need to file a personal injury lawsuit, in addition to or instead of an insurance claim, to secure fair compensation.
Rising Healthcare Costs
Healthcare costs in Louisiana are on the rise, and car insurance companies feel the impact when they have to cover medical bills in accident claims. This has made the cost of insurance even more expensive.
Auto Repair Costs Are Increasing
The rising auto repair costs are directly contributing to the increase in car insurance rates in Louisiana. As the price of car parts, labor, and specialized repair services goes up, insurance companies are faced with higher payouts for claims.
When accidents happen, the cost of repairing vehicles has become more expensive, and insurers must adjust their rates to cover these rising expenses. This increase in repair costs is especially noticeable in Louisiana, where severe weather events like hurricanes frequently cause widespread vehicle damage, leading to more claims.
Distracted Driving
Louisiana has seen a troubling rise in fatal accidents, with several investigations by the state police happening each year. The increase in accidents is often linked to distracted driving, and these incidents result in higher insurance rates for everyone. It seems as though driving habits are getting worse, and the consequences are costly for drivers and insurers alike.
Low Fuel Costs
The low cost of fuel in Louisiana has led to more cars on the road, which increases congestion and the likelihood of collisions.
As more vehicles crowd the streets, the risk of accidents grows, and insurance companies must adjust rates to reflect the rising number of claims. More cars and more accidents make driving in Louisiana increasingly expensive.
Factors Causing Your Car Insurance To Be So High
Several factors can impact the cost of your car insurance. Below are some of the most common ones that can affect your premium.
Age
Drivers under 25 and over 65 tend to pay higher auto insurance rates because they are more likely to be involved in serious accidents. In Louisiana, 16-year-olds pay an average of $6,276 annually, 25-year-olds pay about $3,644, and drivers over 65 pay around $2,996 each year.
Coverage Level
The types of coverage you select can impact the cost of your car insurance. While most states require some form of liability coverage, other common coverages included in policies are comprehensive, collision, uninsured/underinsured motorist coverage, and medical payments or personal injury protection, depending on the state.
Location
People who live in busy cities usually pay more for insurance than those in rural areas, as cities have higher rates of accidents, property crime, and claims. In Louisiana, areas like Harvey, Terrytown, and New Orleans have the highest insurance rates.
Additionally, your driving habits can affect your rates. If you have long commutes or regularly drive through high-risk areas, your premiums may be higher.
Driving Record
If you’ve been involved in several accidents, your car insurance will probably be more expensive than someone with a clean driving history. Similarly, if you’re a new driver and haven’t had insurance before, you’re likely to pay higher premiums.
Financial Responsibility
In Louisiana, drivers without credit pay 70% more for insurance than those with good credit. Also, maintaining continuous car insurance with no gaps in coverage shows financial responsibility, and letting your policy lapse could result in higher premiums when you renew.
Claims history
If you’ve filed several claims recently, your insurance rates may go up. Sometimes, it’s better to pay out of pocket for smaller repairs instead of filing a claim, especially if the payout is just slightly higher than your deductible.
How To Get Cheaper Car Insurance
Louisiana offers a variety of helpful discounts to help lower your car insurance premiums. By taking advantage of these discounts, you can save on your coverage. Here are some of the most common discounts you might be eligible for:
Customer Loyalty
Insurance companies often offer lower rates to long-term customers as a reward for staying with them. You can expect a 10% discount on being a loyal customer.
Billing and Payments
You can save money by paying your policy in full, setting up automatic payments, paying online, or going paperless. You can expect between 2% to 25% discounts.
Good Driver Discount
Drivers with a clean driving record and no history of claims can save on their premiums. You can expect between 10% to 30% off on rates.
Continuously Insure
Drivers who have been continuously insured for at least 6 months can qualify for a 5-20% discount.
Driver Education
State law requires insurance companies to give a discount to drivers aged 50 and older who complete an approved defensive driving course.
Policy Bundling
By insuring multiple vehicles or combining different types of policies (like home and auto) with the same company, you can earn a discount between 1% to 12%.
FAQs
What should I do if my car insurance is too high?
If your car insurance is too high in Louisiana, there are several steps you can take to lower your premiums. ,make sure you’re taking advantage of all available discounts, such as bundling policies, maintaining a clean driving record, or completing a defensive driving course.
You can also shop around and compare quotes from different insurers to find the best rate. You can also consider improving your credit score, as better credit can often lead to lower insurance rates.
Why did my car insurance rate go up?
Several factors could cause your car insurance rate to rise in Louisiana. It could be due to changes in your personal driving history, such as accidents or claims. If you’ve added a new driver or vehicle to your policy, that could also increase your rates.
Additionally, rising repair costs, more frequent natural disasters like hurricanes, and increases in medical and vehicle repair expenses can drive up insurance premiums.
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