Study: Louisiana has second-highest auto insurance rates in U.S.

Sep. 21--Kristy Chaisson said she cringes every time she receives her auto insurance bill.

She pays $268.67 a month, which is strictly liability coverage for three vehicles: a 1999 Chevy Silverado, a 2004 Chevy Tahoe and a 2000 Nissan Titan.

Before adding her 17-year-old daughter and the Nissan, Chaisson said she paid only $62 a month.

"I understand that you will pay more for a younger driver, but so much more is ridiculous," the Houma resident said. "We have no tickets or accidents as far as I know. I would love to buy a newer car and could afford the note but there is no way I could afford the insurance with full coverage having a 17-year-old, and I also have a soon-to-be 15-year-old son who will have to be added. I am not sure how I will be able to afford the insurance just adding him."

Chaisson is not alone. According to a recent study by The Zebra, an auto comparison website, Louisiana drivers pay the second-highest auto insurance rates in the country.

The site calculated its findings based on the profile of a 30-year-old, single, male with a 2014 Honda Accord EX, a good driving history and a standard insurance policy including injury liability, property damage liability and a $500 deductible for comprehensive and collision.

The average American pays about $1,470 a year to insure a vehicle, but motorists who live in Louisiana pay $2,338, according to the study. Terrebonne Parish residents pay a yearly average of $2,268 for auto insurance, and Lafourche drivers pay $2,266.

Drivers from Chauvin shell out the highest rate in the area at $2,413, and Thibodaux motorists with a 70301 ZIP code pay the lowest to insure their vehicles at $2,072, according to the report.

The rate of car insurance in Terrebonne and Lafourche is 1.5 times the national average, and local drivers pay almost $800 more than the average U.S. car insurance customer, figures show.

The study shows New Orleanian drivers pay the highest rate in the state at $3,946.

When it comes to automobile insurance, your ZIP code determines how much you pay, according to the study's findings. For example, city motorists pay more for insurance than those who live in rural areas.

Thibodaux drivers with a 70310 ZIP code pay $72 more than those who live in the 70301 ZIP code.

The rates are not only based on geography, but the type of vehicle and the driving history, according to the study.

State Insurance Commissioner Jim Donelon said ZIP codes and driving histories aren't the only factors that determine how much your auto insurance premium is.

"To an extent ZIP codes do have a role to play in determining rates in one area versus another," Donelon said in a phone interview. "But the overall rate is determined on a statewide basis. For decades we have been a top-10 most expensive state in America, our current ranking being No. 2 (behind Michigan). That is particularly burdensome for a state that's always at the bottom of the list for per capita income. It is a very difficult issue that's been around for decades and truly needs to be fixed."

The biggest culprit behind Louisiana's exorbitant auto insurance rates is litigation, Donelon said.

"We are much more prone to sue over minor accidents than almost any other state in America," Donelon said. "It's kept us as one of the most expensive states for decades."

John Shaver, a Thibodaux insurance agent, said the high number of lawsuits have driven up auto insurance costs across the state.

"The trial lawyers blame it on inferior roads, potholes and our driving habits, but that's just not the case," Shaver said. "It's strictly the law and the ability to file suit and collect high-dollar amounts for very minor accidents. If someone gets into an accident and they're not hurt at all they can still claim injury and collect money, whereas someone who's severely injured doesn't collect enough. Insurance companies have to charge a higher rate because they don't have a chance. If their client gets into a wreck they'll be paying out money and we're all pay for it with higher premiums. I know there has been some legislation to fix the issue, but it wasn't passed."

The latest attempt to drive down Louisiana's auto insurance rates, House Bill 372, was approved in the state House of Representatives but was killed by a Senate committee.

The measure, sponsored by Rep. Kirk Talbot, R-River Ridge, called for reductions in the state's jury trial threshold from $50,000 to $5,000, according to Lana Venable, executive director of Louisianan Lawsuit Abuse Watch.

"While it was disappointing that civil justice reforms aimed at lowering auto insurance rates failed during the recent session, it was not surprising," Venable said. "Rep. Talbot's HB 372, dubbed the Omnibus Premium Reduction Act, stirred up a great deal of discussion. Unfortunately, that discussion ended with inaction, likely ensuring Louisiana's auto insurance rates will remain the second highest in the country."

Although the bill received overwhelming support in the House, the measure was killed by a committee "stacked with trial lawyers," Venable said.

"Even after emotional testimony from business owners representing some of Louisiana's critical industries -- including timber and agriculture -- the committee resolved to keep the status quo," she said. "Meanwhile, Louisianans and their businesses continue to deal with an insurance crisis that shows no signs of improving anytime soon."

Donelon said he's optimistic that Louisiana's auto insurance rates will decrease one day.

"Call me naïve, but I truly am a glass-half-full type of person," he said. "We're going to have a lot of new legislative members in both bodies, and I'm cautiously optimistic with a fresh look at these issues and the notoriety our insurance rates are getting this year, we will have a different outcome next year."

Thibodaux trial attorney Matthew Ory, of AMO Trial Attorneys, said the argument for tort reform is a "dog whistle" repeated every election cycle.

"Contrary to the rhetoric spread by the insurance industry, consumer and public protection is the paramount concern of not only our firm but trial lawyers as a whole," Ory said. "All of us would love to see rate reductions across the board. The self-serving proposals championed by the insurance industry are simply not the way to get this accomplished. It's easy and convenient for politicians in an election year to blame trial lawyers for high premiums. Unfortunately for them, their rhetoric is not backed by any empirical data. Our views are."

Ory's law partner, David Ardoin, said reducing the state's jury threshold would not be effective to reduce insurance premiums.

"Of the 10 states with the highest premiums, Oklahoma is the only other state with a jury threshold, one that is significantly lower than Louisiana's at $1,500," Ardoin said. "This illustrates that rates are not driven by jury thresholds."

Extensive national research shows that insurance rate regulation is the key to reducing insurance rates, Ardoin said.

"We now know that insurance companies discriminate when setting rates against poor people and women," he said. "They also set rates based on other factors that have nothing to do with a person's driving habits such as employment, education and home ownership. Certain companies in this state charge a surcharge to military veterans returning from a tour a duty due to their failure to have continuing coverage while they are deployed. Louisiana would see auto insurance rates decrease if insurance companies were forced to set rates based on driving habits and risk, instead of being allowed to set them based on gender and credit scores."

It should also be noted that State Farm lowered its insurance rates four times in 2019 without any tort reform legislation, Ardoin said.

"Also, Progressive and Louisiana Farm Bureau each dropped their rates by 4.4 percent and 2 percent, respectively," he said.

In the meantime, customers like Chaisson will have to continue shelling out large chunks of money to insure their vehicles.

"I'm not sure what we could do to lower the insurance rates, but I do think the good get punished for the bad," she said.

--Staff Writer Dan Copp can be reached at 446-7639 or at [email protected]. Follow him on Twitter @DanVCopp.

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