Louisiana is known for having a high volume of auto-related lawsuits, which is one of the big reasons residents there pay well over the national average for car insurance. Residents don’t have to take those high premiums sitting down, though. By shopping around, they can potentially net hundreds in savings.
Our Top 4 Picks for the Best Cheap Car Insurance in Louisiana
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Louisiana’s Minimum Coverage Requirements for 2020
Louisiana law requires liability insurance that covers the medical expenses of one person up to $15,000, with a limit of $30,000 for everyone involved. Also, drivers are required to purchase insurance that covers other vehicles or property in the amount of $25,000. Many insurers refer to these limits as 15/30/25.
Why do quotes vary so widely?
Every insurance company uses a different process to determine your risk level. That’s why it’s best to get as many quotes as possible. Even though the factors used to determine risk are usually the same (your age, marital status, location and driving record), each company weighs those factors differently. For example, one company may determine that age plays a bigger part in your overall risk profile than location or marital status, while another insurer may decide that age is less important than your driving record. What this means is that prices are very individualized; no company is going to offer cheap car insurance to every driver. You’ll need to get quotes and find out for yourself which insurer has the best policy for you.
How long does the quote process take?
Most insurers’ websites have online tools that make getting quotes easy. It takes just five minutes or less for each quote as long as you have your information handy. Besides basic personal information (address, type of residence, if you rent or own), you should have your car’s vehicle identification number, or VIN. If that’s not available, you will need the make, model and year of your vehicle, as well as information about your driving record. Is it clean or do you have violations? Get those details beforehand.
How do you begin comparing car insurance quotes?
You’ll first have to find insurers that do business in Louisiana. Some reputable insurance companies in the Southeast region do not do business in Louisiana (including Nationwide, Alfa Insurance and Auto-Owners Insurance). When you have a list gathered, narrow it by focusing on companies with exemplary financial strength and customer service ratings.
The last thing anyone wants is to get in an accident and find out their insurer has lackluster customer service and a shaky financial foundation. Using J.D. Power, a worldwide leader in customer satisfaction surveys, as a reference, you can filter insurers in the Southeast by their customer satisfaction ratings, then cross-check them with A.M. Best’s financial solvency ratings to make sure you’ll be able to depend on them to pay claims and meet their obligations.
Why are Louisiana’s rates so high?
Louisiana ranks 10th in the nation for car insurance rates, according to data from Quadrant. One of the major reasons for this, as outlined by Louisiana Insurance Commissioner Jim Donelon, is what he calls “ambulance chasers.” He believes rates are higher because Louisiana residents are more likely to sue after an accident. Donelon says that lawyers urge drivers to sue after even the most minor collisions because it may turn into financial windfalls for them. This raises the operating costs of insurance companies in Louisiana. Ultimately, however, consumers pay for it in their increasingly high premiums. The Insurance Commissioner has urged tort reform to combat the litigious environment in Louisiana.
Other factors may include poor roads and a lack of competition among insurers. Less competition always means higher prices for the consumer. Many insurers refuse to do business in Louisiana, likely scared off by the high risk of lawsuits. The concentration of residents in densely populated urban areas is another likely reason for the state’s high premiums. New Orleans alone houses a quarter of the state’s population.
What if you’re not a full-time resident?
Anyone who is employed in Louisiana and is driving a vehicle in-state must acquire insurance and register their car in the state within 30 days. The exception to this rule is non-resident military personnel and their spouses, as long as they are licensed and their vehicles are registered in another state. Additionally, they must have filed a financial responsibility form with the state.
Is Louisiana a no-fault state or a fault state?
As a “fault” state, Louisiana follows the traditional system in which a driver who causes an accident bears the responsibility for covering any resulting damages. The distinction between a “fault” and “no-fault” system affects how claims are filed in the event of an accident. In a no-fault state, you must file a claim with your own insurance company, regardless of who caused the accident. In fault states such as Louisiana, as a claimant you will have three options: File a claim with your own insurance, file a claim with the at-fault driver’s insurance provider, or sue the at-fault driver in civil court for damages.
What is SR-22 auto insurance?
This is a standard car insurance policy that includes an SR-22 certificate of financial responsibility. The SR-22 is a document that proves you are in compliance with state laws and carry the legally mandated vehicle liability insurance. Most states, including Louisiana, require an SR-22 to reinstate your driving privileges if you are convicted of DUI.
