Alaska is a bucket list destination and home to some of the most breathtaking drives on the planet. It is also home to extreme weather, remote and often dangerous roadways and a number of locations that can be reached only by air or sea. Because of this, car insurance in this unique state is like nothing else in the country. Can Alaskans reasonably insure themselves without breaking the bank and paying the statewide average of $1,584? With some smart shopping, you absolutely can find the best car insurance for you circumstances.
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When looking for the best basic coverage in the state, it’s possible to save around $1,300 with the right policy. Although quotes will vary greatly depending on an untold amount of factors, there is quite a range among the competition. The most affordable was Geico with a sweet $526 offer, while the priciest was Allstate, quoting $1,920.
It’s important to keep in mind that every Alaskan will be offered a unique quote based on a litany of variables, including age, ZIP code and credit score. Location is a major factor in the cost of your rates. If you live in an area that presents few risks, your costs will likely be lower than if you live and drive where steep mountain roads pose risks for icy accidents. Basically, the only surefire way to compare rates accurately is to check quotes from the competition yourself.
All four quotes can be obtained using some handy online tools. On average they took around five minutes to complete, a welcome sacrifice when potentially talking about hundreds of dollars in savings. If you do have to make a call to get a quote, you may have to set aside 15 or 20 minutes to get all the essential information.
Our Top 4 Picks for the Best Cheap Car Insurance in Alaska
Attention to customer satisfaction is irreplaceable. If you total your car on a highway, you don’t want to deal with an incompetent insurance company on the other side. That’s why it makes sense to choose companies with easy claims processes. Each of the companies above has a solid rating from J.D. Power, a company that conducts thorough customer service satisfaction surveys, and a favorable rating from A.M. Best, a company that evaluates insurance companies’ financial stability.
Although it wasn’t drastically below the state’s average, Geico’s $526 quote was a reasonable price to pay for the coverage. Generally, it makes sense to stick with the most affordable yet reliable company and invest your saved money in better coverage. After all, you (hopefully) won’t be dealing with your insurance company on a regular basis.
Alaska’s Minimum Coverage Requirements for 2020
Like most states, Alaska requires a level of minimum liability insurance in case you are involved in an accident. Here’s what Alaska’s Department of Commerce’s car insurance guide had to say about its required coverage:
“Liability coverage, the only coverage you are required to carry under Alaska law, provides you with protection from claims by others for damages that might arise out of an accident for which you are found to be legally responsible. This coverage is divided into bodily injury liability and property damage liability.”
The quotes above are for the most basic level of liability coverage required in Alaska: $50,000 for bodily injury per person, $100,000 for total bodily injury for all involved, and $25,000 for property damage, or a 50/100/25 plan.
According to Alaska’s Department of Commerce’s car insurance guide, failing to purchase insurance can lead to stiff fines. Here’s what the Alaskan car insurance guide has to say about its required insurance:
“The owner or operator of a vehicle registered for use on the road must carry at least the legally required minimum amount of liability insurance.”
If you are caught driving without the state’s required insurance, you will face a driver’s license suspension.
Failure to prove you have insurance can be as problematic as not having insurance at all. According to the guide, you must have a copy of your policy, proof of self-insurance or your insurance identification card in your immediate possession to avoid penalties:
“Failure to have insurance can result in the suspension of your driver’s license. Before your license can be reinstated, proof of financial responsibility must be supplied and reinstatement fees paid. An SR-22 filing, which provides proof of financial responsibility, may be obtained from your insurance company and must be filed with the Division of Motor Vehicles for three years following an accident in which the driver was uninsured.”
Unfortunately, it’s likely that you will have to file a claim in your lifetime as well. Statistics show that two out of three drivers will be in an injury-causing car accident in their lifetime. What’s even more frightening is that the average cost of a disabling car-accident injury is $93,800, a sum that most people could not afford to pay. That’s why you should look into upgrading your coverage beyond the bare minimum.
While Alaska’s mandatory insurance coverage is higher than most states, it still could be worth your while to bolster your coverage. In most cases, upgrading from cheap car insurance to a 100/300/50 plan isn’t as expensive as you might expect. For example, my quote for a 50/100/25 plan with Geico was $526. To increase coverage to 100/300/50 the cost goes up to $574. That’s only $48 more annually — virtually nothing compared with shelling out of pocket in the event of an accident. It’s worth at least keeping a keen eye out for great deals on better coverage.
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Why are Alaska’s Rates so high?
Although Alaska is far from the most expensive state to insure a vehicle, it certainly isn’t the cheapest. A likely and obvious reason is that state-required coverage is above average. Many states require only a 25/50/10 plan, which logically is cheaper to pay for than a 50/100/25 plan.
Another potential reason is that Alaska is a remote location and it costs a lot to ship parts by sea. It makes a lot of sense that its geography and harsh climate would add to the overall cost of repairing a vehicle.
Alaska’s remote nature leads to higher medical costs, too, because any serious accident is more likely to require airlifting victims to a major hospital. While there is an extensive network of air traffic in the state to compensate for a large number of remote and isolated populations, the cost of transporting someone safely to a hospital by air is not cheap, and the cost is often recouped by charging higher initial premiums.
What if you’re not a full-time resident?
To purchase insurance in the state of Alaska, you must either be a resident of the state or prove that your vehicle is principally parked there. The only other exemption to the rule is anyone with active military status.
What is SR-22 coverage?
SR-22 coverage is also known as high-risk insurance coverage. It offers a policy for those who have had severe accidents, DUI charges and license suspension. In many cases, an SR-22 policy is required to get a driver’s license reinstated after it has been revoked for DUI.
What is no-fault insurance coverage?
No-fault insurance is a type of insurance that has each policyholder’s insurance company pay their own damages in case of an accident. This can speed up the time it takes to process the claim, making it better for drivers. Alaska is not a no-fault insurance state.
Even If You’re Happy, It’s Best to Shop for a New Policy Every Couple of Years
Unfortunately, your level of risk isn’t the only thing determining how much you pay in premiums. Through a practice called price optimization, insurance companies can weigh how much money you’re comfortably spending in other areas of your life to calculate how much your premiums should cost.
This controversial practice, known as profit optimization, is used by a shocking number of insurance companies. A large percentage of the biggest insurance companies analyze a range of your personal data (like credit scores, online shopping habits and social media) with a specific algorithm that decides just how likely you are to look for better deals.
In short, the best way to counteract price optimization is to get competitive quotes. If your insurance company is practicing price optimization, it will undoubtedly take note of you looking for better deals. This is a simple way to keep your insurer offering you competitive rates.
Fortunately, The Last Frontier state banned price optimization. The decision by the Alaska Division of Insurance Director Lori Wing-Heier has been praised as a big step against excessive premium rate hikes and targeted premiums.
Checking the prices that you currently qualify for makes sense for other reasons as well. Insurance companies that count on you as a loyal customer will not be as aggressive in offering you discounts that you qualify for, as their purchaser algorithm tends to show that if you’re not unhappy, you will stay with them anyway. Just like you can get better rates by negotiating with your cable company, for example, you can also get benefits from negotiating your insurance rate and sharing the bids that competitors are offering you. Even if you want to stay with your current company, there is often some discount range that insurance providers are allowed to offer if they think they’re going to lose a customer.
Shopping around offers several benefits. For young drivers, it means that your high initial rates can be lowered as you move into a lower-risk age bracket. For those with bad credit, you can use the saved money to further pay down debt and boost your credit score. Good drivers will save the most, as companies will entice you with discounts to pull you away from competitors.
Best Car Insurance in Alaska
- State Farm
- Country Financial