Would You Move to Another State to Lower Your Car Insurance Premium?

In 11 Ways to Cut Your Car Insurance suggestion #11 to lower your car insurance premium was to relocate to another state:

11) If all else fails, relocate… I’m not suggesting that you relocate to take advantage of lower insurance rates, but…car insurance can vary significantly based on geographic location. In the U.S. for example, car insurance rates can vary substantially from one state to another. And what you typically find is that the same areas that have high car insurance rates often have higher than normal rates for health insurance, property taxes, rents, property values and a host of other expenses and fees. So if you’re planning to relocate to lower your cost of living, lower car insurance rates may be another factor weighing in favor of the move.

The suggestion was extreme to be sure, but it’s not without merit. If you’re considering making a move to another state, it may be worth checking out what average car insurance premiums are. This is just my take – based on my experience of living in just three states – but from what I can see car insurance premiums are a fairly reliable barometer as to the overall cost of living in a given location.

Would You Move to Another State to Lower Your Car Insurance Premium?
Would You Move to Another State to Lower Your Car Insurance Premium?
Generally speaking, if car insurance rates are high in the state, then so is everything else. That could make car insurance premium rates something of a litmus test as to whether or not a state is a place that you can actually afford to live in. No, that’s not scientific, but there does seem to be a correlation nonetheless – and one that probably shouldn’t be ignored if you’re considering making an out-of-state move.

Here are the results of my own experience, based on the three states that I’ve live in.

New Jersey – High Car Insurance = High Cost of Living

New Jersey is where I grew up and lived my early adult life. Here’s what I know that’s irrefutable – New Jersey is one of the most expensive states in the US to live in. You can look at just about any expense category, and New Jersey is almost always somewhere in the five most expensive states, or at least the top 10.

Through all of the years that I lived there, the state had THE highest car insurance premiums in the country. According to The Zebra.com, the average annual car insurance premium in New Jersey, is $1,905 compared to the US average of $1,503. That’s per person.

And true to form, that’s not all. They also had THE highest real estate taxes in the country. They were in the top three or four based on both house prices and rents. And health insurance – same story. They were one of the first states to adopt both income and sales taxes, and currently have a top income tax rate of 8.97% – one of the highest in the country. Oh, and let’s not forget tolls – NJ leads the nation in this dubious distinction as well. Most people in New Jersey think of tolls as being as normal as air and water. In fact, they may think of a state that does not have them as being a “hick state”. Go figure.

Now keep in mind that the state was an early adopter with the state lottery, and also approved gambling casinos in Atlantic City more than 40 years ago. Both were sold to the public on the idea that they would lower taxes. Both claims were pure fantasy or, more likely, bald-faced lies.

When I was living New Jersey, the explanation for the across-the-board high cost of living went something like this: New Jersey is expensive because New Jersey is expensive. Got that? Sure, there were other slightly more detailed explanations, including New Jersey is most densely populated state in the country, we are right next to New York, everybody (meaning everybody from New York) wants to live here, and this is where the money is.

When we moved out of New Jersey 22 years ago, our car insurance premiums plunged – and so did our cost of living across-the-board.

Georgia – Rising Car Insurance = Rising Cost of Living

We left New Jersey for Georgia 22 years ago, and when we did our car insurance premiums plummeted, along with everything else that made up our cost of living. Sure, state income tax rates were comparable to New Jersey, but everything else was less expensive. That included car insurance, health insurance, house prices and rents, gasoline, food, clothing, entertainment, and at the time, sales tax.

As well, Georgia was one of those “hick states” that somehow managed to survive without tolls. But as my wife and I learned, little things – like the missing highway tolls – mean a lot. No tolls seem to be another indication of a lower cost of living.

But a lot has changed in Georgia in 20+ years. It’s no longer the low-cost bastion that it was way back then.
According to one source, Georgia is now among the 10 most expensive states for car insurance. In fact, average car insurance premiums in Georgia are more than $600 higher than what they are in New Hampshire, where we currently live. When you have four licensed drivers in the household, that adds up.

