Wisconsin has 8th-lowest auto insurance costs
Milwaukee rates are rising faster than U.S.
Wisconsin is among states with the least expensive auto insurance rates, but premiums in the metro Milwaukee area are rising faster than the national average, a new report says.
A study by the online auto insurance search engine and research firm The Zebra found Wisconsin had an average annual premium of $1,040 for car insurance, which was lower than all but seven states in the United States.
However, the data also showed that in metro Milwaukee, car insurance rates are up 32% from 2011. That’s well above the 20% increase being seen nationwide, The Zebra said. The average premium in the Milwaukee area was $1,132, according to the study.
The disparity within the metro Milwaukee area itself is stark, the study found. For example, motorists living in the 53206 ZIP code on Milwaukee’s north side paid an average of $1,743 in annual premium, or 54% more than the $941 for a driver living in Grafton, the study indicated.
For comparison purposes, The Zebra’s analysis used a 30-year-old single male driving a 2013 Honda Accord EX with a good driving history and coverage limits of $50,000 bodily injury liability per person, $100,000 bodily injury liability per accident, $50,000 property damage liability per accident, with a $500 deductible for comprehensive and collision.
In looking at why rates are on the rise faster in metro Milwaukee than nationally, The Zebra cited several likely reasons. One is the local weather, which can be severe — storms, hail, tornadoes, wind, flooding, ice — any time of year.
“Milwaukee also has a high rate of vehicle theft, and although its population has remained relatively stagnant, low gas prices may be encouraging more people to drive, increasing traffic accidents and resulting in claims that drive up prices in a given area,” the report stated.
Asked about the wide gap between
some city and suburban premiums in metro Milwaukee, The Zebra spokeswoman Nicole Beck said insurance companies set rates based on a variety of factors revolving around risk.
“As you may imagine, cars parked in more urban areas most likely experience more traffic on their normal routes and can be parked on streets instead of garages, increasing likelihood of hail or other weather damage, as well as additional bumps and dings by careless drivers or pedestrians,” Beck said. “Urban areas generally experience more crime and have higher population density, leading to congestion, traffic and accidents. All of these factors make insuring cars in these ZIPs higher risk, therefore premiums would be higher.”
She said while all of those factors are possible explanations for the disparity, “whether or not the actual dollar amount discrepancy is fair is obviously subjective.”
Andy Franken, president of the Wisconsin Insurance Alliance, said there are many considerations involved in a driver’s auto insurance costs.
“We encourage people to choose the level of insurance that they can afford and that meets their personal needs,” Franken said.
“There’s a lot of things that go into setting premiums — traffic density, healthcare costs, number of accidents, severity of accidents. And obviously, in congested areas those things are likely to have a larger impact on the overall costs. People should focus on their own driving habits, safety and their driving record and other things that can impact their personal costs.”
Insurance companies are regulated on a state-bystate basis, not federally. Some states prohibit the use of consumer credit scores in the rate-setting formula. Wisconsin isn’t one of them, but not all insurers use credit scores here, Franken noted.
The report says studies have shown that drivers with low credit scores are more likely to file a claim than drivers with high credit scores, and when they do, their claims result in almost double the dollar amount of claims filed by drivers with higher credit scores.
Drivers with poor credit also may pay twice as much for car insurance than those with exceptional credit, The Zebra report found.
Some other key factors in determining insurance premiums: type and age of vehicle, driving record and the age of the driver.
Among the 10 most popular vehicles by U.S. sales, the Honda CR-V was the least expensive to insure, with an annual average premium of $1,317 nationwide, according to the study.
Motorists 59 years old had the lowest annual premium, while drivers age 16 had the highest.
In the survey, Michigan had the highest annual average premium, at $2,610. North Carolina had the lowest, at $865. Overall, the report said, car insurance rates are higher than they’ve ever been, with a national average annual premium of $1,427, or 20% higher than in 2011.
Wisconsin historically has had among the lowest auto insurance rates in the U.S., and part of the reason is many insurance companies want to do business in the state, Franken said. According to the most recent report from the Office of the Insurance Commissioner, in 2016 there were about 175 companies offering private passenger car insurance in Wisconsin.
“We’re pretty proud of that history, and we hope it continues,” Franken said. “I think it’s the positive regulatory climate, positive litigation climate and a lot of credit to the state drivers.”
The study said insurance companies are penalizing distracted drivers for the first time since the advent of cellphones, though still not nearly as much as other dangerous traffic violations.
To compile the survey, The Zebra said, it conducted a comprehensive auto insurance pricing analysis between September and December using its proprietary quote engine, using data from insurance rating platforms and public rate filings. The Zebra said it examined nearly 53 million rates to explore trends for specific auto insurance rating factors across all U.S. zip codes, averaged by state, including Washington, D.C.