Louisiana has the least affordable auto insurance in the United States according to a recently published affordability index by Insurance Research Council (IRC).
IRC’s affordability index measures the proportion of household income used to pay for auto insurance. IRC used data from 2018, the most recent year for which figures are available.
In 2018, median household income in the U.S. was $63,179, and the average auto insurance expenditure was $1,057. U.S. households spent 1.67 percent of their income on auto insurance.
Louisiana was the least affordable state by a significant margin, with 3.09 percent of household income going towards auto insurance. Florida, Michigan, Mississippi, and Georgia rounded out the top five of least affordable states, while Iowa had the most affordable auto insurance, followed by North Dakota, Hawaii, New Hampshire, and Virginia.
Louisiana has maintained its position as the least affordable state for auto insurance since 2014, according to IRC.
Last summer Louisiana Democratic Gov. John Bel Edwards and the majority-GOP Legislature agreed to a bill that makes it tougher for Louisiana motorists who file car accident lawsuits to win damage awards. Proponents of the law, which went into effect on Jan. 1, 2021, say it will reduce the state’s high insurance premiums by reducing the number of lawsuits filed after accidents and making it harder for those lawsuits to result in lucrative settlements.
Underlying cost drivers for auto insurance include accident frequency, repair costs, tendency to file injury claims, injury claim severity, medical utilization, attorney involvement, claim abuse, uninsured motorists, and litigation climate.
IRC found that auto insurance has become more affordable nationwide for average Americans over the last three decades.
In the 1990s, the median household spent 1.93 percent of its income on auto insurance compared to 1.71 percent in the 2000s and 1.61 percent in the 2010s.
IRC is an independent, nonprofit research organization affiliated with The Institutes, a risk management and insurance knowledge solutions provider.
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