Typical Ohio drivers pay $1,128 a year, or about 2 percent of their annual incomes, for car insurance - ranking the Buckeye State No. 11 among states with the lowest auto insurance rates relative to incomes, according to a new study from Bankrate Inc.’s CarInsuranceQuotes.com.
By contrast, drivers in neighboring Michigan fork over 8 percent of their annual incomes, or $4,490 a year, for car insurance - the highest percentage in the country. And drivers in Kentucky spend nearly 5 percent of their annual incomes, or $2,292, on car insurance, ranking the Bluegrass State the third most expensive for car insurance, the study found.
“Ohio is in a good spot in terms of how much people are paying for car insurance as a percentage of household income,” said John Egan of CarInsuranceQuotes.com. “If you’re a driver in Ohio, you can look at this report and feel a little bit better about where you are compared to your neighbors.”
Joining Michigan and Kentucky among the Top 5 most expensive states were Louisiana (No. 2); West Virginia (No. 4) and Mississippi (No. 5).
Massachusetts was the least expensive state on the CarInsuranceQuotes.com list. Drivers there typically pay about 1.43 percent of their annual income, or $1,128, on car insurance. In the order of least expensive, North Carolina, Hawaii, Alaska and Oregon followed Massachusetts.
CarInsuranceQuotes.com determined the rankings by dividing the median cost for car insurance by the median household income in each state and the District of Columbia.
The insurance rates were based on profiles of online car insurance customers in June. The median income figures were taken from the 2010 census.
Insurance rates varied widely based on various factors, including driving habits, the cost of insurance fraud, the number of uninsured drivers and the number of injury claims in a state.
But perhaps the biggest reason for the gap between Ohio and some of its neighbors were state insurance regulations, Egan said. Unlike Ohio, Kentucky and Michigan both have “no-fault” laws, in which a policyholder’s insurance company is responsible for damages to their car in a wreck, regardless of who’s at fault.
Michigan is among the nine states that have true “no-fault” laws, while Kentucky and two other states give drivers a choice between a true no-fault policy and a traditional policy.
Ohio drivers also benefit from having a long list of insurers with headquarters or major operations in the state, Egan said.
“Car insurance companies are very competitive in Ohio,” he said. “You can’t turn on TV or turn on a radio without seeing or hearing a car insurance ad. There’s a lot of incentive on the part of car insurance companies to get you as a consumer to buy a policy from them, and that keeps costs down.”