What happens if you’re caught without insurance?
The state of Louisiana levies steep penalties against drivers caught without the proper insurance. Offenders will be fined between $75 and $100 for the first conviction, $100 to $250 for the second, and up to $700 for subsequent offenses. Motorists who are stopped and fail to produce proof of adequate insurance may also have their license plate seized by the police. An officer will put a yellow sticker on the rear window of the vehicle that was stopped. After three days, if you haven’t provided proof of insurance to the Department of Motor Vehicles, your vehicle may be impounded by any police officer who happens to stop you. According to the law known as “No Pay, No Play,” any uninsured drivers are prohibited from collecting the first $25,000 in property damages and $15,000 in personal injury expenses, regardless of who is at fault.
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Is going with cheap car insurance the best option?
Many drivers want the cheapest coverage that they can buy. This is especially true in Louisiana because of how expensive insurance premiums tend to be. However, this might not be in your best interest. On average, drivers have an accident every 17.9 years, according to industry estimates. The average cost of permanently injuring someone in an accident is $93,800, according to the National Safety Council, and that’s for just one person. If more than one person incurs a disabling injury, costs dramatically increase.
Let’s say you purchase Louisiana’s minimum amount of insurance ($15,000/$30,000/$25,000) for $1,988 a year. If you increased your coverage to $100,000/$300,000/$50,000, you would pay $53 more a month, or a little over $600 more a year. That may seem like a big increase, but consider what you might owe if you were to get into a serious accident with only the minimum coverage. If there were multiple people injured, the cost could easily be in the $150,000 range. With your insurance provider only covering $30,000 of that, you could be sued for over $100,000. Had you invested the $10,800 extra in premium costs over the past 18 years, your costs would be completely covered. As you can see, it’s often wise to invest a little more money in liability insurance that covers more than the state-required minimum.
Additionally, collision and comprehensive insurance can be a good investment if you own an expensive vehicle. Uninsured and underinsured motorist coverage is also worth considering. In a state with expensive car insurance, many may choose to drive without the proper coverage. You wouldn’t want to get into an accident and find out the hard way that your insurance is woefully inadequate to cover damages.
What is the main takeaway?
Because of the high cost of car insurance in Louisiana, it’s definitely worth it to do everything you can to lower the price of your premium. However, in your attempts to save as much as possible, don’t skimp on coverage as it may cost you in the long run. Shopping for a new policy every couple of years is a great habit to get into, as is looking for any available discounts from your insurance company.
Why You Should Shop for a New Policy Every Couple of Years, Even If You’re Happy With Your Insurance
If you are a loyal customer, you hope that your loyalty is rewarded. Unfortunately, this may not always be the case. Many insurance companies aren’t just determining your premium based solely on common factors contributing to your overall risk level; many now use “price optimization” to slowly increase your rates. Insurers use fancy algorithms to analyze your personal data, including online shopping habits, the length of time you have been with your insurance company, and even your social media footprint. Those algorithms determine whether you are likely to simply pay an increase in your premium or if you are more likely to take your business elsewhere. This all boils down to insurers’ efforts to maximize profits at your expense without losing your business.
The best thing you can do to protect yourself from price optimization is to shop for a new policy every couple of years or whenever you start to notice gradual increases. This will let insurers know that you are serious about not overpaying, and they will do what they can to keep you as a customer.
Many states have taken steps to specifically address and ban price optimization. Unfortunately, Louisiana is not one of them, despite attempts from consumer organizations to bring attention to this issue. Earnix has estimated that over 45 percent of large companies use price optimization in determining customers’ rates. That’s why it’s so important that you protect yourself by shopping around.
As a driver in Louisiana, you want to take advantage of every discount you can in your search for better rates. While there are many factors that you can’t control, there are several things you can do to lower your premiums. Defensive driving courses are a great start, especially if you are a young driver. Enrolling in this type of course can sharpen your driving skills while earning you a policy discount at the same time. To qualify for a good driver discount, you can usually take advantage of programs from insurance companies that install a device to monitor your driving habits. Young drivers under the age of 25 can receive a student discount if they submit proof of good grades.
Even if you have bad credit, it is possible to find a better insurance rate. There are companies that specialize in offering policies to high-risk drivers, and their rates will often be better than options found elsewhere.