Louisiana's Auto Insurance Affordability Crisis: A Deep Dive into the Southern States' Struggles

Louisiana's Auto Insurance Affordability Crisis

Despite strong income growth that has helped improve personal auto insurance affordability in Louisiana, the state remains the least affordable among its Southern neighbors and the rest of the United States, according to the Insurance Research Council (IRC). In 2022, the average annual premium expenditure per vehicle for auto insurance in Louisiana was $1,588, which is nearly 40 percent above the national average and nearly double that of the lowest-cost Southern state of North Carolina ($840), the IRC report says. Louisiana’s spending accounted for 2.67 percent of the median household income in the state.

Florida's Auto Insurance Affordability

Florida’s average annual premium expenditures, at $1,625, exceed Louisiana’s, but the state is slightly more affordable; Florida’s higher median income results in a lower expenditure share of income (2.49 percent). The Sunshine State is not included in the IRC report because it is the only no-fault jurisdiction among the Southern states, a fact that skews some comparisons. All the Southern states had median household income below the overall U.S. figure, contributing to affordability challenges in the region as a whole. This was especially true for Mississippi, where the median income was 35 percent below the U.S. median.

Cost Drivers and Future Prospects

In addition to low average household incomes, Louisiana’s affordability issues stem from such cost drivers as a higher tendency to file injury claims when an accident occurs, a high rate of underinsured motorists, and a high rate of claim litigation. Previous IRC claim research has pointed to high rates of attorney involvement in auto injury claims in the state. In addition, Louisiana received the second-lowest score in a 2019 survey of businesses regarding the fairness of states’ litigation landscapes conducted by the U.S. Chamber of Commerce. It also is a perennial member of the “Judicial Hellholes” list published by the American Tort Reform Association (ATRA).

For readers, it is crucial to understand the factors affecting auto insurance affordability in their state. Comparing state-specific data and understanding the role of litigation and underinsured motorists can help in making informed decisions about insurance coverage. Staying informed about legislative changes and participating in public discussions can also contribute to improving the affordability of auto insurance in your state.