The average Garden State resident paid 4 percent less in auto insurance premiums in 2007 than the previous year — and 9 percent less than the peak year of 2004, the National Association of Insurance Commissioners reported this week. Nationally, rates fell by only 5.6 percent between 2004 and 2007.
That's the good news. Despite the downward trend, New Jersey drivers continued to pay the highest premiums of any state in the nation — $1,103 per vehicle.
Part of New Jersey's decline in premiums is attributable to legislative reforms in 2003 that helped lure firms that wouldn't do business here. The state made changes to its assigned risk pool of drivers and allowed companies to offer bare-bones polices.
In 2002 alone, seven auto insurance companies bailed out of New Jersey, bringing the total number of companies that had fled the state in the previous decade to 25. The insurance rules made it impossible for some people to get insurance at all. For those who could, the limited competition resulted in escalating premiums.
Today, eight out of the top 10 largest firms write policies in New Jersey. Unfortunately, the policies aren't cheap. Only three other states had average per-vehicle premium costs in excess of $1,000 in 2007 — Louisiana, New York and Florida. The cheapest rates in the nation were in North Dakota, where the average premium was $511.
Several explanations are offered by auto insurers for why New Jersey has the highest rates: generous medical reimbursements, higher auto repair costs, a higher proportion of luxury cars and heavily congested roads.
Those elements aren't likely to change any time soon.
For now, the best thing to do to keep your premiums down is to shop around, explore the discounts offered by various insurers and keep your driving record clean.
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