One of the key findings of the study revealed that Detroit’s average annual car insurance rates are more than ten times those Winston-Salem, North Carolina. The Motor City has the most expensive average car insurance premiums in the country due to the city’s high crime rate and Michigan’s no-fault insurance laws.
What is “no-fault” insurance?
No-fault insurance is a type of car insurance in which the insurer covers damages incurred by a driver in an accident, no matter who is at fault. This removes the need for a driver to go after the other party’s insurance company and the need to go to claims court in order to be compensated for damages that the other person caused.According to a study by the RAND Corporation, no-fault insurance has fallen out of favor with many states as it did not reduce costs. Originally meant to mitigate the problems with court costs, long delays, incentives for dishonest claims, and the unfairness of compensating some victims much more than others, no-fault had not managed to reduce premium costs. In most states, they had higher insurance costs than tort states, and since the mid-1980s, the gap has increased. The RAND study found that premiums under no-fault were 50% higher than those under tort in 2004.
In the U.S., no-fault car insurance is currently sold in: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and Washington, D.C. However, Kentucky, New Jersey and Pennsylvania give drivers the choice to pick between no-fault insurance or “full tort” coverage.
If you’re tempted to pack up and move to North Carolina to save a few bucks on your car insurance, we don’t blame you. Even if you don’t live in North Carolina, you can still affordably protect yourself and get a cheap auto insurance quote