Louisiana’s car insurance rates are the highest in the country. The average car insurance premium costs a little under $1500. New York and New Jersey round out the top three highest car insurance rates.
Many people have seen the ‘Nationwide’ commercials — but few recognize that the insurance company is not available nation wide, including in Louisiana. They say they don’t do business in Louisiana because of the state’s “historically challenging legal environment.”
Nationwide refuses to write auto insurance in Alaska, Hawaii and Louisiana, and only writes a select number of policies in Massachusetts.
While Nationwide stays away, many other companies write to Louisiana, but Insurance Commissioner Jim Donelon says it comes at a steep price.
“[Insurance companies] are very put off by what has been described by others as the ‘legal hellhole’ that Louisiana is,” Donelon said.
According to the latest data published by the National Association of Insurance Commissioners, Louisiana has the highest auto insurance in the country, averaging $1,500. New Jersey and Michigan round out the top three. Louisiana is also higher than neighboring states like Texas, Mississippi and Alabama.
Louisiana’s high cost of car insurance is one of the reasons why the state has a hard time keeping residents. Why live in Louisiana and pay the state’s high taxes and car insurance rates when you can move to Texas? Drivers are demanding relief from Louisiana’s car insurance rates.
Why are Louisiana’s car insurance rates so high? Trial lawyers.
The numbers FOX 8 Investigates found, show that Louisiana is more litigious than any other state. In 2016, lawyers filed 3,300 auto liability suits in Orleans Parish. That amount is higher than Miami and Austin.
Factoring in population, the numbers are even more staggering. Lawyers in Oakland California filed 108 auto suits per 100,000 people. In Miami, it is 110 suits per 100,000 people, 169 in Austin, 234 in Houston and 275 in Dallas. New Orleans is the outlier with 853 auto suits per 100,000 people.
“[That is incredible] That is, but that’s been baked into our rate base,” Donelon said. “We are off the charts in claims to litigation. For decades that has been what has kept us top most expensive state in America for auto insurance.”
More specifically the trial lawyers have a tool to ring money out of insurance companies. It is Louisiana’s highest in the nation jury threshold.
In Louisiana, a judge decides any case under $50,000 and a jury decides any case above it. Maryland has the highest jury threshold at $15,000 and 36 states don’t even have a jury threshold.
What does that mean? It means that it is easier for trial lawyers to file cases that otherwise wouldn’t be filed and settlements are larger than what a jury would award. It’s easier and less expensive for insurance companies to just settle cases below the jury threshold than to fight them.
If Louisiana wants cheaper car insurance, there must be tort reform. The jury threshold needs to be lowered, if not completely eliminated.