Hear ye, hear ye: Louisiana car insurance rates are consistently ranked as one of the highest in the USA. That, unfortunately, is not news. Do an internet search and you’ll quickly see Louisiana is in the top 5 of most expensive states for car insurance more often than the good people in the Pelican State want.
There are several general reasons for higher rates in any state. The higher-ranking states typically:
· Have more bad weather (dangerous driving conditions) which tend to cause more claims than states with good weather
· Have more metropolitan areas equal more congestions/more drivers and more chances for incidents and claims
· Have more uninsured drivers driving
· Often make more, and more expensive, claims
Louisiana certainly has some of the above; but Louisiana has very little snow/ice-type bad weather and only has four cities with populations above 100,000 (New Orleans, Baton Rouge, Shreveport and Lafayette). A report from New Orleans’ “FOX 8 Investigates” on 2/20/19, titled “Is Louisiana’s ‘legal hellhole’ to blame for sky-high auto insurance rates?” (by Lee Zurik & Cody Lillich, WVUE, NO, LA) found another factor. They reported that Louisiana is more litigious than any other state. They cited examples: “Factoring in population, the numbers are even more staggering. Lawyers in Oakland California filed 108 auto suits per 100,000 people. In Miami, it is 110 suits per 100,000 people, 169 in Austin, 234 in Houston and 275 in Dallas. New Orleans is the outlier with 853 auto suits per 100,000 people.” Even back in 2013, USA Today (USA Today) did some digging as to why Louisiana was an expensive car insurance state. They found that Louisiana, “has a large number of bad drivers who make big claims and sue each other in front of friendly judges. This leads to high insurance payouts. In response to these payouts, insurance companies are forced to raise rates.” The claims are often for Bodily Injury [BI}. This is the part of your car insurance policy that helps pay for the costs associated with injuries to the other person or people involved, when you’re found legally responsible for a car accident.
BI claims are often where lawyers and the courts get involved. Louisiana traditionally has a lot of claims and an elected judge decides any case under $50,000 (this is called “jury threshold” and is higher by far than any other state in the U.S.). Juries decide cases above $50,000. It’s often cheaper, or easier, for insurance companies to settle rather than face a jury trial; but the settlement level is a lot higher in Louisiana than any other state. The tendency of elected judges is to side with consumers more than insurance companies. This makes people more prone to sue the other drivers and their insurance companies when involved in an accident (think higher chance of payout). Now people are even going after their own car insurance carriers with the increase of uninsured motorist accidents. Plus, this higher jury threshold means that it’s easier for trial lawyers to file cases that otherwise wouldn’t be filed.
In a nutshell, with all this litigation, insurance companies are made to pay, or pay more than in other states, so they charge higher rates to all their clients. A rate increase is most often across the board so clean drivers also experience the increases. Some carriers do not write business in Louisiana to avoid this melee which limits the choices for consumers as well. With about 40% of the drivers driving with state-required liability limits (15/30/25…Bodily Injury $15,000 per person, $30,000 per accident, Property Damage $25,000) and another 14% calculated to be driving without insurance that makes over 50% of the drivers driving either uninsured or underinsured. Many drivers typically know someone, or know of someone, involved in an accident with an uninsured motorist which leads people to believe the problem of uninsured motorists could be even higher than 14% the state calculates. Add to this, a high number of accidents and the highest jury threshold in the nation, and it keeps adding up to higher car insurance rates for Louisianans.
The answer? Some say tort reform (lowering jury threshold thereby making it less advantageous to sue). Opponents say that will hurt the “little guy.” Seems there could be a happy medium, common sense approach to addressing the issues. Letting state and local representatives know they better make this issue a priority wouldn’t hurt. Meanwhile, drivers need to keep their credit good, keep a good driving record as much as in their power (i.e., don’t roll through stop signs or speed), use payment plans like paid in full or EFT/ACH (automatic payments from checking), and keep their policies in force to keep rates as low as possible. Top 5 is usually a good thing…but not in car insurance rates.
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