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At Cornell, we’re always trying to find ways to lower rates so fewer drivers have to forego buying auto insurance.

Driving without sufficient coverage isn’t the right option. The Ontario government is trying a few things too and you can be the judge of whether their efforts are paying off.

The Ontario Government has a strategy in place to control auto insurance premiums, called no-fault insurance. No fault insurance means the insured driver’s insurance policy must cover the cost of the collision/injuries even when the other driver was at fault.

They had to investigate some method of doing that and no fault was the only solution they could come up with.  The savings are said to arise from reduced court costs — collision and legal costs from people not telling the truth about what happened.

No-fault insurance [introduced in 1990] was meant to expedite the processing of claims, to combat fraud and to prevent injured parties from suing those who caused the accidents (except in rare circumstances). Courtesy of TADA.

Welcome to the United States

The Rand Corporation concluded that US states that implemented no fault insurance actually saw increased insurance premiums. However, state court costs may have decreased. Ontario’s government is reacting now to Ontarian’s protests about high insurance rates, so it may indeed cast some doubt as to the value of no fault insurance.

In some jurisdictions, such as North Carolina, they’ve implemented similar legislation to restrict and limit claims. However, North Carolina doesn’t have no fault insurance legislation.  They’re managing insurance claims in another way. Their solution probably deserves deeper review by our provincial government.

One point that should be made though, is that any policy holder is free to use basic coverage or buy more if they feel they need it. Unfortunately, that extra insurance coverage is a good idea. You may want to look at the extra benefits for your policy.

A recent survey by NerdWallet shows there is a significant difference between rates paid across the US. There’s a good reason for the variation, so before we go all conspiracy theory on this, check out my previous post on how car insurance rates are set.

As you can see in this chart below, rates are typically lowest in North Carolina.

Contrast that with Detroit, Michigan where there is almost no limit on claims, and where auto insurance premiums are highest. Detroit’s annual premium for a 26 year old male with no history of accidents to insure a 2012 Toyota Camry with extended coverage (100/300/50 with a $500 deductible) is an incredible $10,723.22.

The Voice of Detroit suggests that city’s high premiums are the result of out of control auto theft, and a police force that can’t cope with what’s happened there (economic collapse).

These cities were the most expensive:

Rank City State Population Average Car Insurance Price
1 Detroit city MI 706,640 $10,723.22
2 New Orleans LA 360,740 $4,309.61
3 Grand Rapids MI 189,813 $4,042.42
4 Newark NJ 277,545 $3,525.43
5 Baton Rouge LA 230,148 $3,363.73
6 Hialeah FL 229,967 $3,271.86
7 Jersey City NJ 250,317 $3,266.63
8 Louisville KY 602,037 $3,255.99
9 Miami FL 408,760 $3,168.75
10 Philadelphia PA 1,536,471 $2,930.53

And these were the least expensive:

Rank City State Population Average Car Insurance Premium
1 Winston-Salem NC 232,397 $969.10
2 Greensboro NC 273,419 $1,089.58
3 Raleigh NC 416,126 $1,098.48
4 Durham NC 233,210 $1,100.50
5 Charlotte NC 751,074 $1,123.09
6 Boise City ID 210,151 $1,221.65
7 Rochester NY 210,850 $1,249.26
8 Fayetteville NC 203,922 $1,294.80
9 Spokane WA 210,107 $1,307.68
10 Montgomery AL 213,132 $1,375.82
11 Des Moines IA 206,577 $1,420.07
12 Birmingham AL 211,458 $1,429.36
13 Albuquerque NM 552,801 $1,442.01
14 Anchorage AK 295,570 $1,449.39
15 Mobile AL 194,887 $1,470.68
16 San Diego CA 1,326,183 $1,474.71

 

The US does have a significant problem with vehicles being operated with no insurance (dirty driving as its known).  One estimate is that half of Detroit’s drivers can’t afford auto insurance. So, a theory about people leaving Detroit to avoid high car insurance rates isn’t so far-fetched (among other things).

You can be sure drivers in the metro Detroit area are looking for every conceivable way to lower their rates, from snow tires, to safety features and collision detection systems, to eliminating collision coverage and raising deductibles, and especially, using advanced anti-theft devices and systems.

Luxury Car Theft in America

Luxury Car Theft in America | Pinned byRenn Insurance

 

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