NCPA - National Center for Policy Analysis

Liability Costs and Auto Insurance Rates

January 24, 1997

The cost of automobile liability insurance ranges from $741 a year in Hawaii to $198 in North Dakota. Two factors increasing premiums are the estimated 35 cents of every premium dollar that goes to lawyers, and fraudulent claims that cost another 20 cents for each premium dollar.

According to statistics collected by the National Association of Insurance Commissioners:

  • Liability insurance costs less than $300 annually in 15 states.
  • Residents in 14 states pay between $300 and $400.
  • Drivers in 11 states pay between $400 and $500.
  • They fork over $500 to $600 in six states.

But such bills cost drivers in Connecticut, Hawaii, Massachusetts, New Jersey and Rhode Island more than $600 a year.

State legislatures and Congress are considering limiting liability suits, or allowing motorists a choice between lower-cost insurance policies that covers their actual damages and higher priced insurance that allows them to sue such things as pain and suffering.

A Rand Corporation study found that restricting suits might save motorists an average of $200 a year in insurance costs.

Source: Editorial, "Auto-insurance Crapshoot Makes Most Drivers Losers," USA Today, January 24, 1997.


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