The costliest cities for car insurance prove where you live matters more than how you drive

jhyde1

Auto insurance rates have long been one of the abiding mysteries of car ownership. Despite the overall decline in crashes over the past decade, auto insurance rates have steadily risen, driven by what insurers say are higher vehicle repair and health-care costs. Yet a new study also shows that no matter your driving record, a simple change of zip code can cause large swings in how much you pay.

The survey by NerdWallet looked for the highest and lowest annual auto insurance rates in 125 cities, using a profile of a 26-year-old man insuring a 2012 Toyota Camry with a $500 deductible, living in an urban zip code. Seven of the 10 lowest-cost cities were in North Carolina, where a unique set of laws caps rates and personal-injury awards while giving regulators broad control over price increases.

Rank City State Average annual car insurance rate
1 Detroit MI $10,723.22
2 New Orleans LA $4,309.61
3 Grand Rapids MI $4,042.42
4 Newark NJ $3,525.43
5 Baton Rouge LA $3,363.73
6 Hialeah FL $3,271.86
7 Jersey City NJ $3,266.63
8 Louisville KY $3,255.99
9 Miami FL $3,168.75
10 Philadelphia PA $2,930.53

As for the most expensive cities, Detroit's car insurance rates exist on a separate plane from the rest of the country, with a price tag more than double the next most-expensive locale. Michigan requires insurers to offer unlimited medical benefits, which pushes up rates to begin with. Detroit's high rate of auto thefts and overtaxed police force add to insurers' worries as well.

And the cost becomes a vicious cycle; the rates have been so high for so long many lower-income residents can't afford coverage, with some studies finding more than half of the city's drivers go without auto insurance despite state laws. The problem has become so acute that newly elected mayor Mike Duggan vowed during his campaign to start a city-owned auto insurance company to provide affordable coverage to Detroit residents.

The rest of the list shows little to no correlation between population size or congestion; while Washington, DC, consistently ranks as the worst city for driving in the nation, its average auto insurance premiums didn't break into the top 30. All of the top 10 cities hail from states with no-fault insurance, a system that raises insurers' costs, and other legal quirks often fuel further increases. These areas also suffer from high rates of uninsured motorists, and a fair amount of severe weather.

There's only so much an individual in one of these cities can do to lessen these rates. Most companies offer discounts for shoppers who know what they are. A good driving record helps; some insurers now offer electronic driving monitors that can lead to discounts for safe driving. Even an improved credit score can lead to lower rates. Other than that, the only sure path to savings might be a move to North Carolina.