Car insurance is a basic necessity if you're a driver -- not having it is courting financial and personal disaster. But with inflation, rising fuel prices, and other economic stresses at play, being a driver is more expensive than ever. If you're a Maryland driver -- or thinking of becoming one -- it might be useful to know which cities are the most (and least) expensive places for auto insurance.
Why Auto Insurance is Increasing Nationwide
If you think you've been paying more for your car insurance lately, it's not just you. According to the US Bureau of Labor Statistics, the cost of auto insurance has risen more than two times as much as the rate of inflation in the last four decades.
Why is this happening? A few reasons. For one thing, repair costs have risen dramatically in the last few years, as well as the costs for replacement parts. This is in part because of supply chain disruption caused by the Covid pandemic, as well as the recent rise of inflation. Insurance companies pay for those costs when they pay out claims, and the extra expense has to be accounted for somewhere -- which means higher premiums for policyholders.
Another rising cost that insurers have to account for? Medical expenses. Health care expenses are wildly out of control in the United States, and when there's an accident involving bodily injury, the insurance companies often end up paying the bill (or at least a good portion of it). Just as with car repair costs, these expenses are passed along to customers.
There's also the issue of extreme weather events, which have increased dramatically in frequency over the past decade and can incur huge financial losses. 2010 to 2019 was the most expensive decade ever for insurers, with the US enduring $68 billion in damage from natural disasters in 2019 alone.
Auto Insurance in Maryland
So what does this mean for Maryland drivers? First, let's take a closer look at Maryland's legal requirements when it comes to car insurance, including some numbers from Renata Balasco at The Zebra.
According to Maryland law, drivers are required to carry the following coverage: $30,000 of bodily injury liability per person, $60,000 per accident for bodily injury and $15,000 per accident for property damage liability. They must also carry $2,500 per person in personal injury protection (PIP) and uninsured / underinsured driver coverage identical to the amounts given above (30/60/15).
The average yearly premium for car insurance in Maryland is $1,305 per year, about 15% below the national average. The absolute bare minimum coverage (liability only) will cost a Maryland driver about $655 yearly.
But 'average' is far from 'universal'. Car insurance premiums vary according to a wide array of factors: demographics, driving record, model and year of car, credit rating, and geographical location. In general, larger cities have much denser traffic, which means more opportunity for mishaps and greater risk for insurance companies. That means some cities will be considerably more expensive when it comes to car insurance.
Currently, the cheapest car insurance in Maryland is to be found in Leitersburg, and the most expensive in Gwynn Oak. Auto insurance in Germantown will run you an average of $1,953 (about $400 above the national average) while insuring your car in Baltimore will cost about $2,971 yearly.
But if you're looking for the best cheap car insurance in Maryland, it's ideal to search and compare quotes online rather than looking at which cities are most and least expensive. For example, Travelers insurance is the cheapest in Maryland with an average of $1,250 yearly, while Allstate is the most expensive with $2,516 in annual premiums -- making it a less than perfect choice if your priority is finding cheap Maryland car insurance.
Maryland Car Insurance and Credit Rating
One thing Maryland drivers can be thankful for is that unlike many other states, their poor credit rating won't affect their car insurance premiums. Historically, credit rating has always played a major part in determining insurance premiums for drivers -- a poor credit rating could raise your premiums by 114% or more. Conversely, drivers with excellent credit will tend to pay much less. In many states, the only way to get around this increase is to improve your credit rating, which is easier said than done.
But Maryland is one of a growing number of states who have banned the practice of factoring credit rating into auto insurance premiums, meaning drivers with poor credit cannot be used as a factor in denying an insurance policy. Maryland, Oregon and Utah are the three states that have put this practice in place, while California, Hawaii, Massachusetts and Michigan have banned using credit rating for any purpose when it comes to car insurance, whether it's cancellation, refusal, or determining premiums.
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