MALVERN, PA — Louisiana has earned the distinction of being the least affordable state for personal auto insurance, as outlined in a recent report by the Insurance Research Council (IRC), an affiliate of The Institutes. This conclusion stems from a complex mix of economic conditions, claims patterns, and the state’s litigation environment.
In 2022, Louisiana residents faced an average annual auto insurance cost of $1,588 per vehicle, a staggering 40% above the national average of $1,127. This makes Louisiana the second most expensive state for auto insurance, trailing only Florida. The report indicates that these expenses account for 2.67% of the typical household income in the state. While recent income growth has slightly eased the affordability issue, Louisiana has consistently ranked as the least affordable state for auto insurance over several decades.
Dale Porfilio, president of the IRC and chief insurance officer at the Insurance Information Institute, attributes the high costs to several factors. “Affordability issues in Louisiana’s personal auto insurance stem from multiple factors,” Porfilio explained, citing a higher tendency to file injury claims, a significant rate of underinsured motorists, and widespread claim litigation as key drivers. These elements, combined with the state’s litigious culture, contribute heavily to the rising insurance costs.
The IRC’s findings highlight that the median household income in Louisiana is 22% below the national average. Coupled with the elevated premiums, Louisiana’s auto insurance expenditure represents a significant portion of income compared to the U.S. average. Specifically, injury coverages in Louisiana consume twice the income share compared to the national average, accounting for 1.3% of income. Additional expenses include 1.0% for crash repairs and 0.4% for damage from weather or non-crash incidents.
The report underscores that Louisiana’s auto insurance expenditures surpass those of any Southern state, driven by the same underlying cost factors. Addressing these issues is crucial for improving affordability and easing the financial burden on Louisiana drivers.
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