State To State Moves: Things to Know Before You Leave

People move all the time for a plethora of reasons. A new job, attending school, a family emergency, marriage, etc. When it is time to move to a different state, you will have to acquire an Auto and Homeowners/Renters insurance policy for your new state.

Before you call your interior decorator for ideas on how to fix up your new home, you may want to call your Insurance Agent for guidance in your new state. As you may know there are 50 states in America and as a result you have differing insurance laws that each state abides by. Most laws are similar but depending on the various laws, population demographics and where you live, your rates can differ significantly. By doing some research, you can better prepare yourself for your state to state move.

Legislative Climate

In recent years, many states have taken action to keep Insurance rates low by requiring insurance companies to justify rate increases. California for example has been able to reduce costs this way for many years and in 2006 introduced legislation that prevents companies from basing rates on zip codes.

“In September, California implemented a law that prohibits insurers from determining auto rates based on people’s ZIP codes rather than on how safely they drive. Insurers have since filed for rate cuts totaling $1 billion, according to the California Department of Insurance.”

“California auto insurance premiums have declined by 7% since voters approved the landmark insurance reform initiative, Proposition 103 in 1988, while rates nationally have increased 47%. In the fifteen years following the passage of Proposition 103, California went from 2nd most expensive state for auto liability premiums in the country to 21st (1989-2004, most recent data available). Californians, who paid 52% more in 1989, paid less than the national average for auto insurance in 2004.”
Other states like Georgia have made legislative moves that have made room for rate increases. In October 2008, Georgia allowed companies to raise rates without state approval. Rate increases followed almost immediately after this law was passed.
“Since the Georgia law went into effect Oct. 1, many companies have filed to raise rates 5 percent to 10 percent. A few drivers considered more risky could see their bills jump as much as 81 percent. The new law allows insurers to change rates on many types of coverage before getting state regulators’ approval. Previously, the state Insurance Commissioner’s Office had to approve rate increases first. The law allows the commissioner to review the rate change but makes it harder to reject or change an increase after it has been put in place, state officials said. In the two months since the law took effect, more companies raised rates than had done so during the previous nine months. The consumer group Georgia Watch reviewed filings in mid-October and found that 18 companies had raised rates through Oct. 14. Since then, an additional 21 have filed for increases.”

It is important to have a good understanding of the legal climate of the state you plan on moving to.

Insurance Policy Requirements

Some states are Personal Injury Protection States aka “No Fault” States. These states have some of the highest auto insurance premiums in the entire country. While there is no unanimous agreement that no-fault legislation is the direct cause of increased rates, generally speaking the rates tend to be higher there than in states that do not have it.

“States such as Massachusetts that require no-fault auto insurance have some of the nation’s highest premiums and should change their laws to require insurers of at-fault drivers to pay for accidents, according to a report released in Boston yesterday. “The bottom line is that no-fault is a bonanza for insurance companies. It’s a disaster for consumers,” said Harvey Rosenfield.

You need to figure out if the state you are moving to is a no fault state so that you can design a plan that accounts for this. Not doing so can be disastrous for your budget.
Other Factors

Some places in America like New York City are naturally expensive because of the cost of living and large populations. New York City also has a serious insurance fraud problem and as a result, all motorists in the state of New York (another no fault state) must have their vehicles physically inspected for insurance purposes and many companies will not write business in the city at all because of the differences in rates between someone who lives in upstate New York and someone who lives in Manhattan. Detroit, Michigan has some of the country’s highest insurance premiums for several reasons. In addition to being in Michigan which is a no fault state, Detroit has one of the nation’s highest number of uninsured motorists, which does a number on auto insurance rates. People pay more for insurance because people do not carry insurance because the rates are so high. Add to the fact that Detroit is a large American city by the Canadian border and you have a recipe for high premiums. Milwaukee, Wisconsin and Cleveland, Ohio are different stories altogether as they enjoy low Insurance rates despite being in the Midwest and being decent sized cities. Generally speaking, if you are moving to a small town or a state with a small population then chances are your insurance rates will be reduced but this is not always the case. Rhode Island for example, has some of the highest Insurance rates in America and it is NOT a no-fault state.

Summary of Things to Know Before You Move out of State

Before you make your move, please consult with your agent to see if he or she is licensed in that state. Second, do some homework on that state’s laws and Insurance requirements and get some quotes to see what type of increase or decrease you should expect. A proficient agent will be able to maximize your premium dollars in spite of your interstate move. Doing these things will help you plan your new budget in a more organized manner which can save you money while keeping your assets protected. Now you can go shopping for your new place!

  1. Auto insurance rates stable for many ; Fewer accidents, new laws help keep premiums down: [FINAL Edition] Dugas, Christine. USA TODAY [McLean, Va] 05 Dec 2006: B.1.
  2. 15 Years of Auto Insurance Regulation Has Reduced CA Premiums, While Rates Increased 47% Nationwide; Prop 103-style Regulation of Health Insurance Is National Model For Health Insurance Reform Debate PR Newswire [New York] 15 May 2007: n/a.
  3. Rates up for auto insurance: Trend follows Georgia’s passage of law that lets companies increase charges without state permission. Salzer, James The Atlanta Journal – Constitution [Atlanta, Ga] 07 Dec 2008: A.1. A lawyer with the nonprofit consumer group sponsoring the report, the California-based Foundation for Taxpayer and Consumer Rights. Most states have standard liability insurance, or what the report called “personal responsibility insurance,” in which insurers of drivers found to be at fault in accidents must pay costs for the innocent parties. Nine states, including Massachusetts, now have mandatory no- fault insurance. The law requires drivers to be compensated by their own insurer, regardless of who caused the accident. During the time covered by the report, there were 10 states with no-fault insurance; Colorado dropped its mandatory no-fault policy in 2003. Premiums in states with no-fault insurance are 19 percent higher on average than in states with personal responsibility insurance, according to the report. The report also found that rates went up on average 9.8 percent between 1998 and 2002, compared with 5.1 percent in states with personal responsibility insurance.”
  4. Report: No-fault states pay more ; Mass. mulling changes to auto insurance laws: [ALL Edition] Emery, Theo. Telegram & Gazette [Worcester, Mass] 30 Mar 2005: E1.