Why car insurance isn’t as cheap as it could be in Massachusetts
The average cost of auto insurance in Massachusetts lines up with the national average, according to a recent analysis from Insure.com.
The review from the insurance marketplace found Massachusetts motorists pay an average of $1,325 annually, which is the same as the national average.
The survey found consumers in Michigan pay the most for car insurance, with an annual premium rate of $2,738. At the other end of the scale, Maine offers motorists the cheapest auto insurance at an annual rate of $807.
A unique marketplace
One of the reasons Massachusetts insurance rates are not lower is a lack of competition. Gusner points out that even after the Commonwealth deregulated insurance in 2008, Insure.com’s analysis found less than 40 providers operating in Massachusetts. Meanwhile, consumers in Ohio, which offers the second cheapest annual premiums after Maine, can buy auto insurance from hundreds of providers.
Another reason Massachusetts does not offer cheaper car insurance is because it has a large share of urban areas for such a small state says Gusner.
“Metropolitan areas bring congestion and more crashes, resulting in more claims,’’ said Gusner. “Claims cause insurance companies to have higher premiums.’’
Gusner points out that insurance companies that conduct business in Massachusetts are not allowed to consider a consumer’s credit score or gender when determining their rates, which could give Massachusetts consumers a slight advantage.
“It appears that the state tries to keep things fair for its auto insurance consumers,’’ said Gusner.
Car by car
Insure.com looked at the insurance rates offered by six major insurance companies (Allstate, Farmers, Geico, Nationwide, Progressive and State Farm) in 10 zip codes per state in order to determined the average rate for the 20 best-selling cars in the country. The rates were compiled in February 2016.
The rates are based on full coverage for a single, 40-year-old male who commutes 12 miles to work each day. The model assumes the driver has a clean driving record and good credit.
Check out how much it costs to insure the most popular vehicles in Massachusetts (ordered from least to most popular):
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