The rising cost of car insurance seemed to parallel a rise in the cost of everything else. For example, the sales tax increased dramatically after we moved there. House prices and rents also escalated. Gasoline – Georgia was one of the cheapest in the nation in 1993 – now exceeds the national average. Entertainment costs have risen substantially – movie tickets now costs north of $12. Moderately priced restaurants closed their doors, and were replaced by high-priced bistros.

Post-Financials Meltdown, Georgia  developed a back door cost that most people don’t like to talk about – a dramatic increase in police citations. This includes both the number and cost of those citations. No matter how you slice it, increased traffic citations are a back-door tax, especially when they become a regular part of how a municipality operates.

When we moved to Georgia, most of Metro Atlanta was unincorporated – meaning it existed outside municipal lines. But over the years the unincorporated areas incorporated into independent cities. That meant newly implemented municipal real estate taxes (another rising cost). And it meant creating municipal police departments. More police = more traffic citations. In the Atlanta area, that seems to be a near epidemic, with police  cruisers only everywhere. And you know the effect of traffic citations on car insurance premiums…enough said. Fortunately, I managed to dodge that bullet, but the likelihood of getting snagged sooner or later was only too obvious.

And as another sign of the cost of living price spiral, Georgia adopted tolls on a major highway close to where we lived shortly after we moved there. Like I said, little things mean a lot.

New Hampshire – Lower Car Insurance = Lower Cost of Living

We didn’t move to New Hampshire because it has a low cost of living – which it doesn’t, at least not across-the-board. For starters, housing is generally more expensive than it is in Georgia, though it is still lower than New Jersey. And the state does have highway tolls, in addition to which gasoline prices are slightly higher than Georgia (though we spend less on gas because everything is closer, and there are none of the massive traffic jams that typify daily life in the Peach State).

But as I mentioned before, car insurance premiums average more than $600 less than in Georgia. Meanwhile, the state has no income tax, which is only huge. It more than offsets the fact that real estate taxes are about twice what they are in Georgia (though still well below New Jersey).

And while there is a 9% tax on restaurant meals, there is no general sales tax. That alone saves us nearly 7% per year on almost everything that we buy. It will also represent a major savings when it’s time to buy a new car.

But we also found that groceries are noticeably less expensive in New Hampshire than they were in Georgia. So is entertainment. We have estimated that we are saving approximately $200 per month on our grocery bills since leaving Georgia. On entertainment, there are more moderately priced restaurants here then we found in the Atlanta area. Movie tickets are just $10 each, and there’s lots of free entertainment, such as free concerts in public parks, as well as quaint downtown areas that you can stroll and browse with just a few dollars in your pocket.

One of the biggest areas of savings is utilities. It may not be so much that gas, electric, and water, sewer and trash removal are cheaper in New Hampshire than in Georgia, but more about the way things are done here.

For example, since summers are both shorter and milder in New Hampshire, you spend less each year on electricity for air-conditioning. And despite the savage winters, homes are so well insulated that you pay less for gas heat. Our monthly gas bill averages no more than $25, even in the winter months (we live in a townhouse with units on both sides, superior  insulation and a high efficiency Lenox furnace).

Despite the fact that Georgia is warmer in the winter than New Hampshire, homes are not well insulated, and you still have to keep the heat on almost continuously from November to March. Anything that you do save on heating in the winter, you more than give back in electricity for air-conditioning with the savagely hot and extended summers.

And unlike typical communities in Georgia, water, sewer, and trash removal are included in the property tax bill, so you don’t see these as separate charges. Overall, we estimate we’re saving at least $100 per month on our total utility expenses, compared to what we were paying in Georgia.

The savings on food and utilities roughly offset the higher basic house payment that we have now. That means that the absence of a state income tax and a general sales tax – along with greatly reduced car insurance – is all gravy.

I’m not suggesting that you you should move out-of-state simply to lower your car insurance premium. But from my experience, it seems as if car insurance premiums are the key to just about everything else.

Have you noticed a similar correlation between states?

( Photo by pictures of money )

2 Responses to Would You Move to Another State to Lower Your Car Insurance Premium?

  1. Kevin, Virginia has cheaper car insurance compared to Florida where I use to live, but they have a “luxury” tax that I hear can be ridiculous based on the year of your car. I am praying to be able to get a cash car to avoid all of this. So to be honest, I think it works out to be about the same in both states. Great post!

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