REPOST: N.J. once again has costliest auto insurance in U.S., report says

The National Association of Insurance Commissioners says that New Jersey has the costliest auto insurance rates in the nation.

Auto insurance

New Jersey often ranks as the most expensive state to buy auto insurance. | Image Source: nj.com

New Jersey drivers once again shelled out the most in the nation for auto insurance, according to an annual industry report.

Drivers in the Garden State paid an average of $1,220 on car insurance policies in 2012, the last year the figures were available, according to the report by the National Association of Insurance Commissioners.

It marks the third straight year that New Jersey has topped the list, which covers all 50 states and the District of Columbia.

Washington D.C. was second at $1,155, followed by New York with $1,152. Idaho drivers paid the least for auto insurance: $535.

New Jersey’s average is about 49 percent higher than the national mark of $815, according to the report.

The data includes the average amount drivers paid for liability coverage, which is mandatory, as well as collision and comprehensive policies, which are optional. The average mandatory liability premium in New Jersey was $861 in 2012 — also the most in the country.

Marshall McKnight, a spokesman for the state Department of Banking insurance, said New Jersey has always ranked high on the list for a number of reasons.

“We are one of the most densely populated states in the nation,” McKnight said. “So there are more cars and more accidents.”

He added that New Jersey drivers also tend to opt for more coverage than is legally required. About 70 percent carry the maximum personal injury protection benefit of $250,000, McKnight said.

“Only New York and Michigan have a higher number,” he said.

The NAIC stresses that insurance premiums can vary across the nation because of population density, laws, geography, and different requirements for coverage, limits, and benefits.

The organization specifically notes that New Jersey’s numbers are difficult to compare to other states because a large portion of residents live in what the industry considers urban areas.

It adds that the report does not include dividends, which hurts the state’s figures because New Jersey has paid two to four times the national average in dividends to policyholders. Dividends are essentially refunds that auto insurers send policyholders for any excess charges in a premium.

The Washington-based NAIC is a volunteer organization for state insurance regulators. While its data lags by several years, the group’s reports are regarded as the most authoritative on the issue.

High auto insurance premiums was once one of the hottest issues in Trenton, prompting angry Statehouse rallies, lengthy legislative battles, and high-profile court fights as insurers squared off against trial attorneys. But it’s barely been a blip on the political radar in the dozen years since Gov. James E. McGreevey signed reforms into law that eased regulations to make way for lower costs.

In 2006, New Jersey drivers paid an average of $1,152, and the figures fell to 1,104 in 2007 and 1,081 in 2008.

McKnight said people began shopping around for lower coverage, causing the numbers to drop.

But the figures have slowly ticked up since then. The average rose 2.9 percent in 2012, up from 1,185 in 2011. The average in the U.S. jumped 2.2 percent over the same period.

In all, New Jersey has seen a 2.2 percent increase from 2002 to 2012 — the 15th highest increase in the nation.

McKnight said New Jersey may drop out of the No. 1 slot from time to time, depending on what happens in other states.

“But we’re never going to be one of the lowest because of all those factors,” he said.

Louis Campisano is an insurance professional from New Jersey. For more articles on auto insurance issues, like this Facebook page.

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