Louisiana drivers spend a greater percentage of their incomes on auto insurance than residents of any other state, paying an average annual premium of $3,618, according to a new study from the personal finances website Bankrate.
The Bankrate report, titled “The True Cost of Auto Insurance in 2024,” found that Louisianans spend 6.53% of their incomes on car insurance – compared to 3.41% for average Americans. The Louisiana percentage represents an increase of 1.76 percentage points over 2023 premium costs, the report found.
For Jeff Albright, consultant for the Independent Insurance Agents & Brokers of Louisiana, the explanation behind this trend can be largely summed up in two words: injury claims.
“Louisiana consumers have had the highest automobile insurance costs in the country for many years,” Albright told the Louisiana Record in an email. “In the past couple of years, the inflationary increases in the cost of automobiles and repair costs have escalated costs. But the underlying reason automobile costs are so high in Louisiana is that we claim to be injured in automobile accidents twice as often as the national average.”
Louisiana’s injury-claim frequency in 2020 was 49.15 per 100 accidents, while the national percentage is 25.12, Albright said, adding that this has been the case for several years.
“The billboard lawyers have convinced people that if they are ‘in a wreck, get a check,’” he said. “As long as the people of Louisiana claim to be injured twice as often as the national average, we will continue to pay the highest automobile insurance premiums in the country.”
Nationally, the average cost for auto insurance is now $2,543 annually, or $212 per month, according to the Bankrate study, which indicated that more-minimal coverage for drivers can be less expensive.
The Bankrate numbers dovetail with reports by the Insurance Research Council (IRC) released during the fourth quarter of last year.
“Louisiana remains the least affordable state in the nation for both personal auto and homeowners insurance due to a combination of high insurance expenditures and relatively low median income,” an IRC report released in December states.
The report found that in 2020, the average consumer paid $1,495 per year for auto insurance, or 40% above the national average. At that time, car insurance costs made up 2.93% of median household incomes in Louisiana, according to the study.
“Rising auto-repair and construction costs, as well as the state’s relatively low household income, have compounded these issues,” the report states. “In addition, the litigation environment in Louisiana further contributes to the complexities of the insurance landscape. … Louisiana has experienced elevated attorney advertising rates, particularly in legal-services television advertising.”
The report’s findings identify several auto insurance cost drivers in Louisiana, including the likelihood of attorney involvement in claims (56% in Louisiana vs. only 45% nationwide) and the rate of litigation in personal auto claims (2.3% rate in Louisiana vs. only 0.9 percent nationwide).
The percentage of uninsured drivers in Louisiana has generally been on an uptick between the years 2017 and 2022, according to an IRC report published in October. It went from 10.8% in 2017 to 13.7% five years later, the data shows.
When not adjusting for personal incomes, Florida has the highest average cost among the 50 states for full car insurance coverage, at $3,945 per year, according to Bankrate.